Why I believe we are about to embark on a historic bull market run

[bmcgonig]

With all due respect,this 2018 posts 100 pct eliminates any credibility.Honestly,you have no idea about what the market will do as you proved then and are proving now.

This whole thread is nuts. RM is making a bet. One single bet with only 1% of his portfolio. And he's laying out the reasons why. And for that he gets crapped on by some in the forum. Of course none of us have an idea what the market will do. But there no harm in betting that it might go in one direction or. another.

People hedge all the time with 1%, and noone judges that.

There's more arrogance on display in some of these responses than in anything RM posted.

 

[JJpop]

This whole thread is nuts. RM is making a bet. One single bet with only 1% of his portfolio. And he's laying out the reasons why. And for that he gets crapped on by some in the forum. Of course none of us have an idea what the market will do. But there no harm in betting that it might go in one direction or. another.

People hedge all the time with 1%, and noone judges that.

There's more arrogance on display in some of these responses than in anything RM posted.

Well he is basing his belief on a one hour video by Mike Green and goes on to state all these complex theories about why all of this is going to happen.I wonder what video he watched before he made his brilliant 2018 prediction.I did not read all of the thread and in his initial post he did not mention he was making a bet with 1 pct of his portfolio,but made it sound like he had found the holy grail.

 

[11522914]

Along the way I made the usual mistakes, like thinking I was so smart that I could predict the market.

Actually I successfully predict the market everyday. Range from 5 seconds to at most 2 minutes.

My point

Very short term one can predict with reasonable accuracy but over a 2 to 5 year period, I believe it is very difficult if not impossible. Hence it is like betting on black or red.

 

[copyright1997reloaded]

I'm always fascinated about those who always need to p**s on a thread that is in the "Stock Picking and Market Strategy" section with essentially the same post over and over, namely that a) it is impossible to pick market direction and b) you are a fool to try.

Don't like RM's post? - move on down the road to the "Fire and Money" or "Life after Fire" or whatever.

In late 2017 / early 2018 when the market had been running up day after day and then took a nose dive, many here (on ER) were talking about cashing in, that the market had peaked. I didn't think so, and even posted a chart showing that we were working our way through a wedge pattern and that I expected a bullish exit.

In late 2018 / early 2019 when the world was coming to and end and there were post titles like "AAPL after hours!" and "Saw the pre-earnings letter Apple released after the market closed. Ouch, down over 7%. Glad I hedged before the close today!". I went out on a limb and said I would be a buyer (had I already not had a full position - my largest holding). That was at $142, it is $284 now.

When the yield curve got close to inverting (it did eventually) once again the cries of "It's over" came out. Threads like "Going All Cash in 401k".

Yet here we are, up up up from there.

Look, RM might be right, he might be wrong. Clearly, the odds as indicated by the option pricing suggest he is wrong.

Me? I think the bull ends with a blow off top, which is what I've thought since mid-2018 when I suggested it (the market) wasn't done. I was pretty sure (but not willing to bet all of my money sure) during 2017, 2018, and YTD 2019. Part of that is that I am just conservative by nature -- if we run up from here my 62% equity allocation will do nicely. Each of us has to make our own decisions - and I for one am not foolish enough to call RM's thesis foolish, especially since I can see just about every trading day just how under invested some of the major players seem to be).

On another note, someone asked about why we haven't seen a big pickup in inflation given the huge increase in the money supply. Irving Fisher (American Economist) Quantity Theory states:
MV = PT where
M = Money Supply
V = Velocity of money (turnover)
P = Price Level
T = Volume of Transactions (Goods & Services)

The idea here is that inflation is a factor of the money supply AND the velocity of money. That is that and increase in money supply will cause an increase in the price level (all other things being equal). However, what happens if money is 'printed' (added to the money supply) BUT the velocity decreases? Well...then inflation is muted.
Here's a chart of the velocity of money: https://fred.stlouisfed.org/series/M2V

Perhaps instead a lot of that 'deferred spending' is being kept as accumulated wealth (stocks, bonds, houses, ...)

While this can't go on forever, it can go on a lot longer than "the bull market is almost over" crowd predicts.

 

[Lsbcal]

I'm always fascinated about those who always need to p**s on a thread that is in the "Stock Picking and Market Strategy" section with essentially the same post over and over, namely that a) it is impossible to pick market direction and b) you are a fool to try.

Don't like RM's post? - move on down the road to the "Fire and Money" or "Life after Fire" or whatever.

....

I completely agree except for one word. I am not so much fascinated by this phenomena as much as appalled by it.

I put it down to something akin to religious zealotry.

 

[Lsbcal]

...
On another note, someone asked about why we haven't seen a big pickup in inflation given the huge increase in the money supply. Irving Fisher (American Economist) Quantity Theory states:
MV = PT where
M = Money Supply
V = Velocity of money (turnover)
P = Price Level
T = Volume of Transactions (Goods & Services)

The idea here is that inflation is a factor of the money supply AND the velocity of money. That is that and increase in money supply will cause an increase in the price level (all other things being equal). However, what happens if money is 'printed' (added to the money supply) BUT the velocity decreases? Well...then inflation is muted.
Here's a chart of the velocity of money: https://fred.stlouisfed.org/series/M2V

Perhaps instead a lot of that 'deferred spending' is being kept as accumulated wealth (stocks, bonds, houses, ...)

While this can't go on forever, it can go on a lot longer than "the bull market is almost over" crowd predicts.

Here is that chart:

Interesting. Will it be hard to go on vacations when everyone starts spending their hoarded money?

 

[target2019]

I'm always fascinated about those who always need to p**s on a thread that is in the "Stock Picking and Market Strategy" section with essentially the same post over and over, namely that a) it is impossible to pick market direction and b) you are a fool to try.

Don't like RM's post? - move on down the road to the "Fire and Money" or "Life after Fire" or whatever.

I'm fascinated by the poster(s) who do this still being here.

 

[ckelly78z]

After talking to my 78 year old Dad over Christmas about money/investing, I came to the conclusion that I am a bit of a risk taker compared to most folks (I am 100% equities, and up 29% YTD). I made the mistake in September of going safe, and went with income funds, and lost out on some profits....back into equities in mid October.

My Dad is from another era when being safe was being responsible from the only bread winner of the house (Mom never worked). My brother is relying completely on the government, and his pension to take care of he, and his DW.

My son seems to be more aggressive than I am when it comes to investments, and is heavily into Bitcoin, and wants to flip houses. My Daughter is following my lead, and is on a conservative/yet still profitable path.

My DD ia of the opinion that I should be into bonds to preserve any profits I have realized....I just said "not yet" !

 

[dixonge]

I'm always fascinated about those who always need to p**s on a thread that is in the "Stock Picking and Market Strategy" section with essentially the same post over and over, namely that a) it is impossible to pick market direction and b) you are a fool to try.

Don't like RM's post? - move on down the road to the "Fire and Money" or "Life after Fire" or whatever.

A few points:

1 - Just because people publicly disagree with a self-proclaimed 'strong opinion' posted on a public internet forum does not mean they are 'pissing on' it/him.
2 - The section of the forum this was posted in is only obvious depending on how you typically interact with the forum. For me, and I suspect a lot of other people, I just click on 'New Posts' and scroll down. I *never* look at what section a post is in.
3 - I don't think anyone is making the argument that picking direction is wrong, just that jumping in and out of the market like RM does, based on the latest video from some proclaimed expert, is a generally bad idea and likely to produce very sub-par portfolio results. We're all generally expectant of a long-term upward direction or we wouldn't be invested in the stock market to begin with.

I completely agree except for one word. I am not so much fascinated by this phenomena as much as appalled by it.

I put it down to something akin to religious zealotry.

There is a long, long history of disagreement between market-timing and LTBH. Posting a strong opinion about either side on a public forum is guaranteed to generate a response. I'm fascinated that anyone would be surprised *or* appalled by it.

 

[dixonge]

Gee, people take things too seriously.

The OP has gone on a limb to state his thesis. He is not our financial advisor and will not invest our money in this manner. In fact, he himself will bet only a small amount on this.

Relax. You would think people are discussing politics or religions here or something.

I myself have been watching youtube videos on how to carve a whole leg of jamon. It's not as easy as it seems. Don't spend all your time arguing about investment choices and money.

But timing vs LTBH *is* both political and religious. I've converted to the LTBH camp. Which side are you on? Answer carefully.

I do wish that I had seen much earlier that the OP is *so* convinced of this massive short-term upward trajectory in the market that he has invested an entire 1% of his portfolio in calls. I could have just stopped reading then and moved on. *sigh*

 

[Lsbcal]

...
There is a long, long history of disagreement between market-timing and LTBH. Posting a strong opinion about either side on a public forum is guaranteed to generate a response. I'm fascinated that anyone would be surprised *or* appalled by it.

I am not surprised at all but would hope that people on this forum are more sensitive to other poster's interests. Here is what I was responding too:

I'm always fascinated about those who always need to p**s on a thread that is in the "Stock Picking and Market Strategy" section with essentially the same post over and over, namely that a) it is impossible to pick market direction and b) you are a fool to try.

Don't like RM's post? - move on down the road to the "Fire and Money" or "Life after Fire" or whatever.

It is folks who seem to see it as their mission to continuously post the same viewpoint in this part of the forum. To me "Stock Picking and Market Strategy" means this area of the ER site should be free to discuss other methods besides buy-hold.

I have no problem with people investing in a buy-hold fashion and I think it is probably the best approach for the majority of investors.

 

[MichaelB]

Mod note

Multiple posts were removed that are more about politics than the thread topic. Let’s please make an effort to stick to the thread topic.

 

[Lsbcal]

Mod note

Multiple posts were removed that are more about politics than the thread topic. Let’s please make an effort to stick to the thread topic.

Great thanks! Happy Boxing Day.



Boxing Day explained: https://www.cnn.com/2019/12/26/world/boxing-day-facts-trnd/index.html

 

[dixonge]

Mod note

Multiple posts were removed that are more about politics than the thread topic. Let’s please make an effort to stick to the thread topic.

Do you have any idea how hard this is for some of us?

On a more serious note, I would like to say *THANK YOU* for removing posts vs. locking the thread. More deletes, less Porky. That's my vote.

 

[Running_Man]

Originally Posted by Running_Man View Post
I bought back in on April 4th as I reported in that same thread:
Sold all my stocks
I then in October of 2019 bought 1% of my portfolio in S&P500 puts as detailed here:
So I bought S&P 500 2500 puts

Which I sold on December 24,26 and 30th
So I bought S&P 500 2500 puts
With all due respect,this 2018 posts 100 pct eliminates any credibility.Honestly,you have no idea about what the market will do as you proved then and are proving now.

I feel you are analyzing my outlook on the market incorrectly. For one, those positions returned eight percent to my portfolio after tax to me on the investments made, compared to a negative market return over the same period. I am actually a very conservative investor, which allows me to safely take small, very aggressive positions at times when I feel a major move can occur. Being conservative in my investment style I am naturally very wary of over valuations and the damage that can cause to a portfolio.

Over the period of time I have been posting on this forum - 14 years I have not made a great many major moves but when I do I post them in the Stock Picking and Market Strategy. The headlines are quite a bit stronger than the actual investments in most cases because from initiation I have the thought what will prove me wrong? In the current case a change in FED market action would make me seriously reconsider. If the FED were to raise interest rates tomorrow or announce they were to reduce the balance sheet holdings below the September 2019 level, I would immediately sell the options for whatever I could get, but I see that as very low chance and the options as extremely high value, you would see that I think as proof I never knew what I was doing.

I analyze the data for myself and when the facts support a move I make it and post it here, if with the passage of time my theory or outlook for stocks changes, I will admit I must have been wrong and correct my error, typically going back to my conservative holding strategy. This certainly is no different that the FED since in September they said they would need to raise interest rates three times over the coming year and instead did the exact opposite. To merely hold on to an opinion when facts change is an incorrect method of analysis.

I would never go to 100% stocks and I am never in the future going to less than 25% stocks, no matter my level of confidence. History has shown at least 25% stocks is sufficient to endure inflation that may occur and at times valuations can get so low that 75% stocks is a relatively low risk proposition and that 50% is the target for a fairly valued market. In this I am very much in agreement with Benjamin Graham.

In the past 90 years there have been 3 occasions when the S&P 500 has gone up 40% and another 7 where the S&P 500 went up 30% or more. So that even if I am just blind randomly purchasing a one year call option expecting a 40% move that pays 125-1 when it has a 1 in 30 random chance of occurring is still a sound move, (not to mention an additional probability around 8% of making 2-3 times the initial investment, no matter what one believes of my passive investing theory and the force I think it is exerting on the market, my most recent investment is still a solid value play.

 

[NW-Bound]

But timing vs LTBH *is* both political and religious. I've converted to the LTBH camp. Which side are you on? Answer carefully.

Neither. Besides the religious fervents and the atheists, there are also the agnostics.

Some people feel the need to proselytize, and that gets tiresome.

I am not surprised at all but would hope that people on this forum are more sensitive to other poster's interests. Here is what I was responding too:

It is folks who seem to see it as their mission to continuously post the same viewpoint in this part of the forum. To me "Stock Picking and Market Strategy" means this area of the ER site should be free to discuss other methods besides buy-hold.

I have no problem with people investing in a buy-hold fashion and I think it is probably the best approach for the majority of investors.

While I agree that "buy-and-hold" works out quite OK for most of the time, there are also some rare times that the market goes wacko. Emphasis on "rare". One does not want to cry "wolf" every time the market surges, but I do keep an eye out for these rare occurences.

To deny that past market excesses exist, such as the recent dot-com and the housing market mania, that really takes away the credibility of the BH camp. I clearly saw that those maniac conditions would reverse themselves and did not participate, but did not know how to profit from them.

'Nuf said.

 

[OldShooter]

... I put it down to something akin to religious zealotry.

Hmm ... that may be key to the discussion. I think the near-random behavior of the markets is settled science, not even close to being religion.

It is fundamental to Modern Portfolio Theory, which has been around for sixty+ years and got Markowitz his Nobel prize. (It makes no sense to calculate variance for a variable that is not random.)

S&P's semiannual Manager Persistence Report Card results, which consistently show a lack of persistence, are completely consistent with a random market.

There is also ample witness testimony: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

Is there serious academic research or statistical evidence to disprove any of this? (Anecdotes don't count.) I would love to see it, because it might give me a way to beat Mr. Market.

 

[Lsbcal]

Hmm ... that may be key to the discussion. I think the near-random behavior of the markets is settled science, not even close to being religion.

It is fundamental to Modern Portfolio Theory, which has been around for sixty+ years and got Markowitz his Nobel prize. (It makes no sense to calculate variance for a variable that is not random.)

S&P's semiannual Manager Persistence Report Card results, which consistently show a lack of persistence, are completely consistent with a random market.

There is also ample witness testimony: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

Is there serious academic research or statistical evidence to disprove any of this? (Anecdotes don't count.) I would love to see it, because it might give me a way to beat Mr. Market.

Great, why don't you start a thread on this topic. I will be happy to read it. Just not here.

 

[dixonge]

While I agree that "buy-and-hold" works out quite OK for most of the time, there are also some rare times that the market goes wacko. Emphasis on "rare". One does not want to cry "wolf" every time the market surges, but I do keep an eye out for these rare occurences.

To deny that past market excesses exist, such as the recent dot-com and the housing market mania, that really takes away the credibility of the BH camp. I clearly saw that those maniac conditions would reverse themselves and did not participate, but did not know how to profit from them.

'Nuf said.

But the very idea of rare 'wacko' moments/surges or excesses/bubbles is *inherent* in the entire LTBH premise! LT as in Long-term. You buy, then you *hold* through any bubble or crash, preferably continuing to buy all along the way. (unless you are already retired). So in that case, LTBH actually works out all the time. Unless you are in Japan, maybe...

 

[target2019]

To deny that past market excesses exist, such as the recent dot-com and the housing market mania, that really takes away the credibility of the BH camp. I clearly saw that those maniac conditions would reverse themselves and did not participate, but did not know how to profit from them.

You've pointed out one of the reasons I don't post much at BH forum. There are obviously times when one could market-time or mitigate, and end up a whole lot better off.

I don't have the smarts or guts to do it, but if someone wagers 1% on an outcome, who am I to persist and respond negatively about the wager several times?

Another point that went under the radar of some, is the RM's exit and re-entry actually mitigated a significant down (5% by my quick calculation).

 

[target2019]

But the very idea of rare 'wacko' moments/surges or excesses/bubbles is *inherent* in the entire LTBH premise! LT as in Long-term. You buy, then you *hold* through any bubble or crash, preferably continuing to buy all along the way. (unless you are already retired). So in that case, LTBH actually works out all the time. Unless you are in Japan, maybe...

Since past performance is no guarantee of future results, it could also be that next 20 years of U.S. investing is like the last 20 years of Japan markets...
( ͡° ͜ʖ ͡°)

 

[corn18]

These types of threads pop up on bogleheads and get the same response. If you want to see what it feels like from the other side, go on to one of the many stock picking fora and post how you have gotten rid of your individual stocks and went to indexing.

In the end, these threads always end up as a self-licking ice cream cone: they exist purely for their own enjoyment (or agony, as it were).

I wish I had not participated in a negative way earlier. I would delete my post but it seems I cannot. I always want the best for all investors and especially my kin here on ER.

 

[NW-Bound]

But the very idea of rare 'wacko' moments/surges or excesses/bubbles is *inherent* in the entire LTBH premise! LT as in Long-term. You buy, then you *hold* through any bubble or crash, preferably continuing to buy all along the way. (unless you are already retired). So in that case, LTBH actually works out all the time. Unless you are in Japan, maybe...

Sure. If you don't think you can time the market even in the face of these maniac conditions, buy-and-hold will work out a lot better than timing it wrong. Some people who are smarter than me did make good money when the dot-coms blew up, and the housing market collasped.

I still like to keep an open mind, and to people stating a thesis, instead of immediately dismissing it as impossible, I will ask how likely it is to happen, and look into other factors that will negate such theory.

PS. I did benefit from the housing bubble burst, when I helped my daughter buy her 1st home at less than 1/2 of what the previous owner paid.

 

[NW-Bound]

You've pointed out one of the reasons I don't post much at BH forum. There are obviously times when one could market-time or mitigate, and end up a whole lot better off.

I don't have the smarts or guts to do it, but if someone wagers 1% on an outcome, who am I to persist and respond negatively about the wager several times?

Another point that went under the radar of some, is the RM's exit and re-entry actually mitigated a significant down (5% by my quick calculation).

I learned of the BH forum from this forum, which remains the only forum I ever frequent, went to that BH forum briefly, and ran away before I even bothered to register.

While I have respect for the late Bogle, the tone of voice of the BH forum was unbearable to me. For what happened was that I stumbled on a thread where the zealots were bashing some guy. I forgot what it was about, but what striked me as idiotic was some guy who kept repeating the "market efficiency principle". He kept saying that if something was overpriced it would be sold, and if something was underpriced, it would be bought. The arbitrage would even things out, and everything was fairly priced.

Hmmm... I could apply the same arguments to say that there could not be any dictator in history. If some emperors or rulers were so bad, they would be disposed of. There simply could not be any Hitler, Stalin, Mao, etc... They would cease to exist the moment they showed their color. Hah!

I would be more interested in reading a historian's analysis on how these guys came to power at that point in time, and how the populace supported them initially, and how they crushed their opposition.

Similarly, instead of saying the market is always fair, I do not deny that it is irrational at times, and how people were fooled.

"Those who cannot remember the past are condemned to repeat it." -- George Santayana

 

[Aerides]

***************Mod Note***************

We have eliminated all comments about a new 'civil war' from this thread - including quotes of others - to allow it to stay on topic. Since there are so many, we are not sending individual notes to everyone.

Of course, everyone here knows that non-financial global and domestic events are going to have an impact on the markets. But it should go without saying, that getting specific about political predictions and opinions never ends well. If everyone wants to continue this thread, please, exercise a little more restraint.