Reduced Stock holdings to 25% today from 50%

[ERD50]

It will go until the hedge funds are done selling. They got caught hard by the sudden large drop in oil prices. This usually causes more of a washout type event and then rebound once the sellers are out. We shall see. ....

Yes, I would think lower oil prices would be a good thing (overall and long term, maybe not for Exon, etc).

So that would seem to be in alignment with your thought that some of this drop is due to some short term adjustments. Of course, there could be more underlying problems that could cause this to go deeper/longer - I have no functioning crystal ball.

-ERD50

 

[Running_Man]

And I am also furthermore impressed with your desired buy-stop ?? Price. I am curious though, why 2020? Why not get back in at 2015?

This market decline when I saw the price action around S&P200 reminded me of the stock market action of the DOW in 1966 when it would get over 1000 intraday but not be able to close over it until 1972, since my thesis was this was developing the same way I expected there would be no significant close over 2000 and gave a 1% margin of error. Perhaps a better level would be to wait until S&P 2100 to be able to avoid a 1972 - 1974 type bear market. But I have the gut feeling if the market is either like 1966 (I felt that the market pressures were building like the image of Augustus blocking the chocolate pipe in Willie Wonka's factory. Whether that will result in downward 1966 type market behavior or upward pressure is terribly suspenseful for me to see if my thoughts are correct, for now Augustus stock implications have been on the downside.) The other lesser possibility that is comparable would be the 1937 market when the market couln't get over Dow 200 and fell eventually 50 percent --- what happens to economic activity in the coming months will hold the key, in 1937 economic activity fell very rapidly and unexpectedly in the midst of an economic recovery and world tensions.

As for the downside targets, realistic for me would be to look at the prospects for buying once the market fell 30-50% of the advance from 2009 to today -- about 1300 points of advance, so about 390 - 520 points lower than S&P 2000. In 1966 the stock market fell 25% in total price giving back 40% of the advance from 1961 in relatively short order. For now this is the scenario I am trying to avoid. If economic activity would continue to fall rapidly, as the sudden collapse in interest rates could suggest, then I would be looking for a fall closer to 1000. But again at this point nothing is certain and even all that serious to this point.

 

[nash031]

How do you know we are going to cross S&P 2000 this year? That sounds like market prediction to me.. One possible reason S&P 2000 may not be barrier a year from now is that we maybe struggling to cross S&P 1700 or some 200 day moving average barrier even lower.

Running Man and I joined the forum 8 years ago.. 900 often very detail posts, and few PM, I suspect is a more research than most people do on their financial adviser. In Brewer's and HaHa's case I am sure they have posted a couple of thousand financial oriented posts in the last 8 years. I am not sure how much research is needed without running into a paralysis of analysis.

At the risk of being insufferably arrogant, I'll point out I am neither an inexperienced nor an unsuccessful investor. I retired at 39, with no pension (Navy or other). I also picked what I suspect will be one of the top 10 worse years to retiree in 2000. There is a good thread on why 2000 was a bad year to retire here. Yet some how 15 years later I have more money on both a nominal and inflation adjusted basis. Now there is a undoubtedly a lot of luck involved. But I'd argue there is a least a modest amount of skill, partly in my case its figuring which guys know more than myself. Josh Peters, the Morningstar Dividend Investor Newsletter editor is one such person. I invest heavily in dividend stocks that he recommends.

On the forum, I've singled out 3 people, but there a lot of smart people on the forum. What makes those guys special is they have said I am doing/buying X, or avoid buying/selling Y on the forum. Only in one case did they actually PM me and suggest I buy a stock. On some specific occasions, I have listened that advice and ACTED ON IT. I did back of the envelope calculation and by doing so I've made and/or save just over $100K and .

Needless to say if any of them ever make it to Honolulu dinner is on me, and we are talking Alan Wongs, not McDonalds.

Good for you. You choose to make your investment decisions based on message board posts and PMs from people you've never met. I wouldn't. You do. To each their own, and I wish you luck! It seems to have worked out very well for you, or so you tell me.

The S&P already crossed 2000 once this year. While it might not again, it will soon enough for me.

RunningMan made what looks like a great call, and I am sure his timing for buying back in will be equally impeccable. I commend him for figuring things out, and will continue to read his posts with interest. Your investing strategy and his differ from mine at this point in time. I am accumulating, and may look at this pullback as an opportune time to rebalance back to within my desired allocation. Or I may do nothing. My annual contributions are about 15% of my total portfolio at this point, so I would love a sweet discount on my upcoming purchases.

You guys have different views on it because you're in a different place, and thus are taking different action. I appreciate that and I wish you both the best of luck!

 

[nash031]

This market decline when I saw the price action around S&P200 reminded me of the stock market action of the DOW in 1966 when it would get over 1000 intraday but not be able to close over it until 1972, since my thesis was this was developing the same way I expected there would be no significant close over 2000 and gave a 1% margin of error. Perhaps a better level would be to wait until S&P 2100 to be able to avoid a 1972 - 1974 type bear market. But I have the gut feeling if the market is either like 1966 (I felt that the market pressures were building like the image of Augustus blocking the chocolate pipe in Willie Wonka's factory. Whether that will result in downward 1966 type market behavior or upward pressure is terribly suspenseful for me to see if my thoughts are correct, for now Augustus stock implications have been on the downside.) The other lesser possibility that is comparable would be the 1937 market when the market couln't get over Dow 200 and fell eventually 50 percent --- what happens to economic activity in the coming months will hold the key, in 1937 economic activity fell very rapidly and unexpectedly in the midst of an economic recovery and world tensions.

As for the downside targets, realistic for me would be to look at the prospects for buying once the market fell 30-50% of the advance from 2009 to today -- about 1300 points of advance, so about 390 - 520 points lower than S&P 2000. In 1966 the stock market fell 25% in total price giving back 40% of the advance from 1961 in relatively short order. For now this is the scenario I am trying to avoid. If economic activity would continue to fall rapidly, as the sudden collapse in interest rates could suggest, then I would be looking for a fall closer to 1000. But again at this point nothing is certain and even all that serious to this point.

RM - I appreciate you sharing your thoughts behind your moves. Regardless of any criticism of your rationale or others counting on it for their own action, I truly am interested in your thoughts (and those of most others around here). We're all in different spots, and while your action may not be appropriate for everyone, your thought process is very interesting to read, and I again commend you for impeccable timing to this point! Well done.

 

[tulak]

RM - I appreciate you sharing your thoughts behind your moves. Regardless of any criticism of your rationale or others counting on it for their own action, I truly am interested in your thoughts (and those of most others around here). We're all in different spots, and while your action may not be appropriate for everyone, your thought process is very interesting to read, and I again commend you for impeccable timing to this point! Well done.

+1

This is one of the most interesting threads on the forum right now, IMO. Way to time the downturn swing. I can't wait to see the finale.

 

[RAE]

+1

This is one of the most interesting threads on the forum right now, IMO. Way to time the downturn swing. I can't wait to see the finale.

+2. Thank you, Running_Man, for continuing to share your thoughts and observations with us. Most interesting.

 

[clifp]

Good for you. You choose to make your investment decisions based on message board posts and PMs from people you've never met. I wouldn't. You do. To each their own, and I wish you luck! It seems to have worked out very well for you, or so you tell me.

The S&P already crossed 2000 once this year. While it might not again, it will soon enough for me.

RunningMan made what looks like a great call, and I am sure his timing for buying back in will be equally impeccable. I commend him for figuring things out, and will continue to read his posts with interest. Your investing strategy and his differ from mine at this point in time. I am accumulating, and may look at this pullback as an opportune time to rebalance back to within my desired allocation. Or I may do nothing. My annual contributions are about 15% of my total portfolio at this point, so I would love a sweet discount on my upcoming purchases.

You guys have different views on it because you're in a different place, and thus are taking different action. I appreciate that and I wish you both the best of luck!

The market was over due for correction, but none the less with 60% of my money in the market I am hardly happy. I do think it is much more healthy for the economy when the market corrects from 2000- to 1600-1700 than from say 2500 to the 1600 or 1700. So in that respect I'm happy.

Up until 2 years before I retired I was essentially 100% equity, so your attitude is correct down markets give you an opportunity to buy cheaper. DCA is your friend in the accumulation phase.

My only counsel is I wouldn't be so dismissive of folks on message boards.
Virtually everybody takes investment advice from people they haven't met, Jack Bogle for a legion of folks, William Bernstein is popular with many of us on the forum. Virtually everybody on the forum is counting on the guys at Vanguard, Fidelity, Schwab, and/or TSP to get their indexing right.

I imagine lots of folks in the military looking at retirement, pay attention to Doug Nordman, author of the Military Guide to Retirement. I knew Nords both on the forum and IRL before he wrote the book. Now he learned lot stuff in the process of writing the book. But writing the book didn't raise his IQ 10 points. In fact much of the (very good) advice that puts out in his book, was actually posted right here on the ER boards years before it appeared in print or on his blog.

I remember when Fukoshima happen and there was a lot panic about radiation, living in Hawaii it was of mild concern to me.. The forum was a great source of information, now it might have look like just some random guys on the internet, doing google search. But in fact with 1/2 nuclear submariners, a couple of commercial reactor operators, and a former naval reactor instructor, it was a probably the best source of information for a lay person on the net. Similar in the case of Ebola if some reporter says something about the virus, and one the numerous doctors on the forums say that isn't true, I'm going to generally believe the doctor here.

As mentioned I had only been on the forum about the same length of time as you, so when Running Man started talking about the dangers of the stock market in late 2007/2008. I paid attention cause what he wrote made sense, eventhough it was different than what I believed. But my attitude was the same as yours I'm not going to make a big financial decision based on what a guy says on the internet. It turns out that just as the forum has nuclear engineers and doctors, it has educated money guys.

 

[nash031]

My only counsel is I wouldn't be so dismissive of folks on message boards.
Virtually everybody takes investment advice from people they haven't met, Jack Bogle for a legion of folks, William Bernstein is popular with many of us on the forum. Virtually everybody on the forum is counting on the guys at Vanguard, Fidelity, Schwab, and/or TSP to get their indexing right.

I imagine lots of folks in the military looking at retirement, pay attention to Doug Nordman, author of the Military Guide to Retirement. I knew Nords both on the forum and IRL before he wrote the book. Now he learned lot stuff in the process of writing the book. But writing the book didn't raise his IQ 10 points. In fact much of the (very good) advice that puts out in his book, was actually posted right here on the ER boards years before it appeared in print or on his blog.

I remember when Fukoshima happen and there was a lot panic about radiation, living in Hawaii it was of mild concern to me.. The forum was a great source of information, now it might have look like just some random guys on the internet, doing google search. But in fact with 1/2 nuclear submariners, a couple of commercial reactor operators, and a former naval reactor instructor, it was a probably the best source of information for a lay person on the net. Similar in the case of Ebola if some reporter says something about the virus, and one the numerous doctors on the forums say that isn't true, I'm going to generally believe the doctor here.

As mentioned I had only been on the forum about the same length of time as you, so when Running Man started talking about the dangers of the stock market in late 2007/2008. I paid attention cause what he wrote made sense, eventhough it was different than what I believed. But my attitude was the same as yours I'm not going to make a big financial decision based on what a guy says on the internet. It turns out that just as the forum has nuclear engineers and doctors, it has educated money guys.

I read and gather all kinds of information from this forum, Bogleheads, etc. I certainly do not dismiss the thoughts of RM and other people obviously more educated and likely a hell of a lot smarter than me. My only caution to the subject of my post is that he's seemingly making portfolio moves solely because RunningMan is. His original post didn't speak of any thing about how it fit into his personal investing strategy, and seemed to only be about how if RM was doing it, he was too. Maybe that's off-base from reality, but that perception of mine is totally different than learning from others and making your own decisions. He cited that many folks trust their FA to do things on their behalf, and that's true. I also don't use an FA for that very reason; I don't believe anyone knows what's best for my personal financial situation than myself (and I'm certainly not going to pay someone in that case!).

Others have different ideas and varying opinions. It behooves us to take in their information and opinions, reflect on our own strategies, and act accordingly. That said, I am loathe to act based on historical anecdotes and data because, as I said in another thread, "this time" is rarely the same as "last time this happened." Indeed, "this time" is nothing like 1966 - the world is vastly different and information is at our fingertips - even though the stock market may behave in a similar fashion. I can't wrap my head around the logic of this market timing move, perhaps because I'm not smart or well-educated enough on these matters yet, and thus I personally would not act on it, no matter how many times RunningMan is or has been right in the past.

As mentioned, I appreciate RM sharing his thoughts and actions. It has been informative and I've looked at what he thinks, considered it against my own observations and thoughts, and I don't see a logical reason for me to reduce equity holdings at this point - it's not my "style" and I wouldn't feel comfortable acting on his recommendation. EEMMV!

Edit: sorry clifp, had my folks mixed up, hence this response is a little disjointed! I only was "alarmed" at my perception that you were taking action solely because RM was. If my perception is wrong, please accept my apologies. You guys are absolutely entitled - actually obligated - to do what you think is right. I just encourage you to ensure it really is what you think is right, not what someone else thinks is right! I will leave it at that!

Good discussion in any event - definitely made me think and look at historical numbers/figures. May use it as rebalancing... may sit tight. We'll see!

 

[audreyh1]

Yes, I would think lower oil prices would be a good thing (overall and long term, maybe not for Exon, etc).

So that would seem to be in alignment with your thought that some of this drop is due to some short term adjustments. Of course, there could be more underlying problems that could cause this to go deeper/longer - I have no functioning crystal ball.

-ERD50

IMO this is more of a technical event - too many traders caught leaning the wrong way, with no underlying financial crisis or dire economy concerns in the US. But once large positions have to be unwound, it usually snowballs, and there is no hiding until the sellers are done.

Yes, lower oil prices will have benefits overall for the economy and especially giving consumers some relief, but the traders have to go through their pain first.

Lots of scary headlines always help - but we usually have scary headlines, and we had plenty of them with the market climbing like crazy most of the year - like Russia and Ukraine, and always some Middle East saga. These are only "excuses".

I expect the Ebola news today causes part of the midday panic selling, so the market is still vulnerable to the knee jerk stuff, but once the traders positions get unwound things should settle down at least.

A correction was way overdue, and it may not yet be done. We are in the month with the scariest market events by tradition.

 

[Running_Man]

Just as a technical indicator, oil price increases are more highly correlated with a rising stock market than decreasing oil prices. Oil prices in 2009 bottomed in February 2009 one month before stocks before undergoing a drastic rise along with the stock market. Oil prices also topped in 2008 in June at $135 with S&P at 1400 and then fell dramatically along with the stock market into that February bottom, with stocks falling over 50% from that point to S&P 683. And oil prices bottomed in the early 2000's along with stocks and spent the decade of the 2000's in a gradual rise leading to that falloff. So best chance for the market is probably to be lead by a recovery in oil prices.

The market bounced off a trendline that has guided the market move up from 2011, I don't place much faith in that level though since 200 day average gave way so easily, but there were a lot of buyers at that level (1817 on the S&P).

The drop today in interest rates had the fascinating feel of forced overseas selling prior to their market closes to me as the drop was historic in nature, especially since it corresponded with the rout in Greek interest rates - nearly a flash crash in interest rates here in the US, but I doubt if that explanation will ever be made to the public. This is certainly interesting to watch.

I think some of the forced selling by hedge funds could be seen in the last 2 days in one of the biggest MLP's - MMP dropped as low as 66 yesterday and closed at 76 today.

Stock on my list that I am waiting to buy is an old favorite Amgen, not quite ready to pull the trigger, but as I need this position to get back to 25% stocks I will be buying into this position very soon. Stock worth looking at now if you think oil is done dropping would be Chevron with a 4% yield, which is a good price target on that stock.

 

[clifp]

The drop today in interest rates had the fascinating feel of forced overseas selling prior to their market closes to me as the drop was historic in nature, especially since it corresponded with the rout in Greek interest rates - nearly a flash crash in interest rates here in the US, but I doubt if that explanation will ever be made to the public. This is certainly interesting to watch.

I think some of the forced selling by hedge funds could be seen in the last 2 days in one of the biggest MLP's - MMP dropped as low as 66 yesterday and closed at 76 today.

Stock on my list that I am waiting to buy is an old favorite Amgen, not quite ready to pull the trigger, but as I need this position to get back to 25% stocks I will be buying into this position very soon. Stock worth looking at now if you think oil is done dropping would be Chevron with a 4% yield, which is a good price target on that stock.

I hadn't noticed how far MMP had fallen, only the big recovery today. During the 2008/2009 crash hedge funds unloaded MLPs at time presenting some terrific buying opportunities that only last a day and sometimes only minutes. It's worth putting limit orders far below the market in the hopes of catching those moments.

MLP are one of the few ways that mostly long hedge fund, can outperform a regular etf/mutual fund, since Vanguard Total Stock Market can't own them. So they don't have the trillions of dollars of index funds to act as buyers,when they need to meet a liquidity condition. It's worth putting limit orders far below the market in the hopes of catching those moments.

The largest MLP Kinder Morgan KMP is being transformed into a regular S Corp by the end of the year. It will trade under the symbol KMI, a dividend of $2.00+ next year it is yielding 5.7% at its current price of ~$35

I have a position in CVX. I patiently waited most of the year to get only to see it move lower during this sell off, oh well.

Amgen is stock I haven't paid attention to since the late 90s, what's interesting about it?

 

[Running_Man]

Amgen is stock I haven't paid attention to since the late 90s, what's interesting about it?

Amgen qualifies into my portfolio by being in the Value Line 1700, from there it passes my basic screens for Safety, Timeliness, Financial Strength, Price Stability and Earnings predictability. These I discussed on the stock of the week thread.
Amgen is the world's largest biotechnology company and one of the only ones to pay a dividend. A dividend that for the next 12 months will be 2 percent of the present stock price of 130, growing at a 15% annual rate with revenues growing by 10 percent. This is the market average dividend yield for stocks paying dividends and about triple the growth rate for a stock selling under the market mulitple. Amgen has been a consistently positve utilizer of R&D to have a pipeline of products and consistently grow their product line of products. They have the mass, size and vision to consistently be able to add more drugs in the 10-15 year period it takes to develop from Pre-clinical development to market approval.
Amgen should earn $8.40 this year which means it is selling at a remarkably cheap PE of 15. Return on Equity exceeds 20 percent. I feel with the aging of the American population I desire to have exposure to stocks that should have an increasing market and Amgen replaced JNJ which I sold on October 6th for $105.71 because I prefer Amgen's better long term prospects.
Since the S&P had just started to fall from 2000 I though I'd wait on Amgen to see if a correction came, from 138 on October 6th, down from a recetn 52 week high of $144 I will probably be buying tomorrow or Monday as the market drop seems to be holding at least for the near term within the uptrend bands of the S&P500.

 

[Running_Man]

Hedge funds, which seem to be controlling a large swath of the stock market activity lately as they are utilizing cheap money more than most, have affected the price of my newly acquired AMGN shares I bought on Friday @129.65, trading up 10% from there in a few days as Dan Loeb is advocating breaking AMGN into 3. Unless something concrete were to come up I would use my standard dividend valuation rules and only sell AMGN in the near term if it were to get to $188 per share.
As far as total market is going, interesting but still nothing real has happened at all to this point. Will be interesting to me to see how the market closes, there are a lot of happy people on CNBC naturally with such a swift recovery move, I suspect there could be a downturn into the close but mostly I am just interested to see if this keeps building

Note after close: Nice rise into close, another day like this and we will be at 2000 again! AMGN closed @144 up 14.35 from Friday

 

[FUEGO]

Running_man, fill me in on your psychology. Are you worried that you'll buy back in higher than where you sold out? We're still a bit below where you sold out, but things can move quickly. I'd be pretty worried and obsessing over the markets if it were me (not wanting to buy in too late).

I know you're only partially out of the market right now so maybe that's enough hedging to not worry you too much.

 

[clifp]

Running_man, fill me in on your psychology. Are you worried that you'll buy back in higher than where you sold out? We're still a bit below where you sold out, but things can move quickly. I'd be pretty worried and obsessing over the markets if it were me (not wanting to buy in too late).

I know you're only partially out of the market right now so maybe that's enough hedging to not worry you too much.

We are a tad lower (.5%-3%) than when I sold my the index funds and exactly 1/2 (i.e. 3) individual stocks are trading lower and 1/2 trading higher.

I did get about 1/2 my money back in the market in the form writing Dec puts on both indexes and different individual stocks darn near the bottom.

I am keeping the rest in cash until either we close above 2050, or we retest the recent lows.

 

[Running_Man]

Amgen, Inc. Earnings: Restructuring Efforts Are Beginning to Pay Off (AMGN)

Nice writeup on Amgen's quarterly results which were very good.

 

[Running_Man]

Running_man, fill me in on your psychology. Are you worried that you'll buy back in higher than where you sold out? We're still a bit below where you sold out, but things can move quickly. I'd be pretty worried and obsessing over the markets if it were me (not wanting to buy in too late).

I know you're only partially out of the market right now so maybe that's enough hedging to not worry you too much.

No I am not worried at all actually, I never really thought that much of the sell off but now think everyone here is getting a second chance to follow my lead and sell, market is moving so fast and in the fifth year of a bull market that is not a positive sign unless my second scenario comes into play where the market, on the back of unrestrained global easing explodes upwards, in which case I will get back in if it closes over 2020.

The late bull market volatility is showing nervousness from market participants and could be a preview to some panic selling. But as I said nothing really has occurred.

 

[Running_Man]

Amgen, Inc. Earnings: Restructuring Efforts Are Beginning to Pay Off (AMGN)

Nice writeup on Amgen's quarterly results which were very good.

With Amgen announcing they are raising the dividend 30% and plan on paying 60% of earnings as a policy going forward until at least 2018, buying back 2B of stock (not a fan), new sell point due to valuation for me now is 215 a share.

 

[NYEXPAT]

In many instances once you reach the 200 day moving average, there is a attempted rally that fails to make a new high and subsequently takes out the 200 day moving average. With that in mind, On Friday I bought SPY for what will probably be a quick trade.

Sold the SPY today at 2011, now back to 50/50 AA.

 

[ERD50]

From 9/10/2014 -

.... so I sold this morning while S&P500 was at 1986. I will get back in if the market can close above 2020. ....

So you are back in? Be interesting to see where we go from here.

S&P 500 (^GSPC) 2,023.56

Are you sticking to the original plan? If it drops to 1986, will you sell again, and buy back at 2020? Or some other plan at this point?

-ERD50

 

[Options]

"Far more money has been lost by investors protecting themselves from market downturns than from the downturns themselves."
- Peter Lynch

"Any strategy that involves predicting returns, especially short-term returns, is likely to be a dud."
- Jonathan Clements

"Dazzled by their own knowledge and oblivious to the fact that other people are at least as knowledgeable, millions of investors move their money around every day...The end result is not a portfolio but a hodgepodge, a mishmash, a slop bucket full of market goulash."

"In the stock market, much of what seems to be patterns is, in fact, just random noise."
- Jason Zweig

 

[Running_Man]

Back into the market today around noon, S&P @ 2025, ironically on the day Draghi is taling up more European QE prospects. Back at 50% exposure.Move proved I am a nit. It is much better for my portfolio here though!

 

[mickeyd]

I often have to remind myself of Dr.Bill Bernstein's missive~ "If you've won the game, why keep playing?"

 

[CaliforniaMan]

I often have to remind myself of Dr.Bill Bernstein's missive~ "If you've won the game, why keep playing?"

You only know if you have won the day you die. Then, well, you don't really know either. The game really never ends, you just get on and off at a time and place not of your choosing.

 

[NW-Bound]

True, investing is a game that never ends.

Well, it does end when you are broke or dead.

Meanwhile, I will keep on playin'.