Get out now and beat the debt ceiling crash?

[REWahoo]

Quote:

Originally Posted by ERD50 Are things worse today? There is a lot of 'good old days' talk on a variety of topics.

It's been a while but once again it's time for....

YouTube - ‪Monty Python - Four Yorkshiremen‬‏

[Animorph]

I'm not sure the "crash" effect wouldn't be worse for government debt instruments than for equities. The U. S. credit rating gets lowered when it happens. Equity effects are secondary.

[Dreamer]

We have been on vacation for last 1 1/2 weeks. We are now staying at DD's house and they do not have cable or satellite, so we have not been watching the news and have barely glanced at a newspaper. So, no worrying for us, since we are ignorant about what is going on in the world. Wish I could convince DH to cancel Direct TV and the newspaper, but I don't think that will happen. I am not smart enough to time the market successfully, but would probably be worrying, if I was at home watching the news.

[harley]

Quote:

Originally Posted by LOL! No significant news? Are you kidding me? Did you see what the Greek parliament did? It could've gone the other way. Also the ISM report today was big. But the 6% rise was after a 4% drop 2 weeks ago, so net +2% on the Greek news. Not such a big move after all.

Oh, some trailer park country decided to take out a loan at a Paychecks-r-Us UN branch, and that's supposed to convince me the economic crisis is over? That's the biggest news I've heard since Britney Spears shaved her head. Yeah! Doubledown on the blue chips!

[ladypatriot]

Quote:

Originally Posted by ScaredtoQuit I'm taking heat now and I know I deserve it. Intellectually, I really do know that timing is a no- no and I haven't succumbed to it for more than a decade. (Of course I also knew that timing was a no-no when I was doing it 15 years ago.) But cashing out now strikes me as a reasonable thing to do at the moment. With all of the enmity between Democrats and Republicans these days, doesn't it seem likely that sooner or later the market is going to react to the possibility of a default? I mean isn't it obvious to everyone?? Don't you guys hear what the opposing sides are saying about each other on MSNBC and CNBC? Really, these guys are in servious opposition to each other.

I don't watch MSNBC but I do watch CNBC for entertainment in the early morning (Squawk Box). Hey, it beats that inane drivel on Today or Good Morning America.

The markets are always reacting to something; next week it will be the June employment report, or some other data. We hung on through the slow crash of 2008 and into the lows of early 2009, buying along the way. That experience reinforced our commitment to a diverse asset allocation and disciplined investing.

That being said, DH and I always have a little cash on hand for opportunity investing. If the market tanks in reaction to the debt crisis (which I think has been sensationalized by the media), then I'm going to buy into some ETF's I've been researching. And if the market rallies in reaction to a resolution of the debt crisis, then I'm probably going to sell a little off the top of some investments, and hold that money until the next market downturn.

[rescueme]

Today's "editorial comment" on a possible double dip recession :

[Midpack]

Quote:

Originally Posted by REWahoo It's been a while but once again it's time for.... YouTube - ‪Monty Python - Four Yorkshiremen‬‏

Thanks, best post on this thread...

[HFWR]

Double dip? Why, back when I was a kid, we couldn't even afford one dip...

[ls99]

Quote:

Originally Posted by samclem With Greek 10 year bonds now at about 16% APR, I'm ready to jump in with both feet. That's way more than the annual increase needed to meet my SWR, and the rate is guaranteed. Hey, they are government bonds, what could go wrong?

Don't worry, as in all Greek conundrums, Deus Ex Machina will solve the problem.

[jacob]

Quote:

Originally Posted by ScaredtoQuit But cashing out now strikes me as a reasonable thing to do at the moment. With all of the enmity between Democrats and Republicans these days, doesn't it seem likely that sooner or later the market is going to react to the possibility of a default? I mean isn't it obvious to everyone?? Don't you guys hear what the opposing sides are saying about each other on MSNBC and CNBC? Really, these guys are in servious opposition to each other.

Sure, it's possible to time big things like the housing bubble and the dot com bubble. Many people did it. Most didn't. (I did pretty well by going defensive in 2007 and going hot in 2009. It's not like timing requires inside knowledge, but it does require paying attention to the big picture.) However, those were structural problems on main street with millions of people and millions of documents being involved. Eventually nobody even knew who owed what to whom.

Conversely, raising the debt ceiling is nothing new. It happens every other year and it's settled by 435 people (or however many shows up) sitting in the same room. What's unusual is how much media exposure it's getting this time. That's the only thing new about it.

If you look at how the market responds to the European debacle, political disagreement on some measure causes the market to drop 2% on a Monday. Then the politicians agrees on something after closing. Then the market is up 2% a Tuesday. And so on. Much of the current stock market volatility seems to be driven by USD/EUR exchange rates. Something bad happens in Euroland, the USD/EUR goes up, and the US market goes down. And vice a versa.

What you should be looking for [namely, the next bubble] is widespread defaulting on the municipal level. That's a systemic problem. Another thing to keep your eye on is a rise in commodity prices, particularly a run up in oil above the $150 level. These will crash the market because laying off government workers or paying that much for energy will affect everybody.

Whether to raise the debt ceiling is a political/accounting problem. It can be fixed in one room.

[MichaelB]

Quote:

Originally Posted by REWahoo It's been a while but once again it's time for....

Hate to disappoint you, but the Four Yorkshiremen is not original Python. It was written for "At Last the 1948 Show" and two of the writers went on to Monty Python fame - and they brought that skit along with them.

The original:

YouTube - ‪Original 4 Yorkshiremen Sketch‬‏

[M Paquette]

Quote:

Originally Posted by MichaelB Hate to disappoint you, but the Four Yorkshiremen is not original Python. It was written for "At Last the 1948 Show" and two of the writers went on to Monty Python fame - and they brought that skit along with them. The original: YouTube - ‪Original 4 Yorkshiremen Sketch‬‏

Och, aye. But you try and tell that to the young people of today, and will they believe you? Nay!

[veremchuka]

Quote:

However, I can't help thinking that the ongoing battle over the debt ceiling offers a unique opportunity to earn some extra trading profits. It's a slam dunk that some time over the next four weeks, the market is going to crash because of the contention in Washington.

I think you could have something here but I think you are going a little overboard. Yes, it seems possible that the market could take another dive into the 1250 or 1200 range but I would not get out today or tomorrow based upon that. Now what I would do is if that happens is to exchange some fixed income for some equities, a modified market timing/rebalancing. My AA could use another 5 or 10% more in equities but only if I see a good down turn, one that will afford buying at a good price. So no, I think selling or exchanging completely out of equities based upon something that might happen is way too iffy.

[eytonxav]

While I am not ready to run for the hills, I'm sitting at about 40% cash based on my view of the economy. I really wonder how many here think that the status quo is clear sailing ahead? Look at unemployment, the housing market, the european pigs, price of oil/healthcare/education, no more arrows in the Feds quiver, political gridlock, casino wallstreet, states in bad fiscal shape, infrastructure crumbling, etc.

That said, to the OP, why not buy a hedge (eg Bearx) vs totally going to cash.

[REWahoo]

Quote:

Originally Posted by DFW_M5 I really wonder how many here think that the status quo is clear sailing ahead?

The status quo is never "clear sailing ahead". If it was, that's when I'd want out...if I could figure out what to do once I was...

[eytonxav]

Quote:

Originally Posted by REWahoo The status quo is never "clear sailing ahead". If it was, that's when I'd want out...if I could figure out what to do once I was...

Buy and hold is fine, but the "trend" does not look promising to me. No one can say with any certainty what will happen, so you are left to set an AA that allows you to sleep at night and thats probably the best any one can do, and with respect to that, there are no rules that say your AA cannot be adjusted based on ones view of the changing economic landscape.

[73ss454]

Quote:

Originally Posted by DFW_M5 While I am not ready to run for the hills, I'm sitting at about 40% cash based on my view of the economy. I really wonder how many here think that the status quo is clear sailing ahead? Look at unemployment, the housing market, the european pigs, price of oil/healthcare/education, no more arrows in the Feds quiver, political gridlock, casino wallstreet, states in bad fiscal shape, infrastructure crumbling, etc.

Wow, I think I'm going to have to cut my throat, the end of the world is near.

[DblDoc]

Quote:

Originally Posted by DFW_M5 Buy and hold is fine, but the "trend" does not look promising to me. No one can say with any certainty what will happen, so you are left to set an AA that allows you to sleep at night and thats probably the best any one can do, and with respect to that, there are no rules that say your AA cannot be adjusted based on ones view of the changing economic landscape.

Nope, no rules but the track record of those that anticipate what they think the market will do is abysmal. YMMV. You have to be right twice (for exit and entry) and overcome your cash drag, not to mention tax implications if trading outside a tax deferred account. Better to set your sleep at night AA with consideration for both good and bad times and forgetaboutit.

DD

[eytonxav]

Quote:

Originally Posted by 73ss454 Wow, I think I'm going to have to cut my throat, the end of the world is near.

Hardly the end of the world, this is not 2008 all over. However, I felt the OP was getting some harsh respones, so just weighing in with an alternate view. But, I am about 40% cash and have been taking $s off the equity side since April and will probably hold at this level until I see some bargains.

[eytonxav]

Quote:

Originally Posted by DblDoc Better to set your sleep at night AA with consideration for both good and bad times and forgetaboutit. DD

For me, port is entirely tax sheltered, and yep, I am setting my AA with consideration to both good and bad times. I have largely been a buy and hold investor, but I will tweak when I feel its prudent. I am not hitting home runs, but the market has treated me reasonably well and I have no regrets over 30 years of investing.