Down goes the Dow

la gente está muy loca wrote:

Chemical Reagent wrote:

The markets continue to rise, as I predicted, but I will sit out the rest of the day.

I can't tell you how many have suggested that I trade on margin. When you're hot, it's tough to not fall into the trap of believing that you're intrinsically "right", rather than just having your finger on the current pulse. I have seen it happen to others.

I don't think it could happen to me, but I'm not about to find out. No borrowing for me.

Not to mention you'll need real money to open a margin account.

What the heck? CR has been a big plus for this thread. He has also been remarkably successful in his trading as posted here (and I am NOT a big fan of trading). On top of that he has been consistently positive (with one minor slip up - "You don't trade, do you?").

All that and you come on here mocking him? Seriously? You are out of line.

You may be referring to me as gloom and doom. On the other hand, investors tend to ignore trends changing and shut out the negative. Selective perception so to speak. Warren Buffett once said: "be greedy when others are fearfull, be fearfull when others are greedy."

Igloi - this focus you have on 15 year returns is getting my goat. the interesting thing is that we are just now cresting the tech bubble on that time frame - 15 years ago the market started to fall.

so in a year the 15 year stock market numebrs will start to look much better - I suspect you will stop talking about 15 year cycles at around that point.

the point is that picking start points like you keep doing to prove your point is questionable and you know what? I think you should stop doing it.

OK, of course you are assuming that the market will move higher. I think that will be very difficult. We are roughly at the same point in the S&P 500 as we were four months ago. The NASDAQ hit a new closing high, but it is filled with companies with dubious business models (social media, gadget companies, biotech). At the same time the Dow Jones Transportation index has been in decline. Corporate profit margins have peaked, while corporate debt and margin debt is at record levels.

Your Bullishness strikes me a cognitive dissonance, that is your logic is challenged by counter arguments. However, you take the path of least resistance, that is, that the stock market will just continue to go up. You get mad when someone challenges your argument.

Ghost of Igloi wrote:

OK, of course you are assuming that the market will move higher. I think that will be very difficult. We are roughly at the same point in the S&P 500 as we were four months ago. The NASDAQ hit a new closing high, but it is filled with companies with dubious business models (social media, gadget companies, biotech). At the same time the Dow Jones Transportation index has been in decline. Corporate profit margins have peaked, while corporate debt and margin debt is at record levels.

Your Bullishness strikes me a cognitive dissonance, that is your logic is challenged by counter arguments. However, you take the path of least resistance, that is, that the stock market will just continue to go up. You get mad when someone challenges your argument.

No he is most decidedly NOT 'assuming that the market will move higher.'

Come on, dude, try to keep up. This is getting embarrassing.

You remind me of Debbie Downer.

As agip would say, foul...here is the quote I was responding to....

"so in a year the 15 year stock market numebrs will start to look much better - I suspect you will stop talking about 15 year cycles at around that point"

So I ask, how do the numbers get better without the market moving higher. You just embarrased yourself.

Igy

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=257#ixzz3dWmomWFd

I only began to make comments on this thread over the past year even though I have followed it for considerably longer. I chose to make comments because of what I considered to be inaccurate statements and anlysis.

Ghost of Igloi wrote:

As agip would say, foul...here is the quote I was responding to....

"so in a year the 15 year stock market numebrs will start to look much better - I suspect you will stop talking about 15 year cycles at around that point"

So I ask, how do the numbers get better without the market moving higher. You just embarrased yourself.

Igy

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=257#ixzz3dWmomWFd

At this point I am seriously considering that you are just trolling. If so, well done, you had me fooled for a while. And even now I am not so sure.

So, to answer your question: "So I ask, how do the numbers get better without the market moving higher? "

Let me respond slowly and use small words.

You are looking at 15 year returns so the returns get better if either the market moves higher in the coming months OR THE STARTING POINT OF 15 YEARS AGO BECOMES LOWER.

OK, now I am embarrassed for having responded to an obvious troll.

Well done.

OK, if the market is flat for the next year the S&P 15 year average goes from 4.0% to 4.07%. The low points over the last two market cycles were October of 2002 and March of 2009.

Another point, if you are trying to be prudent about your investment assumptions, why would you use a low starting point to model? Furthermore, if you look at models that are most consistent with predicting future returns (CAPE 10, Tobin's Q, Buffett Indicator), today's market is most similar in valuation to 2000 and 2007. The period of the early 1990s was a period of low valuation in the equity markets using those same models. So, in my mind there is nothing wrong with using the 15 year period, and it certainly is not an attempt to cook the books.

Ghost of Igloi wrote:

Another point, if you are trying to be prudent about your investment assumptions, why would you use a low starting point to model? ...

I would use ALL data available, going back as far as there is reliable data. I consider this to be back to 1926. And I certainly think that focusing on anything less than at least 50 years is foolish - the inherent bias due to what part of the cycle one is capturing is far too great with such small sample sizes. 15 years is basically nothing in terms of understanding expected risks and returns.

Alright, so be it. Since 1881 CAPE 10 has only been at higher valuations in September 1929 and December 1999. Tobin's Q data going back to 1900, has only shown higher valuation in the first quarter of 2000. The Buffet Indication, with data back to 1970, has only been higher in the first quarter of 2000.

You can ignore the data at your own peril if you wish.

Marginalia wrote:

lol jealous much la gente? I wouldn't ride on cr too much, he's been good here. he is the perfect answer to put up or shut up, a concept you might want to consider yourself. like agip i am pulling for cr, there is too much doom and gloom in this thread

sorry to burst your bubble but CR isn't trading with real money. I can view all DDM trades. CR claims to have traded a large block but no large block traded at his price. Other trades number of shares not the same at his prices. When I asked why he traded DDM and not SSO, he gives an absurd answer. SSO is 2x SP500; DDM is 2x DJIA. Their R squared is over 90. SSO trades about 6000000; DDM 400000 shares a day. Any smart trader given the choice of 2 similar securities but one is more liquid than the other always trades the the more liquid one, more so if doing market orders. Before Profunds split their leveraged ETFs, slippage on DDM compared to SSO could be 50 bps on total trade. That's $50 per 100 shares. I could go on but I'm off to the Cape .

I found the posts odd as well, phrasing and context bizarre at times. What he claims to be doing is foolish anyway and hard for me to cheer for.

As I said, I had no doubt you would go down that rabbithole. Congratulations on having wasted your time. You seem like someone who thinks they know it all, and that there is a single way--and more importantly a single correct way--to do something. It's unfortunate you have dismissed my limited explanation as absurd, as I cannot reveal more than I have.

There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.

Out of curiosity, in what capacity do you act?

Of more general interest, I missed the drop today, I thought the market would just waffle.

For the record, I am gente's biggest fan, but to be fair to cr, a) he has said he has been disguising his trades with false prices and b) regardless of whether he trades are cash money or fantasy baseball, he has nailed maybe a dozen in a row.

Interesting.

I have a strong desire to set things straight, which would require me to reveal more than is wise. My other options are to continue posting here as I have, or to call it a day and leave readers with the history recorded in this thread.

Alas, I will end my posting here as of today. My only hope is that somebody will have found my posts worthwhile.

Jeesuus chriist, you stoopid muther fukker look what has happened. Chemical was the best thing to ever happen to this thread, and the only reason I ever bother to come here. You stoopid fukk. Did you ever stop to think that slippage may now be less? Did you ever think that the actual slippage isn't a detriment? The way I read his explanation he might not in fact trade, he might have some sort of weird arrangement with whomever he is affiliated with, who uses his suggestions as a barometer including prices and volumes. Who fukking cares? It doesn't mean shiit, what's important is that he was always right. Do you even understand the significance of this? I doubt it. You stoopid fukk!! now he is gone. I really wanted to see how long he could go and what he would do when things turned south. I can't believe what a self-absorbed retread you are, thanks a lot. FUKK!!! Chemical, consider coming back. I don't think anybody except this loser cares whether you are actually trading or not, I know I don't. Nor do I care about the details of your arrangement, whatever it is.