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I knew we hit the top ...
06-07-2007, 06:19 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Aug 2002
Posts: 1,322
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I knew we hit the top ...
... when I saw this forum
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06-07-2007, 06:21 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Posts: 12,880
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I think you forgot the link again, Soon.
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06-07-2007, 09:40 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Aug 2002
Posts: 1,322
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Quote:
Originally Posted by TromboneAl
I think you forgot the link again, Soon.
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No, I meant this forum, the stock picking forum.
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06-07-2007, 10:32 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,155
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That's funny!
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06-08-2007, 07:17 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2003
Posts: 5,105
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Good point.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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06-08-2007, 07:46 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Meh, nothing new. Market goes up, market goes down. There is money to be made in both cases. Since I was up about 30% since mid-january, I can't say it was a huge shock to see a correction. Justwish I had sold a touch more before the downleg started.
What is actually surprising this time is that the bond market has taken it in the butt at the same time as the stock market got hit. Pretty unusual, I would say.
As in just about all the past corrections, a few well chosen purchases when everyone is panicking will almost certainly prove to be very profitable.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-08-2007, 07:53 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Aug 2002
Posts: 1,322
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Quote:
Originally Posted by brewer12345
As in just about all the past corrections, a few well chosen purchases when everyone is panicking will almost certainly prove to be very profitable.
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I agree. I no longer invest in individual stocks, but have dry powder that I'll pour into my balanced funds if we get a significant downleg. We're due for one but, then, we've been due for one for a few years now. When was the last time the S&P had a 10% or more correction? If I'm not mistaken I think it was back when the tech bubble burst.
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06-08-2007, 09:06 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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I have enough dry powder to do some heavy damage to a small country.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-08-2007, 11:25 AM
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#9
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
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Quote:
Originally Posted by cute fuzzy bunny
I have enough dry powder to do some heavy damage to a small country.
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Speaking of powder kegs, how's the house sale going?
__________________
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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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06-08-2007, 11:38 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Painting is almost done. Carpet starts tuesday or wednesday next week. Up for sale by friday, i'd imagine.
Then we'll see how it goes. Should show better than anything else in the same value range, given its got all new paint, carpet and appliances.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-08-2007, 01:43 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jan 2007
Posts: 1,891
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Quote:
Originally Posted by cute fuzzy bunny
I have enough dry powder to do some heavy damage to a small country.
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atchway ethay alktay aboutway ethay ydray owderpay, ethay
atriotpay actway isway atchingway ouyay!
__________________
If i think of something clever to say, i'll put it here...
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06-08-2007, 03:26 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Shoot I had to use the pig latin to english translation page on that one.
Which by the way, the atriotpay folks also probably have engaged...
Imagine if a major terror plot was put upon us and it turned out that all of their communications slipped by the feds because they used pig latin. That'd make our WWII usage of Navajo seem paltry in comparison.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-08-2007, 04:16 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by SoonToRetire
I agree. I no longer invest in individual stocks, but have dry powder that I'll pour into my balanced funds if we get a significant downleg. We're due for one but, then, we've been due for one for a few years now. When was the last time the S&P had a 10% or more correction? If I'm not mistaken I think it was back when the tech bubble burst.
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Every other equity category had a more than 10% correction last year from May to June. SPY, MDY, IWM, EFA, EEM were down 8%, 12%, 14%, 16%, and 26%, respectively.
SPY was down more than 10% in the first 3 months of 2003.
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06-08-2007, 04:26 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Jan 2007
Posts: 1,891
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Quote:
Originally Posted by cute fuzzy bunny
Shoot I had to use the pig latin to english translation page on that one.
Which by the way, the atriotpay folks also probably have engaged...
Imagine if a major terror plot was put upon us and it turned out that all of their communications slipped by the feds because they used pig latin. That'd make our WWII usage of Navajo seem paltry in comparison.
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do ya think they're that sophisticated?
and i'm not a total geek, i used the translator too...
__________________
If i think of something clever to say, i'll put it here...
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06-09-2007, 07:26 AM
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#15
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Recycles dryer sheets
Join Date: May 2007
Posts: 290
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Come to think of it, a bond picking forum would be more useful to me at this point, since it seems like that is where all my new money is going these days. (Which is also probably a market top signal, heh.)
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06-09-2007, 08:23 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by bpp3
Come to think of it, a bond picking forum would be more useful to me at this point, since it seems like that is where all my new money is going these days. (Which is also probably a market top signal, heh.)
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That's a tough one, simply becausethe bond market is not nearly as liquid and open to retail investors as the equity market is. Unless you are buying treasuries at auction or agencies and munis at issue, the brokers screwing you frictional costs on corporate trades generally eat up much of the potential return. If you are willing to buy beaten down stuff and junk, you may be able to do OK, but you have to be able to do credit analysis.
If you buy stuff other than treasuries/agencies/munis at issue, I would suggest confining yourself to NYSE-listed bonds and stuff that trades on an exchange like a stock.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-10-2007, 12:20 AM
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#17
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Recycles dryer sheets
Join Date: May 2007
Posts: 290
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Quote:
Originally Posted by brewer12345
That's a tough one, simply becausethe bond market is not nearly as liquid and open to retail investors as the equity market is. Unless you are buying treasuries at auction or agencies and munis at issue, the brokers screwing you frictional costs on corporate trades generally eat up much of the potential return. If you are willing to buy beaten down stuff and junk, you may be able to do OK, but you have to be able to do credit analysis.
If you buy stuff other than treasuries/agencies/munis at issue, I would suggest confining yourself to NYSE-listed bonds and stuff that trades on an exchange like a stock.
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What I have available locally is mostly sovereigns (US, France, Germany, Australia, NZ, Canada...), but not at auction. The bult-in markup from the broker for a bond purchased from inventory tends to run around 1%, which for, say, a 5-year holding period comes to roughly an effective expense ratio of 0.2% (more for shorter, less for longer, obviously). This doesn't seem too bad to me, so I have been buying them, but is there anything I may be overlooking here?
Other than that, there is mostly stuff from World Bank and similar entities (Asian Development Bank, State Bank of Bavaria, etc. -- all AAA entities), denominated in various currencies, which can be acquired at issue. Higher yield than the comparable sovereign, but of course somewhat higher risk, presumably. Any opinion on these? I have gone for a couple of these in the past when a sovereign of the desired currency/maturity has not been available.
One thing I stay away from is "step-up" bonds or bonds with complicated maturation rules (the currency of maturation depending on exchange rate movements, e.g.). They look to me like invitations to get skinned. I also avoid corporates, on the principle that there is probably too much equity risk built into them, of which I have already enough via the stock market.
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06-10-2007, 10:17 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by bpp3
What I have available locally is mostly sovereigns (US, France, Germany, Australia, NZ, Canada...), but not at auction. The bult-in markup from the broker for a bond purchased from inventory tends to run around 1%, which for, say, a 5-year holding period comes to roughly an effective expense ratio of 0.2% (more for shorter, less for longer, obviously). This doesn't seem too bad to me, so I have been buying them, but is there anything I may be overlooking here?
Other than that, there is mostly stuff from World Bank and similar entities (Asian Development Bank, State Bank of Bavaria, etc. -- all AAA entities), denominated in various currencies, which can be acquired at issue. Higher yield than the comparable sovereign, but of course somewhat higher risk, presumably. Any opinion on these? I have gone for a couple of these in the past when a sovereign of the desired currency/maturity has not been available.
One thing I stay away from is "step-up" bonds or bonds with complicated maturation rules (the currency of maturation depending on exchange rate movements, e.g.). They look to me like invitations to get skinned. I also avoid corporates, on the principle that there is probably too much equity risk built into them, of which I have already enough via the stock market.
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Seems like a reasonable strategy. On the sovereigns, just make sure you stick with top shelf credits (AA or better) and you should be fine. I haven't honestly looked at the world bank, etc., but I guess I would pay attention to who the guarantor is and what the entity's credit profile is. I'd probably be comfier with the State Bank of Bavaria and some of the Landesbanks than the ADB or the world bank, personally. I tend to view the Federal Home Loan Bank as equivalent to the US govt, but with a smidge higher yield.
The complicated structures are also best generally avoided. The one area I will play in is shorter term callables. Last month I bought a 1.5 year FHLB bond. It was callable at 6 months (one shot opportunity). For accepting this (minor) risk, I got 35BP more yield than 1.5 year paper and about the same as 6 month paper. If the trade goes against me, its short term AAA paper, so no big deal.
When the credit markets crack (and they will), be ready to buy some corporates. They will become a very attractive deal at some point.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-10-2007, 11:05 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by brewer12345
What is actually surprising this time is that the bond market has taken it in the butt at the same time as the stock market got hit. Pretty unusual, I would say.
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Not really. When the stock market is falling mostly because of inflation and interest-rate fears, bonds to tend to "take it in the butt" along with stocks.
When stocks are falling because of slow growth or fears of a recession, that tends to cause interest rates to drop and THAT creates a bull market in bonds. But this market is more afraid of inflation than slower growth, thus betting interest rates will move up if anything...and taking bonds down with stocks.
What's more unusual, IMO, is that gold has also been taking it in the butt lately. Usually when market action is dominated by inflation fears, that would be bullish for gold, but not lately. It seems cash is king right now.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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06-10-2007, 12:44 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by ziggy29
Not really. When the stock market is falling mostly because of inflation and interest-rate fears, bonds to tend to "take it in the butt" along with stocks.
When stocks are falling because of slow growth or fears of a recession, that tends to cause interest rates to drop and THAT creates a bull market in bonds. But this market is more afraid of inflation than slower growth, thus betting interest rates will move up if anything...and taking bonds down with stocks.
What's more unusual, IMO, is that gold has also been taking it in the butt lately. Usually when market action is dominated by inflation fears, that would be bullish for gold, but not lately. It seems cash is king right now.
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I still have not seen any real logical reason for the bond market sell-off. Sure there are reasons why longer maturities should be yielding more, but those reasons have been out there for a while.
I think what we saw was the markets for all risky assets repricing a bit: gold, commodities, bonds, equities, etc. The spooky thing is that everything seems to move in the same direction when things get ugly, so diversification is less useful than it was. The market seem to have stabilized on Friday, though.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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