Dow posts worst Opening Day in 8 years

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pgg said:
So, will today change anything you do? Are you going to alter your asset allocation?
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Orders to buy Developed Foreign Markets and Emerging Markets placed today with likely trigger tomorrow. Order to buy Large Cap ETF placed today if market declines another 4% from here.

I'd love to get GOLD at $900 an ounce but that won't be this week. GDX at under $13 and Ill buy more.

Maybe some more energy stocks on weakness.
 
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Thanks China....:eek: Seriously, who didn't see this coming? China's economy has been propped up for about 5 years now. That charade can only last so long.


Blade, you should wait a little longer to buy in emerging markets. We haven't seen the bottom of this yet
 
the fact that our economy rises and falls with a shady unregulated country like China is what is frightening for me and my portfolio
 
everything is DOWN except for one major asset class: Precious metals and the miners.

For those who think GOLD is just another commodity this sell-off is proof that when the **** hits the fan people flock to GOLD.
 
The ultimate question is when to short the U.S. bond market because that is a ticking time bomb waiting to implode.
 
FollowTheMoney said:
The ultimate question is when to short the U.S. bond market because that is a ticking time bomb waiting to implode.
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That's like saying "The ultimate question is which Powerball numbers to play right now" ...

How long are you willing to wait, and how much money are willing to lose waiting for it to happen?

Old saying about markets staying irrational longer than one can stay solvent.


I had some financial TV inflicted on me this morning while waiting for a surgeon to show up. Person after person talking about what all this "means" and what one should do and how it's all so clear and this indicator means that ... and yet somehow all these people who know so much today didn't know a thing about this crisis a week ago.
 
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pgg said:
That's like saying "The ultimate question is which Powerball numbers to play right now" ...

How long are you willing to wait, and how much money are willing to lose waiting for it to happen?

Old saying about markets staying irrational longer than one can stay solvent.


I had some financial TV inflicted on me this morning while waiting for a surgeon to show up. Person after person talking about what all this "means" and what one should do and how it's all so clear and this indicator means that ... and yet somehow all these people who know so much today didn't know a thing about this crisis a week ago.
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You are correct of course. But, technicals of the chart indicate the market will likely re-test the August 24th lows. Unless there is a specific reason or stock you must buy right now the best plan of action is to wait until those lows are reached once again.

Fundamentals also show the P/E of most growth stocks are high and value stocks like oil based ones have a very uncertain "P" going forward.
 
This was an incredible week. Love playing the market in both directions when it's volatile as hell and crystal clear what it is going to do. Pretty much all you had to do was watch China and play off of it. Watched for any bullish data caused sucker rallies (China intervention in the markets/ oil inventory report/ jobs report) then shorted the bejesus out of them. Even made a nice long play on Tuesday before resuming short bias. Awesome week.

20% of my portfolio is placed into a long gamble going into Monday. I'm betting the Chinese say something about further governmental intervention in the market over the weekend.

-pod
 
pgg said:
I had some financial TV inflicted on me this morning while waiting for a surgeon to show up. Person after person talking about what all this "means" and what one should do and how it's all so clear and this indicator means that ... and yet somehow all these people who know so much today didn't know a thing about this crisis a week ago.
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I called it - seriously I did....

I but some SPY PUTS for expiration in June 2016 about 2 weeks ago during the middle of the small Santa rally. I knew there would be a large pull back soon. However, what I can't even pretend to guess - is will it continue?

If you look at a 20 yr chart - never has the marker risen after seeing a flattening of market over a substantial amount of time - like we have seen with the S&P over the last 6 to 9 months. In fact the two times there was such a flattening, the market has fallen HARD. The last one fell 50% over 1 year, and the one previous was about 40% over a year.

I think it is better to be on the short side for a while. Take option premiums for bear spreads. VIX is climbing - good time for time decay money to fill your account.

I do agree to get some energy ETF's. How much more can they fall?

Also, if interested, NVRO held most of it's value during this fall. I still think this a great stock for the next year. Maybe the small drop presents another great entry point.
 
Hit a rebalancing band in international value and US Large. Bought some of each. Also tax loss flipped a few positions this week. Down markets are where you make your money. Not terribly fun though while doing it. Buying in down markets is sort of like going to the gym. I hate doing it, but I know am likely better off for doing it.
 
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BLADEMDA said:
everything is DOWN except for one major asset class: Precious metals and the miners.

For those who think GOLD is just another commodity this sell-off is proof that when the **** hits the fan people flock to GOLD.
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Gold may go up a bit, and a lot of things really get bad, but when a recovery occurs, it'll drop right back down near $1,000 again. It's basically a good hedge to have in your portfolio, but not a fantastic investment vehicle overall, as it performs poorly in a stable economy.
 
pgg said:
Zerohedge? Really?
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Zerohedge works 60% of the time, every time. Really though, I've been predicting a 25-30% drop in the markets by summer since the start of last month, so they're really just confirming what I already saw the markets heading into. The big problem is overvalued bonds and poor developing country growth at the moment, it's just going to drag the markets into a selldown for a bit until valuation reaches something a bit more realistically aligned with where the markets should be.
 
Mad Jack said:
Zerohedge works 60% of the time, every time. Really though, I've been predicting a 25-30% drop in the markets by summer since the start of last month, so they're really just confirming what I already saw the markets heading into. The big problem is overvalued bonds and poor developing country growth at the moment, it's just going to drag the markets into a selldown for a bit until valuation reaches something a bit more realistically aligned with where the markets should be.
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So, do you see S and P bottoming at 1820 or closer to 1650?
 
Well, China didn't intervene in their market yet, but they did me a solid by strengthening the Yuan. Futures are looking green and Europe trending out of the red.

The market was fairly oversold so a bounce was likely even without intervention. I'll be closing positions when the rally starts to fail. The market has plenty of room to drop longer term.

-pod
 
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We just haven't seen an economy the size of China's collapse so we have no idea of the ultimate economic ramifications.

One potential disagreement I have with Krugman's piece is on his claim of minimal interconnectedness. As we have seen today, oil has the real potential to drive down world markets, and right now oil is heavily influenced by Chinese dropping demand combined with our own governments ill advised complicity in the war on oil prices. Likely, he is correct and a recovery in oil prices will somewhat divorce the world markets from further SSEC failures.

Even then, we have to worry about dollar fluctuations stimulated by the PBOC and their significant currency reserves.

Thankfully, there is a lot of money to be made in a bear market if you play it right. I only eked out a couple percent today as I wasn't able to play the downside due to scheduling. In this market you have to protect gains no matter how small.

-pod
 
periopdoc said:
As we have seen today, oil has the real potential to drive down world markets, and right now oil is heavily influenced by Chinese dropping demand combined with our own governments ill advised complicity in the war on oil prices.
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Not counting short term volatility, what do you mean here? Cheap oil is a symptom of bad economies (reduced demand), not a cause of bad economies. Cheap energy is not bad for economies, except those heavily dependent on oil exports like SA and Russia.
 
urge said:
I think we are starting (since last year) to go through a long deflation. I would not buy real estate now.
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I am about to buy an expensive house. Can you elaborate?
 
Eyefixer said:
I am about to buy an expensive house. Can you elaborate?
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There is no cash in the system. Prices across the board are coming down. You might end up with an underwater mortgage if this creeps into real estate.
 
urge said:
There is no cash in the system. Prices across the board are coming down. You might end up with an underwater mortgage if this creeps into real estate.
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Well, that doesn't make me feel good :). Any references I get more info from?
 
pgg said:
Not counting short term volatility, what do you mean here? Cheap oil is a symptom of bad economies (reduced demand), not a cause of bad economies. Cheap energy is not bad for economies, except those heavily dependent on oil exports like SA and Russia.
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Put simply, reduced demand for oil in China (due to a depressed economy) results in depressed oil prices and depressed oil prices have more of a negative effect on the U.S. economy than the govt realizes or admits. Certainly not to the degree that it effects Russia and its allies in the Middle East (likely the whole geopolitical point of the war on oil prices), but still a negative effect.

I believe the U.S. Govt is complicit in the SA war on oil prices. Quietly allowing for the implosion of the shale industry for the greater good of preventing the re-emergence of the Soviet empire with Putin at the helm. I can't say I completely disagree with the strategy.

Of course, if we had a robustly healthy economy, then the slump in oil prices would be a slight bump in the road to the overall economy. It would be devastating to the entire segment of the economy that has grown around shale oil (exploration, development, MLPs etc), but most of the pain would be eased by growth in other areas as a result of cheap energy. But when you have an economy teetering on the edge of recession anyway, the hit to the energy sector can be enough to tip us over the edge.

What I was trying to say is that oil is the vehicle by which the Chinese recession can be transmitted to other unstable economies. Hope that makes sense.

-pod
 
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BLADEMDA said:
So, do you see S and P bottoming at 1820 or closer to 1650?
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I'm betting it hits 1700 or lower this year, and not quickly- this'll be a slow bear mauling, with a slow return to the 1900-2000 range over the next year. I actually pulled all of my investments out of the market right before things started dropping, because the risk:reward just isn't worth it for cash I intend to spend entirely within the next two years (medical school expenses and the like). I stand to lose a lot more than I could gain on a 2.5 year time horizon. Marketwatch seems to agree with me: http://www.marketwatch.com/story/an...drop-on-the-sp-500-is-taking-shape-2016-01-11

MW-ED039_chart_20160111114453_ZH.jpg
 
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Just looking at redfin in my area, plenty of houses are going for 10% off their original asking price
 
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Mad Jack said:
I'm betting it hits 1700 or lower this year, and not quickly- this'll be a slow bear mauling, with a slow return to the 1900-2000 range over the next year. I actually pulled all of my investments out of the market right before things started dropping, because the risk:reward just isn't worth it for cash I intend to spend entirely within the next two years (medical school expenses and the like). I stand to lose a lot more than I could gain on a 2.5 year time horizon. Marketwatch seems to agree with me: http://www.marketwatch.com/story/an...drop-on-the-sp-500-is-taking-shape-2016-01-11



MW-ED039_chart_20160111114453_ZH.jpg
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It's impossible to time the low with precision. I'll likely add at 1820-1830 and go to my full in position at 1680. When the market bounces off the lows it bounces hard.
 
No offense to any of you guys, but nobody really knows what the market will do over the short or long term. I certainly don't, which is why I keep buying a diverse mix of low cost index funds every month. I'm not going to try to time the market because historically that's a losing game.

A lot of this reminds me of the garbage Jim Cramer spews. Yes, sometimes he is correct in his predictions. He is also equally likely to be wrong.

I have 30 years until I retire and I plan to keep buying low cost mutual funds and maintain the same asset allocation through all market conditions.
 
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nycitygas said:
Just looking at redfin in my area, plenty of houses are going for 10% off their original asking price
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Yup. The median home price in my neck of the woods has gone up double digits for 3 years now.
 
okayplayer said:
No offense to any of you guys, but nobody really knows what the market will do over the short or long term. I certainly don't, which is why I keep buying a diverse mix of low cost index funds every month. I'm not going to try to time the market because historically that's a losing game.

A lot of this reminds me of the garbage Jim Cramer spews. Yes, sometimes he is correct in his predictions. He is also equally likely to be wrong.

I have 30 years until I retire and I plan to keep buying low cost mutual funds and maintain the same asset allocation through all market conditions.
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Well I can tell you my portfolio would be a lot smaller today if I had invested all my money exactly as the experts said to do. Instead, I prefer to go to my full equity exposure once a true bear market sets in. This strategy has been the one to use since 2000 and would trounce the notion that the same asset allocation should be used in all market conditions. These days the computers dictate a lot of the exit from the markets so as valuations get stretched the best approach is to scale back equity exposure and wait for a better entry point. This has worked like a charm since 2000 and is my long term strategy. I'll probably vary my equity exposure by 10-15 percent based on market conditions and valuations.

It's fine to keep buying equities every month but it would also be fine to use some technical Analysis along with fair value analysis to determine equity exposure. Stocks are not cheap right now and some are very expensive. Historically, that has led to underperformance.

The investing gurus are using data prior to the entry of super computers, ETFs and regular investors being able to sell with the click of a mouse. I submit to you this has changed the way the market acts and the speed in which things now move. That's why you can see flash crashes and vast price movements in minutes. I agree it's hard to time the market but it's not hard to keep cash on the sidelines for bear markets especially when the current bull market is long overdue for a correction. I'm not advocating single stock selection but rather common sense investing based on valuation and basic technical analysis.
 
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okayplayer said:
No offense to any of you guys, but nobody really knows what the market will do over the short or long term. I certainly don't, which is why I keep buying a diverse mix of low cost index funds every month. I'm not going to try to time the market because historically that's a losing game.

A lot of this reminds me of the garbage Jim Cramer spews. Yes, sometimes he is correct in his predictions. He is also equally likely to be wrong.

I have 30 years until I retire and I plan to keep buying low cost mutual funds and maintain the same asset allocation through all market conditions.
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I've beaten the market 8 out of the last 10 years, and the ones where I didn't I wasn't far behind. It isn't wise to try and time markets, but I'd be eating a whole lot more ramen in medical school if I hadn't done so in the past. I guess a big difference between me and many other investors is that most people are investing for retirement. I invest both in funds for retirement (my conservatively balanced funds) and also for fun (my money that I play around with and that is paying for my room and board in med school). My retirement account will be enough to get me by in the twilight of my life at the rate they're going, but the rest of my investments are more for pleasure. It's basically just a drawn-out form of gambling that I've done quite well at.
 
BLADEMDA said:
everything is DOWN except for one major asset class: Precious metals and the miners.

For those who think GOLD is just another commodity this sell-off is proof that when the **** hits the fan people flock to GOLD.
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You have been watching too much Hannity/Fox. Don't quit your day job. Gold isn't going to save you here and the miners are toast, go look at FCX and what's happened there...best bet if you are bearish is to get out the market and buy back into S&P index after it takes a hit

-MD / MBA and former Wall Street analyst
 
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ER BlueBlood said:
You have been watching too much Hannity/Fox. Don't quit your day job. Gold isn't going to save you here and the miners are toast, go look at FCX and what's happened there...best bet if you are bearish is to get out the market and buy back into S&P index after it takes a hit

-MD / MBA and former Wall Street analyst
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Gold can't save me as it is only 3.5 percent of my portfolio. And I'm not quitting my day job. GDX is a good investment at under $14 for the long term.

I have cash ready to deploy once the S and P hits my targets. Thanks for your post.
 
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ER BlueBlood said:
You have been watching too much Hannity/Fox. Don't quit your day job. Gold isn't going to save you here and the miners are toast, go look at FCX and what's happened there...best bet if you are bearish is to get out the market and buy back into S&P index after it takes a hit

-MD / MBA and former Wall Street analyst
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If I were in it for the long haul, that's exactly what I'd do. Dump to cash, wait for crash, rebuy Vanguard index funds once the market hits 1700. Gold is good as a hedge if you've got a full portfolio and it's occupying a particular niche, but it's bad as an investment to dump a large amount of your asset allocation into, because you're one news article or world event (China sells off its gold reserves/oil soars/etc) away from the sector taking a serious hit.
 
sevoflurane said:
Yup. The median home price in my neck of the woods has gone up double digits for 3 years now.
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I think nycitygas said houses are 10% down in his area.

Years 2012-2014 were amazing for housing in my area. Over 10% gains every year, perhaps related to the lowest mortgage rates in history.

2015 was not so kind. About 5% loss. I'm afraid it will keep going down for a while, especially if the stock market keeps tanking and the fed keeps raising interests.
 
For every person who "beats the market" my hunch is that there are 10 others who fail miserably. It's very hard to consistent time and beat the market over any stretch of time. For those that can do it I congratulate you.

For the rest of us the best approach is diversification and steady investing over a long period of time. My tweak on that concept is varying your exposure to equities based on valuations and technical analysis. This 10-15 percent variation should help you lose less money over time thereby allowing you to outperform the market. Since 2000 paying attention to valuation combined with technical Analysis has been a winning formula.
 
Eyefixer said:
Well, that doesn't make me feel good :). Any references I get more info from?
Click to expand...

My standard advice is to buy the house you can afford under traditional mortgage guidelines. This is especially critical when shopping in an overheated market with a reduction in real estate value just around the corner.

I have three rules for buying a house. These guidelines will keep you from going underwater with your mortgage unless there is a Great Depression level of economic turmoil.

First, do not buy a house unless you have a solidly stable job for at least the next 5 years. Second, do not buy a house unless you can afford a full 20% down payment (80% loan to value). Third do not buy a house unless you can afford the payments on a 15 year fixed mortgage on that house.

These may seem like tough rules, but will keep you out of trouble if the economy or the real estate market tanks.

Set your max purchase price based on either the 15 year mortgage payment or the 20% down, whichever is lowest. Once you have found a house, shop for the cheapest mortgage you can find (likely a 5/1 ARM). Shop around for a mortgage like you shopped for your house. Most folks spend five minutes when they should spend a lot more time on this. Pay close attention to the true cost of the loan. Cheapest I could find when considering the true cost was from PenFed where I have all my consumer loans. Absolutely brilliant company for consumer loans.

Then make payments equal to what you would be paying on a 15 year fixed. Be disciplined about this. At the end of the initial 5 year period, you will be so far ahead that even if your rate gets adjusted to its ceiling, you will end up paying less than you would have with a 15 year fixed. It won't protect you from losses if the real estate market tanks, but it will protect you from getting upside down on your mortgage.

Personally, I put 20% down and made double payments for the first five years. Somewhere around the 55th month I crossed the 50% equity mark and cut it back to single payments.

-pod
 
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Why only play the market in one direction? With the multitude of short ETFs, or options, you can make profit no matter which way the market is going. Define your max acceptable loss and use stops or options to ensure you never exceed that acceptable loss level. I used to think options were only for increasing beta, but really they are an excellent strategy for defining and minimizing your downside risk.

*Disclaimer - The studies are clear, on a population basis the best way to trade is to buy index funds and don't try to time the market. Don't try to beat the market like I try to do. The evidence is clear, you can't beat the market. But if you do decide to trade be aware it's a shark tank, the HFTs are remorseless about taking your money. Laughing all the way, they will take every last stinking penny you leave out there.

-pod
 
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periopdoc said:
Why only play the market in one direction? With the multitude of short ETFs, or options, you can make profit no matter which way the market is going. Define your max acceptable loss and use stops or options to ensure you never exceed that acceptable loss level. I used to think options were only for increasing beta, but really they are an excellent strategy for defining and minimizing your downside risk.

*Disclaimer - The studies are clear, on a population basis the best way to trade is to buy index funds and don't try to time the market. Don't try to beat the market like I try to do. The evidence is clear, you can't beat the market. But if you do decide to trade be aware it's a shark tank, the HFTs are remorseless about taking your money. Laughing all the way, they will take every last stinking penny you leave out there.

-pod
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+1

Don't bet with your savings. If you want to play the market, use money you don't mind using and be prepared to lose. I've been lucky, and could have done even better with shorts and options if I had the time to focus on them. But this sort of thing is risky, and NOT what you want to do with your **** you account.
 
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