Unemployment drops from 8.3% to 8.1% in August

[werepossum]

You really think McCain would have done better?

You really think Romney would do better?

McCain maybe, maybe not. I don't think he understands economics any better than does Obama, but he wouldn't be doing the things that makes business nervous of expanding or investing in America. Romney, yes, I think he will do better. I think though we're talking about fractions of percent in unemployment, maybe 7% versus 8.1% rather than Bush's 4% which was partially due to inertia and partly to the housing bubble. I think our underlying systemic problems preclude a Reagan-style recovery.

 

[PJABBER]

Yes, I believe we just took out multi-year highs going back to the uneasy quiet before crash (looks like 1425.35 close on May 8,2008), and are within 10% of all time high (intra-day high 1576.09 October 9, 2007):

Those numbers are S & P 500, which is probably what most people retirement mutual funds are benchmarked against.

If you did some judicious tax loss selling when everything was falling in unison, irrespective of quality and valuation, you could have offset some of the losses, and improved quality of portfolio, and potential returns going forward.

People who capitulated near bottom, and have been in cash or bonds since then, have missed out on 100%+ rebound (see chart on page 6 (market returns vs. typical investor returns): http://selectedfunds.com/downloads/SFSucclInv1211.pdf).

Plus, when economy really does start to recovery and interest rates spikes, people are going to find out that you can lose money in bond funds...

That is a scary long term pattern for me. I just went 50% cash and have started to take short positions.

Why?

Triple Top Reversal

 

[mshan]

Hi PB:

I wasn't making a market call one way or the other, especially on any sort of short-term or tactical basis. Just commenting on where we stood from a historical perspective.



That being said, tidbits I've collected on where we might stand now (please note that my bias is long-term bullish, so please view everything below through rose-coloured glasses):

- Technical analyst Louis Yamada noted in mid-August that while market was tired and extended, uptrend from 2009 is still intact (she also said she thought it was dangerous to short specifically because the uptrend had not yet been broken): http://finance.yahoo.com/blogs/breakout/bull-market-long-tooth-yamada-120820358.html

- Liz Ann Sonders (Charles Schwab) had some comments this morning over argument that market can't go higher given that we are already at 60 year highs in terms of profit margins and that the global economy is slowing very substantively: http://finance.yahoo.com/blogs/dail...aked-stocks-still-well-liz-ann-140358417.html

- JP Morgan perma-bull Thomas Lee had originally called for a year end target of 1430 last December (S & P 500 was having a difficult time breaking above 1250 then, the effect of LTRO had not apparently been fully appreciated by market yet, and everyone was calling for a nasty whoosh down in stock market at start of 2012) (http://www.businessinsider.com/jp-m...ategist-thomas-lee-sp-500-target-2012-2011-12), but I think he upped his target to around 1475 (forgot actual number he said on CNBC) going into election, then calling for pullback to 1430 by year end.

- BAC / ML strategist Savita Subramanian I think was originally around 1425 year end, but changed that recently to slow grind up to around 1450 by year end.

- Goldman apparently still sticking with year end target of 1250: http://www.zerohedge.com/news/why-goldman-refuses-raise-its-sp-1250-year-end-forecast & http://www.zerohedge.com/news/goldman-explains-where-invest-now

- Morgan Stanley is always bearish on CNBC, though haven't seen any of their literature pop up in Zerohedge and forgot what their year end target is (Adam Parker is their strategist on tv, if you want to google for yourself).

Have no idea what they assume about the outcome of the presidential election, and / or whether any of these year end targets include complete, partial, or no resolution at all of fiscal cliff before year end or early next year (http://www.economonitor.com/dolanec...ons-underline-need-for-goldilocks-budget-deal) before next year.





Long-term Bullish ("Millennials" thesis): http://news.morningstar.com/article..._LPAGE=/FORBIDDEN/CONTENTARCHIVED.HTML&_BPA=N

Long-term ~ Bearish ("Death of the Cult of Equities"): http://www.pimco.com/EN/Insights/Pages/Cult-Figures.aspx

Thoughtful Uber-Bear Bob Janjuah (Nomura): http://www.zerohedge.com/news/bob-janjuah-you-have-been-warned & http://www.zerohedge.com/news/bob-j...cy-makers-i-have-no-meaningful-insights-offer (I think his basic thesis is that central bank action can't levitate markets forever, and at some point, there needs to be one final cathartic, capitulative flushing of the system, wiping out all of the excesses of decades of easy money, before foundation for new true sustained bull market can take place). Europeans now appear determined to maintain "financial stability" at any cost: http://londonbanker.blogspot.com/2011/12/why-i-oppose-financial-stability.html

(Sidenote): Morningstar analyst video commentary on risks of chasing yield if and when economy really picks up steam and interest rates start rising substantively: http://www.morningstar.com/cover/videocenter.aspx?id=566824






Personally, I am comfortable with my strategic asset allocation (diversified portfolio of stock mutual funds), my individual holdings, and time horizon (decades down the road). I have no idea what will happen in short-term, but will ride out the volatility essentially as is. I did sell a small bit of one holding when we made previous move towards S & P 500 1422, might sell a bit more if we make aggressive move at 1440 - 1450 (trader Steve Grasso on CNBC Fast Money Half Time report said if we take out 1442, that opens up move to 1500, fwiw), and maybe a final bit more if we do move towards 1475 ish. Not market timing, just taking a little bit of profit so if things do crash temporarily, I have some extra free cash if something pops up that I want to buy while market is tanking.

Out of curiosity, are you positioning for some sort of short-term tactical move down, or is this more long-term positioning? What's the downside target and time-frame you expect it to play out?

 

[PJABBER]

Hi PB:

I wasn't making a market call one way or the other, especially on any sort of short-term or tactical basis. Just commenting on where we stood from a historical perspective.

I like your posts as I learn something from your references in almost all of them.

I am commenting more above for 401K and rollover funds as I cannot really trade with those.

I am very bearish on bonds. For equities I am long term bullish with a Romney win, meh for Obama. Probably be looking a correction to hit much sooner if Obama remains in place and continues to live off ever increasing debt spending no matter if we see another ineffective round of QE or not.

I think a Romney win will offer a short term trading bounce but decline with austerity programs kicking in.

Declines happen fast and playing short has been very, very good to me so I am almost all cash right now waiting for trigger events.

I much more comfortable trading on volatility, lots of liquidity is key but sometimes I can get into special situations and have done OK with those.

I also like distressed assets and that is where I am doing my research right now. Will probably get back into convertible arbitrage as well.

Good times, good times! :awe: