Dow posts worst Opening Day in 8 years

[GA8314]

Thank you all for the advice. Aggressively payment schedule is in place .

Nice man. I really think you will be happy with that decision. I did the same thing, and as of literally tomorrow I am student loan free. Took 40 months because our 2 year to partner is a tough haul financially, but I'm very glad I did that.

I only say this to fellow docs because very similar options are available to docs, but you can aggressively save AND aggressively pay off loans if you do a few very important things like picking up extra shifts/call, living reasonably, holding on major discretionary spending, and having that deep desire to pay that sh.t off and recognizing debt for what it is....

The data is clear that people who live below (yes, below) their means tend to be happier. You don't need to live like a "rich guy" to be happy and ultimately wealthy. Stay the course.

It's a good feeling, but truthfully, like all other milestones, it's somewhat anticlimactic......

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[Mman]

One of the most interesting things in financial literature is that people that make vague bear -predictions almost never get called out on it after the fact. - Mman


View attachment 211930

I could be wrong, but there, now I'm not vague at least. We can look back on this post in a year and see if I'm right

well we got like 2 weeks to go. S*P is up like 19% (excluding dividends which add ~2%) the last 12 months while Silver is up 1% (I actually rounded it up to give you the benefit of the doubt). So you've basically given up almost 20% gain in a single year by going to Silver instead of stocks.

And again, I don't mean to be mean to you on this. You were just so darn sure of your prediction (like everybody else is) and this is a good lesson as to how stupid those predictions can be.

The moral of the story? Everyone should stop trying to predict where the market is going in the next 12 months and just stick with the plan. People have been strongly calling for a bear market since 2011. 5 years later and it's gone up this whole time. If you sat out this entire time (or worse took a net short position), you may have done permanent harm to your portfolio.

I don't know what the market will do tomorrow or next month or next year. It's quite possible it will go up a lot in that time or it might go down. Pick your appropriate asset allocation and stick to it. Jumping out of the market because you think it's about to crash is as dumb today as it has always been. I'd also be curious how your personal earning returns way beyond 12.5% per year has been working out if your own market timing has been so bad. I mean you were quite sure of yourself earlier in this thread. Hell, your own chart kinda implied the Dow was going to 13000. It sits > 23,000 today so you are only off by more than 10,000.

 

[nimbus]

well we got like 2 weeks to go. S*P is up like 19% (excluding dividends which add ~2%) the last 12 months while Silver is up 1% (I actually rounded it up to give you the benefit of the doubt). So you've basically given up almost 20% gain in a single year by going to Silver instead of stocks.

And again, I don't mean to be mean to you on this. You were just so darn sure of your prediction (like everybody else is) and this is a good lesson as to how stupid those predictions can be.



I don't know what the market will do tomorrow or next month or next year. It's quite possible it will go up a lot in that time or it might go down. Pick your appropriate asset allocation and stick to it. Jumping out of the market because you think it's about to crash is as dumb today as it has always been. I'd also be curious how your personal earning returns way behind 12.5% per year has been working out if your own market timing has been so bad. I mean you were quite sure of yourself earlier in this thread. Hell, your own chart kinda implied the Dow was going to 13000. It sits > 23,000 today so you are only off by more than 10,000.

This was offset by massive guaranteed gains trading forex.

 

[BLADEMDA]

Either this is the greatest investment of all time or it's going to be the biggest bubble in the history of the world:

 

[BLADEMDA]

Bitcoin is now $10,000 and likely going to $20,000 next year.

 

[facted]

Bitcoin is now $10,000 and likely going to $20,000 next year.

Likely?!? Interesting word choice. Was is that based on? Drawing a continuation of a chart?

 

[Lonestar]

Bitcoin is now $10,000 and likely going to $20,000 next year.

 

[Lonestar]

Stock market is rigged (fed induced party). Hence bitcoin (digital fiat currency) is up a zillion percent this year. Everybody loves to party like its 1999. Party on dudes.

 

[pgg]

Bitcoin is now $10,000 and likely going to $20,000 next year.

Wait, are you making that prediction, or just copypasting it?


I don’t play the Bitcoin game, but as a spectator, one thing that I find interesting is that no one talks about spending Bitcoins any more. It’s all about buying them and selling them (or holding them to sell them later). It seems a little concerning that something that’s supposed to be a currency isn’t actually used much as a currency.

 

[deleted126335]

Bitcoin might change the world.
More likely to be a footnote in history.
One can still make or lose big bucks on it no matter which of the above happens.
Do you feel lucky?

 

[BLADEMDA]

Bitcoin might change the world.
More likely to be a footnote in history.
One can still make or lose big bucks on it no matter which of the above happens.
Do you feel lucky?

Should you invest in a cryptocurrency?

 

[deleted162650]

no one talks about spending Bitcoins any more

That's because its primary use is to pay for nefarious transactions. First rule of spending bitcoin - don't talk about spending bitcoin.

 

[pgg]

That's because its primary use is to pay for nefarious transactions. First rule of spending bitcoin - don't talk about spending bitcoin.

Maybe this is just another thing I don’t understand about Bitcoin ...

But I don’t understand why people think it’s anonymous. Every transaction is preserved forever in the block chain. It’s a lot less anonymous than cash or a cash-prepaid gift/Visa card.

 

[deleted162650]

It’s a lot less anonymous than cash or a cash-prepaid gift/Visa card.

Yes, Hello - is this Mr. Hitman?


Yes.


Do you accept pre-paid Visa gift cards?

 

[pgg]

Yes, Hello - is this Mr. Hitman?


Yes.


Do you accept pre-paid Visa gift cards?

Surely Mr Hitman accepts cash.

 

[deleted162650]

Surely Mr Hitman accepts cash.

You gonna mail cash to him?

 

[deleted126335]

You gonna mail cash to him?

If I trust him enough to kill someone for me I trust him enough not to steal from me.

 

[deleted162650]

If I trust him enough to kill someone for me I trust him enough not to steal from me.

I'm not worried about the Hitman stealing. I'm worried about some lackey at the post office.

 

[facted]

Bitcoin is now $10,000 and likely going to $20,000 next year.

Down 20% in 5 hours!

Bitcoin Just Plunged 20% in a Matter of Hours

 

[Mman]

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.

I always get a kick out of specific bearish predictions in hindsight. S&P is up like 45% in the 103 weeks since this post with no more than approximately a 5% pullback at any point.

Will the stock market tank at some point? Of course. But if anybody thinks they know when it will happen, well they are just wrong.

 

[BLADEMDA]

I always get a kick out of specific bearish predictions in hindsight. S&P is up like 45% in the 103 weeks since this post with no more than approximately a 5% pullback at any point.

Will the stock market tank at some point? Of course. But if anybody thinks they know when it will happen, well they are just wrong.

Tax Cut will likely add fuel to the fire. I don't know when the market runs out of steam but I wouldn't bet against it the first quarter of 2018. I am expecting pullbacks in 2018 due to trading volatility which is something we did not have much in 2017.

I'm not BEARISH for 2018 but equities look expensive even with this tax cut; that said, I'm expecting a 7-10% increase in the S and P 500 for 2018. I have no idea if we will get a black swan event like nuking North Korea but if we avoid these events the markets will likely go up.

 

[Mman]

SO Mman, despite earnings dropping, you expect stock returns to be 5% year? With earnings falling, and stocks going up, P/E ratios will be even more out of line with historical averages - and you think this will continue for 10 years?

And I get it - don't look, just put money in and hope it all comes out okay because it has done well over any 30 year window.

However, what would have to happen - if anything - for you to say, "ya know what? The market looks way expensive right now. I think I will allocate my assets to another class for the time being."

Because David Merkel (from your article) indicates he is telling his investors to move to bonds right now. He also said he isn't ready to hit the panic button yet - but I take that to mean his hand is moving next to it.

10 months later and market has returned like 16% since then and while the market still looks kinda expensive it's not overwhelmingly so compared to other choices to invest in although bonds finally starting to tick up. I'll just keep my allocation roughly the same and keep investing all along. And yes, corporate earnings are still going up (despite you thinking they were dropping) with no end to that in near term sight.

Do I know the future? Of course not.

If Fed keeps jumping up rates for the next 12 months, bonds might start to get a bit more attractive compared to stocks.

(and this thread is still fun to read in hindsight)

 

[vector2]

Anyone selling any out of the money covered calls against their long-term divvy holds? Seems like a reasonable way to hedge currently- if the market drops or even stays strong and moves sideways then you collect a nice premium. If the market continues to beast up then worst case scenario you can add some shares albeit at a less favorable price.

 

[epidural man]

10 months later and market has returned like 16% since then and while the market still looks kinda expensive it's not overwhelmingly so compared to other choices to invest in although bonds finally starting to tick up. I'll just keep my allocation roughly the same and keep investing all along. And yes, corporate earnings are still going up (despite you thinking they were dropping) with no end to that in near term sight.

Do I know the future? Of course not.

If Fed keeps jumping up rates for the next 12 months, bonds might start to get a bit more attractive compared to stocks.

(and this thread is still fun to read in hindsight)

good point. Markets do rise - until they don't. But you didn't answer the question - Give me some data when you will think that buying is too expensive...what will the market look like? While will macroeconomic feild look like? What will happen when the fed balance sheet starts to shrink?

 

[Mman]

good point. Markets do rise - until they don't. But you didn't answer the question - Give me some data when you will think that buying is too expensive...what will the market look like? While will macroeconomic feild look like? What will happen when the fed balance sheet starts to shrink?

When the yield on treasuries starts approaching the yield on stocks, I will not be very likely to be putting money heavily into stocks.

(and please don't ask what yield on a stock means again, i'm pretty sure that discussion was hashed out several pages earlier in this thread)

 

[epidural man]

When the yield on treasuries starts approaching the yield on stocks, I will not be very likely to be putting money heavily into stocks.

(and please don't ask what yield on a stock means again, i'm pretty sure that discussion was hashed out several pages earlier in this thread)

What page? I'd like to read how you determine yield on a stock. I can't find that anywhere else on google's pages that offers a good, solid, satisfactory answer.

 

[Mman]

What page? I'd like to read how you determine yield on a stock. I can't find that anywhere else on google's pages that offers a good, solid, satisfactory answer.

page 6 of this thread, starts probably 3/4 of the way down where you ask the same question

 

[epidural man]

page 6 of this thread, starts probably 3/4 of the way down where you ask the same question

Haha.

At least I'm consistent. I remember reading that - seems like a long time ago.

So - P/E inverse = stock yield. Got it. So what do you look at...P/E of S&P? Of your ETFs? Of certain individual stocks in your portforlio? And over what period of time to make that decision?

P/E ratio of the Nifty Fifty is something like 40. The P/E ratio of FAANG is well over 100. Russell 2000 - something like 75 (which of course includes the 1/3 of companies that are loosing money). So what P/E do we use?

Do you ever look at median price to book?

 

[Mman]

Haha.

At least I'm consistent. I remember reading that - seems like a long time ago.

So - P/E inverse = stock yield. Got it. So what do you look at...P/E of S&P? Of your ETFs? Of certain individual stocks in your portforlio? And over what period of time to make that decision?

P/E ratio of the Nifty Fifty is something like 40. The P/E ratio of FAANG is well over 100. Russell 2000 - something like 75 (which of course includes the 1/3 of companies that are loosing money). So what P/E do we use?

Do you ever look at median price to book?

P/E of the S&P is good enough for me. This isn't some micro level decision making. But when risk free assets get priced near risky ones like stocks, you always go risk free. But at this point stocks still yield way more than risk free assets. Will they go down and up? Sure, but the ups will still outweigh the downs at this point.

 

[epidural man]

Is anyone concerned about the auto loan subprime possible crisis?

P/E of the S&P is good enough for me. This isn't some micro level decision making. But when risk free assets get priced near risky ones like stocks, you always go risk free. But at this point stocks still yield way more than risk free assets. Will they go down and up? Sure, but the ups will still outweigh the downs at this point.

Well I hope it works out.

 

[Mman]

Is anyone concerned about the auto loan subprime possible crisis?

I mean it's a thing, but it's like a molehill compared to the mountain of the subprime mortgage crisis.

 

[pgg]

Is anyone concerned about the auto loan subprime possible crisis?

The what?


Totally completely unlike the housing crisis.

Most importantly, risk for auto loans is built into the interest rates on them. Bad mortgages were at 3% or interest-only or even negative amortization loans. High risk auto loans have double digit interest rates, sometimes more than 20%. They're risky but the investors are paid a premium for that risk.

Not very much money in the grand scheme of things. Autos account for something like 5-10% of household debt. Mortgages ... a lot more.

Cars are much more easily repossessed and liquidated assets than houses.

Houses are expected to appreciate over time, and unrealistic expectations there fueled the subprime mortgage disaster. Cars on the other hand dramatically and rapidly depreciate and everyone knows it. There's never been any hope that lenders making risky car loan could just repossess and sell the asset for 50% more than it was worth at the time of the loan a year ago.

The housing collapse was driven in large part by the way the risk was obscured and handed off to other suckers by complicated securitization schemes.

To quote Jules, it ain't the same ****in' ballpark, it ain't the same league, it ain't even the same ****in' sport.

 

[Mman]

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.

2.5 years later and we still haven't had the imminent 25-30% drop you predicted, in fact the S&P is up almost 50% since then.

Market timing sounds great in theory, but almost never works and almost always causes people to make bad investment decisions. Of course the market will drop at some point, none of us are smart enough to know when.

 

[nimbus]

One of the most interesting things in financial literature is that people that make vague bear -predictions almost never get called out on it after the fact. - Mman


View attachment 211930

I could be wrong, but there, now I'm not vague at least. We can look back on this post in a year and see if I'm right

[/QUOTE]


Okay.

This entire thread is pretty entertaining to read now.

 

[BLADEMDA]

Predicting the market is very hard to do. Timing even harder over a longer period.

I’m a long term bull on the USA. It’s foolish to bet against us long term. Short term the amount you hold back in reserves, if any, depends on your time horizon until retirement.

 

[BLADEMDA]

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.

A great post. Honest. Accurate. Valid. The only thing I’d add is whether you want 10-20 percent in non stock assets to help cushion the recessions. Longer term Mr Market goes up.

When the recession does hit us ( I don’t know when ) remember to ignore the pain and keep investing according to your plan. The best path to wealth is investing in equities long term.

FYI, my largest positions are in the major market indices like the S and P 500 or Russell 1000. That’s the standard to measure against long term.

 

[Mman]

Okay.

This entire thread is pretty entertaining to read now.

I'll be honest, I do like a good graph with essentially penciled in arrows showing the future...

I also find it interesting @Matty44 has started posting here again but doesn't exactly own up to these previous supremely confident predictions.

And reading all the fun stuff from Hussman and zerohedge and talk about gold and silver and forex day trading, etc. Good thread. And I will admit that while I have been putting money in the market all along, technical markers are getting closer to a recession than we have been in a while.