New Year Stock Market

[James5v]

I would like to hear some opinions on what the New Year will hold for stocks. I have to say I am not very optimistic.

Last year I sold most of my stock funds and now have only about 20% in the stock market. The remainder is in safe MMF but only making 4% or so, not real safe since inflation tends to take most of that return. I would like to move some back into the market but do not feel this is the right time. That usually is a good sign for others to buy.

I keep wondering when all the people who live off credit cards are going to crash. I also wonder about the housing situation along with oil prices although unemployment numbers have been okay. I have followed but not owned BAC and have watched it moved down. It's 6.2% dividend looks nice but the stock continues downward.

So what do you guy think about next year??

[kcowan]

OK so you are 20-80? What is the 20 invested in? I would stay away from financials and retail until the storm passes.

[frayne]

Sorry my crystal ball is broken.

[Dawg52]

Quote:

Originally Posted by frayne Sorry my crystal ball is broken.

Mine too. I just try to keep an allocation I can sleep with. As a result, I'm pretty conservative over the long term. I stay with the 100 rule.

[James5v]

I am in three funds, Schwab S&P 500 Fund, Laudus International Fund, and Janus Contradian Fund.

[mickeyd]

Hey James,

Quote:

I would like to move some back into the market but do not feel this is the right time. That usually is a good sign for others to buy.

Sounds like you have not settled on an asset allocation yet and that you are trying to time the market a bit. Most successful long term investors find it best to establish an allocation that fits them (i.e. 80/20) and stay the course through all ups and downs in the market. Timing the market is generally a losers game.

How would you recognize a "good sign"? I have only seen them in my rear-view mirror.

[haha]

Historically the fourth year of a presidential term is moderately positive, though if I remember correctly the positive bias is not as strong when the incumbent administration is leaving-ie.2nd term president.

That said, there are certainly negatives too. It is hard to imagine any return coming from PE multiple expansion. PE multiples have been on a downtrend ever since the millennium, and long term interest rates have irregularly worked themselves higher. So I can't come up with a good argument against the proposition that smoothed PEs should stay steady or continue to decline.

Dividends are low, so that leaves earnings growth as the only real source of positive returns. However, recently 40% of earnings growth has been from residential housing and that seems to be over for now. That leaves business investment, consumer dis-saving, and government deficits as possible engines of GDP growth and hence earnings growth. Can the consumer increase his borrowing when the housing and credit bubbles are contracting? I would guess not. A large drop in fuel prices might help, as would a recovery in US manufacturing. I would say that governments state and federal are also pretty close to the limits of spending and/or deficit expansion.

So overall it looks to be a difficult year, and one that might be difficult to complete in the plus column. 2000 was another atypical 4th presidential year, and not an attractive precedent.

Ha

[Ed_The_Gypsy]

Doom, Doom.

(Hey! One day I will be right!)

[James5v]

I look forward to the New Year because I am retired and can do what I want. I play music and golf. However, $100 Oil, Housing problems, individual and US DEBT really scares me for next year. I would like to be receiving 6.3% dividend from BAC but would not touch this stock at the present time.

I prefer to be on the safe side. I'm would like to be able to "Time" the market but realize this is not possible. Usually, my bearish feelings are a signal the bulls have returned. However at this point, I feel much more comfortable at night knowing that while my assets are just barely increasing at 4 something % minus inflation they are relatively safe. If I am totally wrong and market rallies at least I will be well rested because I sleep well at night.

[Dawg52]

Well yesterday was a great start to the new year. Cold as heck, couldn't play golf, and the stock market drops. Does it get any better than this? Happy New Year!

[tightasadrum]

With oil at $100, the dollar getting whacked, banks staring each other down, and everyone looking for a place to safely hide until the worst is over, a fund that invests in well-diversified commodity futures might be a very good hedge on traditional funds. PCRIX had a very nice jump of 3.76% yesterday.

[frayne]

Just finishied reading my current edition of BW and they questioned six finance experts. Of course got six different views, anywhere from 20% increase to 20% decrease on the DOW and S&P. So take your pick.

[unclemick]

Beware: I'm usually 100% wrong.

You want to buy growth stocks where you get a PEG ratio below 1. Money and bonds are to be avoided as interest rates fall cause the World banks are going to flood with liquidity to fight the perceived finanacial crisis. Inflation is going thru the roof when all that money starts sloshing around. But commodities may already be overpriced.

Can't remember where I read the above.

Me - 60/40ish in Target for real money(let the computers rebalance) and a few good good stocks for the Norwegian widow.

heh heh heh - need I point out this post is total B.S. with my first cup of coffee - I overslept.

[James5v]

I'm having my third cup of coffee. I have been switching between MSNBC and CNBC. Oil still hovers around $100 and I am getting very tired of Iowa, not the people but the politics.

It is amazing I have all these TV channels and find nothing to watch.

[retire@40]

Quote:

Originally Posted by James5v I'm having my third cup of coffee. I have been switching between MSNBC and CNBC. Oil still hovers around $100 and I am getting very tired of Iowa, not the people but the politics. It is amazing I have all these TV channels and find nothing to watch.

That's why I don't watch a lot of TV. I'd rather go for a walk or a bike ride.

[FinanceDude]

I'm thinking 7-8% return would be "marvy".........

[al_bundy]

i was working last night and got a chance to look at the technicals

most of them paint a bad picture, but one interesting thing is that on the SP500 and the Dow the on balance volume is up over the last month or 6 weeks. means that while the market was down, up volume is higher than down volume over that time and people are net buyers of stock.

could be like the summer of 2000 where we had volitility but the on balance volume was up and then fell off a cliff and the market crashed, or maybe someone knows something

[James5v]

It seems to me listening to the news today, C's news, US selling its assets to Kuwait and others, depressed housing market, huge trade deficit with China, high credit card debt, unemployment increasing, US budget deficit, and no good candidates for president on either side, I would love someone to help with me with some optimistic thoughts.

I wish I knew when the bank stocks are going to bottom but I don't think we have seen the worse.

Hey, I am an optimistic person but I am also a realist.

[al_bundy]

months ago on safehaven there was an article about how this could be an inflationary bear market, which happens once every 40 years or so. 1907, 1937 or 1938, 1974. years might be a few off.

PPI was 6.3% today. off the charts