CPI... and what else?

[imoldernu]

What indicators do you look at when making your own assessment of the direction of the market?

https://www.cnbc.com/2018/08/10/us-cpi-july-2018.html

The Labor Department said on Friday its Consumer Price Index advanced 0.2 percent, the bulk of which was due to a rise in the cost of shelter. The CPI rose 0.1 percent in June.

In the 12 months through July, the CPI increased 2.9 percent, matching the increase in June.

 

[OldShooter]

None. No one knows where the market is going to go and the pundits prove this every day.

 

[imoldernu]

To start this off, one measure:

Market Breadth

https://www.investopedia.com/terms/m/market_breadth.asp

Personally, I don't have the background, patience or basic understanding of the myriad of charts that purport to indicate direction or deviance from the norm, but at the same time, feel uneasy about the forecasts of the pundits.

I look for broad based indicators... more year over year or even ten year trends. The only financial writer that I regularly follow is Charles Hugh Smith...

That said, virtually nothing in the stock market except general interst.

 

[GrayHare]

Fed Funds rate, and direction of change

 

[Cut-Throat]

A good Investment plan should not need to pay any attention to trying to forecast the direction of the Market. The Market will rise, the market will Crash.... Should not matter to your I.P. -- Stay the course.


Watch and Pay attention to the Pundits for Entertainment Purposes only.

 

[audreyh1]

I watch several things - interest rates, CAPE10, various interest rate spreads, CPI and PPI, Fed meeting press releases and the metrics the Fed watches, sometimes ECRI.

But these are just for my personal interest/curiosity, and with the exception of CAPE10 have no impact on my investing strategy.

 

[Oz investor]

while i do take SOME notice of indicators ( but some are using clearly fudged data , especially the CPI )

i also use the look and see technique

for instance i walk to the local shops and see the bank manager regularly outside talking business on the phone ( i have a fair size holding in that bank ) so clearly the other business is more important than writing new loan business ( he is a franchisee ) while the banking group is doing OK you can quickly understand home and business borrowing is NOT .. and shuttered shops quickly support the downturn in business borrowing theory .

you also listen to associates on chatter about what they buy , how their job is going , etc. etc ,

rarely a huge signal in themselves but a more accurate picture of trends and opportunities , sadly my two favourite 'gray nomads ' travel no more so i don't get intel on the whole East Coast on the nation

 

[SecondCor521]

Skirt hemlines.

Which league wins the Super Bowl.

Butter futures in Bangladesh.

A few others but they're proprietary.

 

[mountainsoft]

What indicators do you look at when making your own assessment of the direction of the market?

I visit marketwatch.com and see what the market is doing today. Tomorrow is anyone's guess.

https://www.marketwatch.com/investing/index/djia/charts

 

[DrRoy]

None. No one knows where the market is going to go and the pundits prove this every day.

+1

 

[Oz investor]

None. No one knows where the market is going to go and the pundits prove this every day.

the market can only go 3 ways .. up , down and sideways ( sometimes all in the same trading day )

so i developed a 'what if ' strategy ( what do i do if the market drops or rises today )

currently i am spending more time on learning ( and research ) but that could change on Monday ( or any other trading day )

 

[Richard4444]

I like to buy tomorrow's newspaper, so I know how to trade today

Rich

 

[target2019]

What indicators do you look at when making your own assessment of the direction of the market?

When I record our account totals at end of each month. I also capture this PE10 calculation:
Shiller PE Ratio
I don't act on it, but it confirms my suspicions that the stock market generally goes up, and has down periods.


If that chart does not agree with your feelings, try one of the other market views across the top of page. S&P500 Historical is a very positive looking indicator, for example.

 

[marko]

What indicators do you look at when making your own assessment of the direction of the market?

Assessing the market is different from reacting to it.

I don't do very many changes to my portfolio other than minor tweeks.

I just keep my AA and expect (not hope!) that over the long run I'll come out ahead.

I "assess" the market by tracking my progress at the end of each week and what is going on short term in the financial news, more as a general point of interest.

2008 reinforced what I already knew: I'm not smart enough to see something drastic coming and react to it; even most of the big guys weren't, so I don't try.

 

[Oz investor]

2008 reinforced what I already knew: I'm not smart enough to see something drastic coming and react to it; even most of the big guys weren't, so I don't try.

i came into the market after 2008 , i can see something drastic MUST happen but i don't know when , and i also understand i must participate in the market if i want to increase my asset base quickly enough before 2020 and have to take the near term risk of a $value haircut ( and hope the $value recovers in .. say 10 years )

will i try and pick this cycles peak .. NO , i don't think i have the skill for that but i can take out some of the risk of a total capital loss ( by taking some cash off the table whilst in 'enough' profit )

this reduces my fear of total capital loss ( the company might still go broke but a lot of that investment cash has been invested elsewhere )

 

[Dash man]

Fear factors. As long as people are fearful of investing, I’m comfortable as a bull. When everyone is piling in, I’m happy to lighten my load.

 

[Red Badger]

Skirt hemlines.

Which league wins the Super Bowl.

Butter futures in Bangladesh.

A few others but they're proprietary.

+1
I closely track Monitor Lizard futures and moon phases (and those hemlines).

 

[MichaelB]

Skirt hemlines.

Which league wins the Super Bowl.

Butter futures in Bangladesh.

A few others but they're proprietary.

+1
I closely track Monitor Lizard futures and moon phases (and those hemlines).

Moon phases and Bangladesh butter futures have potential, but the best indicator is Venezuelan Beaver Cheese futures

 

[imoldernu]

Co-incidentally... I went back to my pundit's page, and found a very recent article that deals with the subject of balanced investing.

"The Fantasy of "Balanced Returns" Funding Retirement"

The article references Venezeula. FWIW, here's the essence.

Consider how a "balanced portfolio" yielding "balanced returns" worked out for middle class retirees in Venezuela.
The fantasy that a "balanced portfolio" yielding "balanced returns" will fund a stable retirement for decades to come is widely accepted as a sure thing:inflation will stay near-zero essentially forever, assets such as stocks and bonds will continue yielding hefty income and capital gains, and all the individual or fund needs to do is maintain a "balanced portfolio" of various asset classes that yield "balanced returns," i.e. some safe "value" lower-yield returns and some higher risk "growth" returns.
This fantasy is based on the belief that yields will exceed real inflation for decades to come. That is, if inflation is 2%, and the average yield of a "balanced portfolio" is 6%, then the inflation-adjusted return is 4% annually--not great, but enough to secure retirement income.
What few dare ask is: what happens if inflation is 7% and yields drop to 2%?Then the retirement fund loses 5% of its purchasing power every year. In a decade, the fund's value will decline by roughly half.
Oops. Analysts such as John Hussman have been pointing out that historically, eras of outsized returns such as the past decade are followed by eras of low or even negative returns. So assuming a "balanced portfolio" of corporate and sovereign bonds, growth stocks, index funds, etc. will yield 6% to 7% like clockwork is essentially betting that this time is different: high growth will never pause or reverse.
But let's say things really unravel, and inflation is 8% and yields are negative 2% for a few years. Retirement funds will lose 10% of their purchasing power every year. In a few years, the fund will lose half its value.
What happens if the current "everything" asset bubble pops, and inflation starts running away from policy makers? It's worth recalling that declines on the order of 75% to 80% are common when bubbles finally pop--for example, the NASDAQ stock index post-2000.
If inflation (i.e. the currency loses purchasing power) gets out of hand due to excessive money creation to fund interest on debt, entitlements and obligations, the only cure is to raise interest rates significantly. Higher rates destroy the value of existing bonds and they strangle speculation and debt-dependent projects and spending.
Higher rates means corporations, governments and households must pay more each month in interest, leaving less income for spending and investment.Unfortunately, the global economy is largely dependent on rapidly expanding debt for its survival. As this chart shows, the tiny reduction in debt expansion in 2008-09 very nearly collapsed the global financial system.

The website is Charles Hugh Smith. He hasn't been right in predicting either, but usually offers in depth insight into parts of the economy that don't always get attention.

For most, this might be a waste of time, an perhaps rightfully so, but for me, a few minutes of reading doesn't take up a lot of my life, and I find it interesting. So..... on to:

Howard Lindzon
Clayton Christensen
Josh Brown
Herb Greenberg
Barry Ritzholtz
etc,.

and keep a link to: http://www.usdebtclock.org/

 

[lwp2017]

Ditto for Length of ladies’ hemlines.

Hemline Index: https://en.m.wikipedia.org/wiki/Hemline_index

 

[NW-Bound]

Co-incidentally... I went back to my pundit's page, and found a very recent article that deals with the subject of balanced investing.

Analysts such as John Hussman have been pointing out that historically, eras of outsized returns such as the past decade are followed by eras of low or even negative returns.

So assuming a "balanced portfolio" of corporate and sovereign bonds, growth stocks, index funds, etc. will yield 6% to 7% like clockwork is essentially betting that this time is different: high growth will never pause or reverse.

Yes. This time will be different. It has to be, because our happy retirement depends on it. And who does not want happiness?

 

[Blueskies123]

Wage inflation

 

[Oz investor]

Yes. This time will be different. It has to be, because our happy retirement depends on it. And who does not want happiness?

history suggests most times 'different' translates to worse ( and with unforeseen complications)

worry about your happy retirement , because if you have it correct others might be very jealous ( and that is rarely a good outcome )

this time the problem just looks complicated .. maybe complex enough to ignite civil wars

 

[marko]

worry about your happy retirement , because if you have it correct others might be very jealous ( and that is rarely a good outcome )

this time the problem just looks complicated .. maybe complex enough to ignite civil wars

They're already jealous. Jealousy has been around for a while. I'll take my chances.

 

[big-papa]

The question is OK, what are you going to do about it? In my own portfolio, as I've continued to learn more, I added a higher foreign component and some inflation protected instruments (TIPs/iBonds). Will it protect me? I have absolutely no certainty, but it does seem logical to add some geographical diversity and inflation protection to my mix - at least in some scenarios, I'm hoping it will lengthen the runway before I go off the cliff.