Markets in a tailspin

[IronWing]

It's not over.

It's never over. The market re-baselines every single day. It will go up, down, or nowhere and start with a fresh normal the very next morning.

 

[Hugo Drax]

The conservative media definitely pushed PM's as an investment for the catastrophic depression Obama was going to bring.

 

[Charmonium]

The conservative media definitely pushed PM's as an investment for the catastrophic depression Obama was going to bring.

It was really surprising how many people who should have known better really believed that money creation by the fed was going to create hyper inflation. No one seemed to realize that virtually all of that money would be tied up in excess reserves and would only impact the economy once banks started lending again.

Don't forget that a lot of the rise we've seen in recent years has been due to companies buying back their stock. IBM was a great example of this. You borrow money at a couple percent interest if that and use it to buy back your stock so as to inflate earnings per share. It's a great scam until people finally realize that despite the boost in EPS, your revenues are going nowhere.

Anyway, historically, bull markets last for several years after the first rate rise. And given how long it's taken since the recession to get back to full employment, this bull should run for at least another 3-5 years. Employment tends to be a lagging indicator, so much so that's it's almost counter cyclical. So until unemployment starts to increase, I wouldn't worry.

 

[shady28]

The conservative media definitely pushed PM's as an investment for the catastrophic depression Obama was going to bring.

Politics aside, gold is up 50% since Obama took office - and that's after a 30% decline since 2012. It's also up 600% in the last 15 years - again, after a 30% decline.

But that's old news.

All commodities / metals / oil / stocks are crashing now.

The complacency here is palatable. When everyone is complacent, it's a sign of a top.

As far as printing money, that was clearly a fight against deflation. Money isn't simply created these days, it winds up being 'backed' by debt. Consider, there is almost 3x more debt in the world than there is money. That debt mountain is in danger of collapsing.

What should have happened in a normal economic cycle during the last 2 recessions (.com bust and the "Great Recession") is that debt should have been allowed to "go bad", and be retired. It's part of the business cycle.

The Fed didn't allow that to happen.

Cash is king. Mark those words.

 

[fskimospy]

Reference? Or are you talking about this post from June 2014?

Pay attention to what was actually said.

Or maybe this one from 2013 where I said we were 4-6 years from a bottom in the cycle? 2017-2019 sounds about right for a bottom.

Actually, it was this one:

In inflation adjusted real dollar terms, S&P still has not beat its Aug 2000 high.

I think 2014 is going to be sucker punch time for folks heavily invested in stocks.

The S&P then proceeded to gain about 12% in 2014.

Any explanation as to why your prediction was so catastrophically wrong?

 

[fskimospy]

Politics aside, gold is up 50% since Obama took office - and that's after a 30% decline since 2012. It's also up 600% in the last 15 years - again, after a 30% decline.

That doesn't change the fact that history shows gold to be a bad long term investment. If you want to cherry pick date ranges you can of course find times where it's been good, but that's the thing about investing: in real life you can't cherry pick date ranges.

But that's old news.

All commodities / metals / oil / stocks are crashing now.

The complacency here is palatable. When everyone is complacent, it's a sign of a top.

As far as printing money, that was clearly a fight against deflation. Money isn't simply created these days, it winds up being 'backed' by debt. Consider, there is almost 3x more debt in the world than there is money. That debt mountain is in danger of collapsing.

What should have happened in a normal economic cycle during the last 2 recessions (.com bust and the "Great Recession") is that debt should have been allowed to "go bad", and be retired. It's part of the business cycle.

The Fed didn't allow that to happen.

Cash is king. Mark those words.

This analysis seems to be based on Austrian business cycle theory, which is problematic considering that it's been pretty well empirically disproven. All that aside, what are your predictions for 2016, specifically? You were wrong about 2014, but here's another bite at the apple!

 

[shady28]

Actually, it was this one:



The S&P then proceeded to gain about 12% in 2014.

Any explanation as to why your prediction was so catastrophically wrong?

That quote you made was from me on Dec 31, 2013. It was a prediction of a sucker punch which lured people back into the market, people like you.

The DOW closed at 16,369 on that day.

It is currently at 16,528. 20 months later. Futures say the market will open > -200 down.

Unless you managed to get out at the peak (unlikely) your 12% is gone. You would have been better off buying treasuries or CDs.

And yes I think this is the beginning of a very long overdue, massive downturn in the markets and economy. So if you want a prediction, here's one. We won't see the 18312 peak for at least 7 years.

As for you, if you are invested in the market (I find that doubtful), here's another prediction - you will wish you had gotten out on Dec 31 2013 within a couple of months.

 

[fskimospy]

That quote you made was from me on Dec 31, 2013. It was a prediction of a sucker punch which lured people back into the market, people like you.

There is no definition of sucker punch in any dictionary where a 12% gain would qualify. A sucker punch is an unexpected harm that is inflicted. Not some sort of trap like you are describing.

You're trying to rewrite your meaning after the fact to avoid being wrong.

Also, it didn't lure me back in. I don't base my investment strategy on yearly market movements.

The DOW closed at 16,369 on that day.

It is currently at 16,528. 20 months later. Futures say the market will open > -200 down.

Unless you managed to get out at the peak (unlikely) your 12% is gone. You would have been better off buying treasuries or CDs.

You are cherry picking again. That's not how investing works. A month ago it was up about 7-8 percent over the 2013 close, but I didn't see you admitting fault then. You can't just pick convenient dates.

And yes I think this is the beginning of a very long overdue, massive downturn in the markets and economy. So if you want a prediction, here's one. We won't see the 18312 peak for at least 7 years.

As for you, if you are invested in the market (I find that doubtful), here's another prediction - you will wish you had gotten out on Dec 31 2013 within a couple of months.

Can you quantify this is some way? A decline of >= what % in S&P value or GDP value? Please be as specific as possible.

 

[shady28]

Actually, it was this one:



The S&P then proceeded to gain about 12% in 2014.

Any explanation as to why your prediction was so catastrophically wrong?

...

You are cherry picking again. That's not how investing works. A month ago it was up about 7-8 percent over the 2013 close, but I didn't see you admitting fault then. You can't just pick convenient dates.



Can you quantify this is some way? A decline of >= what % in S&P value or GDP value? Please be as specific as possible.

Reality is that the market right now is -1.6% from when that post was made, 20 months ago. You talk about cherry picking dates, then you turn around and pick a date 2 1/2 months ago when the market made its peak. Unrealized gains are just that - unrealized.

How much will it fall?

At least 50% from its peak, and probably more.

 

[bshole]

That quote you made was from me on Dec 31, 2013. It was a prediction of a sucker punch which lured people back into the market, people like you.

The DOW closed at 16,369 on that day.

It is currently at 16,528. 20 months later. Futures say the market will open > -200 down.

Unless you managed to get out at the peak (unlikely) your 12% is gone. You would have been better off buying treasuries or CDs.

And yes I think this is the beginning of a very long overdue, massive downturn in the markets and economy. So if you want a prediction, here's one. We won't see the 18312 peak for at least 7 years.

As for you, if you are invested in the market (I find that doubtful), here's another prediction - you will wish you had gotten out on Dec 31 2013 within a couple of months.

I hope to Christ you are wrong as I had about 1.25 million in the market a month ago. I am too scared to look at its current value. I don't get what is propelling this sell-off. The economy is not in a tailspin like it was in 2008. It makes no sense whatsoever to me.

 

[dullard]

I don't get what is propelling this sell-off. The economy is not in a tailspin like it was in 2008. It makes no sense whatsoever to me.

6 years of non-stop gains. The economy didn't double in those 6 years, but the stocks sure did. They just got a little out of control.

http://www.advisorperspectives.com/dshort/updates/Market-Cap-to-GDP.php

 

[bshole]

6 years of non-stop gains. The economy didn't double in those 6 years, but the stocks sure did. They just got a little out of control.

http://www.advisorperspectives.com/dshort/updates/Market-Cap-to-GDP.php

Now wait a second they were coming back from a MASSIVE contraction, a point signicantly lower than a decade previous. Much of the gain was simply recouping a vastly undervalued market.

 

[fskimospy]

Reality is that the market right now is -1.6% from when that post was made, 20 months ago. You talk about cherry picking dates, then you turn around and pick a date 2 1/2 months ago when the market made its peak. Unrealized gains are just that - unrealized.

I picked that date to show you how when you arbitrarily select a date you can often get whatever results you want, not because I thought it was a good date to pick. You've used cherry picking of this sort several times recently.

How much will it fall?

At least 50% from its peak, and probably more.

Ok, that means we're looking at an S&P of somewhere around 1,000. What time frame are you talking? EDIT: It didn't happen in 2014 as you predicted, maybe this year? Next year? When?

 

[shady28]

6 years of non-stop gains. The economy didn't double in those 6 years, but the stocks sure did. They just got a little out of control.

http://www.advisorperspectives.com/dshort/updates/Market-Cap-to-GDP.php

If you were invested in the DJIA on Oct 1 2007 @ 13930, you're up about 15% right now.

That's hardly a doubling.

This is the end of a third phase up in Dow Theory. It has all the hallmarks.

The real gains were in the second phase up, 1987-1999. That's 500% in 12 years. And you're talking about 15% in 6 years like it's a win.

The third phase of a bull market is the weakest. The gains are smaller, conviction of investors is the highest, debt advances rapidly, and the economy doesn't advance broadly. That describes the last 5 years pretty well.

So now we get to see what a correction of a 35 year bull market looks like.

 

[JSt0rm]

If you were invested in the DJIA on Oct 1 2007 @ 13930, you're up about 15% right now.

That's hardly a doubling.

This is the end of a third phase up in Dow Theory. It has all the hallmarks.

The real gains were in the second phase up, 1987-1999. That's 500% in 12 years. And you're talking about 15% in 6 years like it's a win.

The third phase of a bull market is the weakest. The gains are smaller, conviction of investors is the highest, debt advances rapidly, and the economy doesn't advance broadly. That describes the last 5 years pretty well.

So now we get to see what a correction of a 35 year bull market looks like.

Sounds like fun and opportunity abound. I've got another 30 years to keep my main stuff in the markets so as long as we find some new highs in that time I will get out way ahead of a cd.

 

[dullard]

If you were invested in the DJIA on Oct 1 2007 @ 13930, you're up about 15% right now.

That's hardly a doubling.

This is the end of a third phase up in Dow Theory. It has all the hallmarks.

The real gains were in the second phase up, 1987-1999. That's 500% in 12 years. And you're talking about 15% in 6 years like it's a win.

The third phase of a bull market is the weakest. The gains are smaller, conviction of investors is the highest, debt advances rapidly, and the economy doesn't advance broadly. That describes the last 5 years pretty well.

So now we get to see what a correction of a 35 year bull market looks like.

I said 6 years, 2007 to 2015 isn't 6 years. Plus, you keep forgetting dividends.

Look at a S&P tracking fund with dividends reinvested:
https://personal.vanguard.com/us/funds/snapshot?FundId=0540&FundIntExt=INT
On that graph, 2007 high was about $13200. As of yesterday it was $19938. You are up at least 50% from 2007 if you had an S&P500-like investment and reinvested dividends. And that includes fees taken out from Vanguard, the actual stocks did better. Okay, drop that 3% for today's plunge.

Finally debt hasn't been advancing rapidly.

About the only thing you are correct about is that 1987 was a good time to be invested.

 

[brianmanahan]

lol shady28 talk like he only buy at the top of the market

 

[shady28]

I said 6 years, 2007 to 2015 isn't 6 years. Plus, you keep forgetting dividends.

Look at a S&P tracking fund with dividends reinvested:
https://personal.vanguard.com/us/funds/snapshot?FundId=0540&FundIntExt=INT
On that graph, 2007 high was about $13200. As of yesterday it was $19938. You are up at least 50% from 2007 if you had an S&P500-like investment and reinvested dividends. And that includes fees taken out from Vanguard, the actual stocks did better. Okay, drop that 3% for today's plunge.

Finally debt hasn't been advancing rapidly.

About the only thing you are correct about is that 1987 was a good time to be invested.

2007 to 2015 is peak to peak. What you were doing was measuring from trough to peak, which would imply perfect market timing. That's why I chose 2007 and not 2009.

In any case, you both moved the bar by looking at an indexed fund with re-investment of dividends and skirted the point.

The point was, the middle of the upward move is more powerful. Using your new bar of re-invested indexed mutual fund, which of these looks like the bigger move :

15 year chart, 2000 - recent peak in 2015 was ~80% increase :

15 year chart, 1980-1995 (15 years) started at $11,000 and ends at $138,000 which was ~1300% increase. The point is the same, this is the strong move in the secular bull market, it's been over for a long time and your 80% dividend re-invested fund pales by comparison :

I don't know where you get the idea that debt hasn't exploded, unless you're looking at Debt : GDP ratios.

Here is one of many available debt charts. And yes, it includes public debt - that is also debt and it has to be repaid :

 

[shady28]

lol shady28 talk like he only buy at the top of the market

The proper way to read a chart is peak to peak or trough to trough.

 

[NoStateofMind]

2007 to 2015 is peak to peak. What you were doing was measuring from trough to peak, which would imply perfect market timing. That's why I chose 2007 and not 2009.

In any case, you both moved the bar by looking at an indexed fund with re-investment of dividends and skirted the point.

The point was, the middle of the upward move is more powerful. Using your new bar of re-invested indexed mutual fund, which of these looks like the bigger move :

15 year chart, 2000 - recent peak in 2015 was ~80% increase :

15 year chart, 1980-1995 (15 years) started at $11,000 and ends at $138,000 which was ~1300% increase. The point is the same, this is the strong move in the secular bull market, it's been over for a long time and your 80% dividend re-invested fund pales by comparison :

I don't know where you get the idea that debt hasn't exploded, unless you're looking at Debt : GDP ratios.

Here is one of many available debt charts. And yes, it includes public debt - that is also debt and it has to be repaid :

Stop your fear mongering. Everything's perfectly fine.

 

[LegendKiller]

The proper way to read a chart is peak to peak or trough to trough.

There is no "proper" way to read a chart. You can read it either way. What is your entry and exit.


Not sure why it matters how much debt there is at this point. Is it serviceable? If yes, then it is fine. If not, prove why not. Your picture is from a gold shilling investment manager that doesn't even have $1bn AUM.

What is your timeframe for this 50% reduction?

 

[brianmanahan]

The proper way to read a chart is peak to peak or trough to trough.

not for me

1) i am buying every 2 weeks, including during the troughs

2) i am reinvesting dividends, which the charts don't show

 

[OverVolt]

If you were invested in the DJIA on Oct 1 2007 @ 13930, you're up about 15% right now.

That's hardly a doubling.

This is the end of a third phase up in Dow Theory. It has all the hallmarks.

The real gains were in the second phase up, 1987-1999. That's 500% in 12 years. And you're talking about 15% in 6 years like it's a win.

The third phase of a bull market is the weakest. The gains are smaller, conviction of investors is the highest, debt advances rapidly, and the economy doesn't advance broadly. That describes the last 5 years pretty well.

So now we get to see what a correction of a 35 year bull market looks like.

It looks like deflation, repossessions and defaults .

 

[OverVolt]

The proper way to read a chart is peak to peak or trough to trough.

No that is the proper way to think you can actually hit the peaks and troughs, when in reality you have a better chance of getting hit by lightning INDOORS.

 

[shady28]

There is no "proper" way to read a chart. You can read it either way. What is your entry and exit.


Not sure why it matters how much debt there is at this point. Is it serviceable? If yes, then it is fine. If not, prove why not. Your picture is from a gold shilling investment manager that doesn't even have $1bn AUM.

What is your timeframe for this 50% reduction?

There is a proper way to read a chart for analysis.

http://www.investopedia.com/articles/technical/02/070302.asp


Read the thread, I already stated a range when I thought the bottom would occur. It isn't anytime soon.

I also didn't say a damn thing about debt being serviceable or not, I simply listed debt as one of the characteristics of a top.

Another characterization is heavy participation by laymen, and a very speculative market.

This thread just reinforces that. The lemmings are not just going off the cliff, they're doing it with fervor.