Indeed. I guess that's the gamble...rising, falling, or stagnant.
Indeed. I guess that's the gamble...rising, falling, or stagnant.
Yep. China weak again this evening. Lots of cross currents.
If we hold here it will be another point in a succession of higher lows since the August lows - at least there's that
My current worry is credit - high yield and bank loans are getting beat up a bit - I know Igy has been pointing that out for a while and he's been right.
Question is if it means anything or if it is just the current shorting fad among hedge funds.
agip,
Widening credit spreads are a leading indicator for declining equity markets. Poor business models weaken, cannot rollover debt, bankruptcy becomes inevitable. A year ago the Street told us that high yield was attractively valued with high yields and low defaults. That analysis was wrong. Like stock buybacks and margin debt, it shows a market that is late cycle. Declining earnings and a market that increasingly portrays a risk-off character should be a warning to all. Picking up nickles and pennies in front of a steamroller is a bad idea.
Igy
Ghost of Igloi wrote:
agip,
Widening credit spreads are a leading indicator for declining equity markets. Poor business models weaken, cannot rollover debt, bankruptcy becomes inevitable. A year ago the Street told us that high yield was attractively valued with high yields and low defaults. That analysis was wrong. Like stock buybacks and margin debt, it shows a market that is late cycle. Declining earnings and a market that increasingly portrays a risk-off character should be a warning to all. Picking up nickles and pennies in front of a steamroller is a bad idea.
Igy
agreed that many cracks are showing now - credit, emerging markets, even the dow transports cracked this week. Just about the only thing humming along is the economy.
agip,
I am not trying to be being a Debbie Downer here, but that is how business and market cycles function. I agree the economy is humming along, but when does that change? Does the economy take another leg up or start a leg down? That is really the question. And I agree for the buy and hold investor, it does not matter. But I see most buy and hold investors to be more of my vintage than that of the younger generation. Just some thoughts from the Old Man.
Igy
Ghost of Igloi wrote:
agip,
that is how business and market cycles function
Igy
but not the stock market, not really - for the stock market to take a big bear market dip you need a recession. At least for the last 20 years you have needed a recession. It is very hard to knock down the stock market 20%.
And we have almost no signs of a recession - you can always find something that isn't going great, but 8/10ths of economic indicators are looking fine.
So it is hard for me to believe we are in a for a recession or bear market.
Maybe we're just in for an extended range-bound market - floating around here for a while.
agip,
Actually the last two recessions were preceded by a market downturn. Keep in mind employment is the last of lagging indicators.
Hey agip, I am not saying you can't be right in the end. I am saying that in my opinion the data points down not up. The significance of sequence is where we differ.
Igy
The market goes up, the market goes down. Repeat.
The voice of reason wrote:
The market goes up, the market goes down. Repeat.
Worthless. What is needed to be known is when it will be going uo and when it will be going down.
No one knows that. You should know that better than most.
K5 detector wrote:
No one knows that. You should know that better than most.
Exactly. Nobody knows. Yet people make billions of dollars charging fees for their "expertise". Which in fact has zero value.
The 21st century snake oil salesmen.
For once I'm going to agree with you. Sounds like you may have actually paid for that advice that had you pulling out of the market prior to that big run up. Sucks to be you, but your misfortune has led to this great thread. Maybe you can take some solace from that.
[quote]K5 detector wrote:
For once I'm going to agree with you. Sounds like you may have actually paid for that advice that had you pulling out of the market prior to that big run up.
Huh? What was your "thought" process in arriving at the conclusion that I paid for advice? On what facts did you base your analysis? Oh wait. You don't think nor consider facts, do you?
And what big run up are you talking about? An increase of less than 20% over a two and 1/2 year period -- is that what you call a big run-up?
You know what was a big run-up? The more than doubling of the market while I was in it for four years beginning in 2009.
Yeah. That really sucked. Almost as bad as when I got out of the market in 2008 and avoided the 50% meltdown.
For the record, since the thread was started the Vanguard Total US stock market index fund is up 29.8% including dividends. Ticker VTI.
over the 2.28 year lifespan of the thread, that's 12.07% per year, annualized.
"Recession", "depression", etc. are all tied to GDP, which number now holds almost no useful meaning to me.
For some unknown reason, today I got a sense of economic hopefulness. By "economic", I mean the production and trading of goods and services, not profitability, or speculation.
I don't know why. It's probably totally irrational. I NEVER feel like this.
Consider: the markets just "corrected" to the tune of 10-15%...but then they came back, and fast. Anybody ever ask "why" or "how" they came back? The market doesn't seem to want to break 2100, but neither does it seem to want to leave 2100.
Fair enough. What if it hovers between 2000-2100 for long enough that earnings rise sufficiently to bring the P/E back down to earth?
I disagree with the poster who said that it was all about revenues. Bullshxt. That is what businesses tell you, that can't make a buck. It's what hapless CPA's on the other side try to convince you is great when they are valuating for an acquisition.
In the business world (not in the equities world), it is complete bullshxt. I have never bought anything based on revenues, and never will. I know some who have, and it has worked out to have been a mixed bag, because success depends to a large extent on the current and projected business environment, and on actual market position, rather than on abstract revenues.
lol, when you have no profit, go to revenues. What happens when revenues start to fall, do they go to debt? Don't laugh, I have seen it tried.
BTW IMO we are about to enter an era of seriously huge M&A.
There's nothing "abstract" about revenues. Look, some investors focus on earnings, some on profits, some on revenues. There's a place for all of them. I think the smart investor takes a piece from each.
Agip,
Have you not heard the saying that the stock market has predicted 9 or the last 5 recessions? If you call the 1987 crash a bear market, that was a market event and there was not a recession.
If you go back in the bear markets/crashes we have had in the past 60 years:
2008
2000
1991-1992 (actually only 18% decline)
1987
1981-1982
1973-1974
1969
1966
The last time we had a bear market with a democratic president for the majority of the time was in 1966. If you're a trend follower like me and you see that the London bookies have Hillary at 4/5 and Rubio next at 7:1 to be elected president, well maybe we end up like 1992 instead of 2000.
LEI are not predicting anything really, but if you average out the recovery period between the last few recessions, you would expect a business cycle bottom in 2017. That does not mean it won't be like 1992 instead of 2000 or 2008:
https://research.stlouisfed.org/fred2/series/USSLINDcoach d bored back to sleep "Waiting For Godot" (Janet). Squaring my commodity positions on Friday for the FED meeting is all the excitement I get this week....
You and everybody else I know who has been shorting will be sorting out their commodities on Friday.
Talk about currencies, people should short the CAD, massively. They are screwed! Sorry Canucks. Even though housing is insanely overpriced in Canada, there can still be some good deals on land, which I am now investigating. If their dollar goes to or below 70 cents US, all the better.