US Stock Market in 2015- Has it Topped Out?

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I have no idea whether the US stock market has reached its peak but I am a buyer at 1910-1920 S & P 500; But, I have been waiting for this market correction.

I realize most are "buy and hold" Index or ETF investors on SDN but I'm curious to see if anyone will be adding to equities at these levels or 5% lower from here.
 
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After another battering for U.S. stocks Friday, investors need to change their expectations for the rest of the year, one technician said.

"I think we've already hit our top on the year. I think it's just going to get ugly," said Dan Fitzpatrick, president and technical analyst at Stock Market Mentor, in a CNBC "Power Lunch" interview.

The Dow Jones industrial average plunged 530 points, ending its worst week since September 2011. Both the Dow and Nasdaq closed in correction territory, or more than 10 percent lower than their all-time intraday highs this year.

Stocks
Fitzpatrick stressed that investors should stay patient before "jumping in" on any weakness. The "buy the dip" saying may not work for the rest of the year, he added.

"We're not dip buyers anymore. We're rally sellers," he said.

Investors should resist "panic" and selling at a market bottom, Fitzpatrick added.
 
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S-P-500-Index-2015-07-31-chart.png
 
BLADEMDA said:
I realize most are "buy and hold" Index or ETF investors on SDN but I'm curious to see if anyone will be adding to equities at these levels or 5% lower from here.
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Since I will be buying lots of equities in the future, I would love nothing more than a big down swing from here so I can buy them on the cheap. Alas if they don't go down, I will still be buying.
 
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BLADEMDA said:
I have no idea whether the US stock market has reached its peak but I am a buyer at 1910-1920 S & P 500; But, I have been waiting for this market correction.

I realize most are "buy and hold" Index or ETF investors on SDN but I'm curious to see if anyone will be adding to equities at these levels or 5% lower from here.
Click to expand...

Bought emerging markets yesterday because I hit a rebalancing band.
 
BLADEMDA said:
Balls! I couldn't pull the trigger because each weak that sector keeps going down. I'll need to see a leveling off first of EM before I add to my positions.
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Who knows? I may need to rebalance into it again before this is over.
 
Mman said:
Since I will be buying lots of equities in the future, I would love nothing more than a big down swing from here so I can buy them on the cheap. Alas if they don't go down, I will still be buying.
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We agree on this fact. Please look at the graph below from Morningstar on the return since 1995. Now, I'm not expecting that same return but I hope to get half that amount over the next two decades (i'll be retired before then though):

3400.jpg
 
"Six years into a stock bull market, I won't pound any e-tables urging readers to buy more stocks. This column, as always, is intended to explore ideas and think through consequences, no more. I will note, though, that the 1994 article was launched at what was then perceived to be near a market top, only two years before Alan Greenspan's famous comment that U.S. stocks were perhaps priced for "irrational exuberance," and yet the all-equities advice ended up working out well. Predicting the future is no easier for pessimists than it is for optimists."

John Rekenthaler



John Rekenthaler has been researching the fund industry since 1988. He is now a columnist for Morningstar.com and a member of Morningstar's investment research department. John is quick to point out that while Morningstar typically agrees with the views of the Rekenthaler Report, his views are his own.
 
BLADEMDA said:
We agree on this fact. Please look at the graph below from Morningstar on the return since 1995. Now, I'm not expecting that same return but I hope to get half that amount over the next two decades (i'll be retired before then though):

3400.jpg
Click to expand...

Kinda of misleading graph to include the internet boom 1995-2000, housing boom run which correlated with stock market boom 2002-2007 and of course the run we have had 2009-2015. So the graph represents 3 booms and 2 nosedives (2000-2001 and 2008-209).

If u would have put 10k in 2000. U still would have had 10k in 2010. Which represents a zero percent gain. Actually u lost money due to inflation.

Can can plug in any time frame we want to make it look more compelling.
 
aneftp said:
If u would have put 10k in 2000. U still would have had 10k in 2010. Which represents a zero percent gain. Actually u lost money due to inflation.
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No because you ignore dividends, you actually would have made a small gain in that time frame. And if you dollar cost averaged investments over the duration of that time frame you made a lot. You can pick out whatever time frame you want, but if it's long enough you always make money.
 
aneftp said:
Kinda of misleading graph to include the internet boom 1995-2000, housing boom run which correlated with stock market boom 2002-2007 and of course the run we have had 2009-2015. So the graph represents 3 booms and 2 nosedives (2000-2001 and 2008-209).

If u would have put 10k in 2000. U still would have had 10k in 2010. Which represents a zero percent gain. Actually u lost money due to inflation.

Can can plug in any time frame we want to make it look more compelling.
Click to expand...


Hey, you are correct. I did some digging and I found this:

SPX-Dow-Nasdaq-since-2000-real.gif
 
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SPY-ETF-since-2000-peak.gif


The total return certainly looks better, but the real (inflation-adjusted) purchasing power of that $1,000 is currently only 306 dollars above break-even, a real compounded annual return of 1.80%.
 
Mman said:
Since I will be buying lots of equities in the future, I would love nothing more than a big down swing from here so I can buy them on the cheap. Alas if they don't go down, I will still be buying.
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So true! Those of us decades from retirement can only benefit from these short term downturns. It simply means we'll have more shares in the end at whatever price.
 
Mman said:
No because you ignore dividends, you actually would have made a small gain in that time frame. And if you dollar cost averaged investments over the duration of that time frame you made a lot. You can pick out whatever time frame you want, but if it's long enough you always make money.
Click to expand...

In the long run we are all dead. Deciding on how much to reduce equity exposure as we approach the end of our earning capacity is a very thorny issue. Sequence of returns for retirees is hugely important and beyond one's control.

The person who retired in 1980 with a 50/50 or 60/40 portfolio had a very different sustainable withdrawal rate experience than the person who retired in 2000.
 
dr doze said:
In the long run we are all dead. Deciding on how much to reduce equity exposure as we approach the end of our earning capacity is a very thorny issue. Sequence of returns for retirees is hugely important and beyond one's control.

The person who retired in 1980 with a 50/50 or 60/40 portfolio had a very different sustainable withdrawal rate experience than the person who retired in 2000.
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Not really. I think 3% SWR would've worked just fine for either of them with a balanced portfolio.
 
dr doze said:
I agree that a 3% SWR is prudent for planning going forward and is very safe. But most people are counting on a much higher rate. Sequence of returns around retirement will be critical if you are counting on a higher rate.

http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html?_r=0
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That's a fascinating graphic.

Real annual returns over 7% are in green. There's not a lot of green on that chart. But everyone I know tells me the stock market returns 11% on average in the long term.
 
pgg said:
That's a fascinating graphic.

Real annual returns over 7% are in green. There's not a lot of green on that chart. But everyone I know tells me the stock market returns 11% on average in the long term.
Click to expand...

Agree that the chart is eye opening. Don't forget the link lists real returns. The 11% that you are referring to is almost certainly nominal returns.
 
The s and p 500 is at the same place today as it was on Sept. 30, 2014. This is when the criminal Fed stopped pumping the heroine QE into the arms of the wall street traders. The fed balance sheet has been flat the for the last year and so has the stock market. Instead we are distracted by Caitlyn, the raping mexicans, Jared from Subway, and trying to figure out wherever the blood is coming from.

Wake up people!


The economic recovery is nothing but FRAUD! Debt is not wealth. It's propped up by BS subprime auto loans of 0% for 7 years now I see on tv, young people enslaved by 6 figure student loan debt at 8% that can never be repaid, pretending that people who don't look for jobs are not unemployed, i.e. they don't count, underreporting the correct amoutn of inflation so social security doesn't become insolvent as quickly, artifically inflated stock market, real estate and bond markets with negative real interest rates.

Thus, the Fed is controlled by Wall Street. These entities are criminals. People need to wake up, realize what's going on. Wherever the blood is coming from is from the oligarchs that control this country!
 
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Wiscoblue said:
China down 8%. Dow futures down another 400 points. Don't catch a falling knife.
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I have no idea what that means except that a stock purchase today would be something like 8% cheaper than a stock purchase last week. Human psychology is funny to me. When someone sees a sale at a store they get happy and want to make a purchase. When a stock goes on a sale, they fret and want to sell. It's terrible decision making to buy high and sell low, but that's what many people emotionally do.

So the idea to not "catch a falling knife" would suggest not buying stocks until they are past their low and getting more expensive which is bad advice. Simple dollar cost averaging is way more effective.
 
Wiscoblue said:
Buying on the way up seems more sensible than on the way down.
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how does one determine which way the market will go in the future? Most people that wait to buy until it's "on the way up" miss a large portion of the gains that happened to make it be on it's way up.
 
I would be a very rich man if I knew the answer to that question! I guess I would wait to see if the market stabilized at some point before jumping in.
 
Wiscoblue said:
I would be a very rich man if I knew the answer to that question! I guess I would wait to see if the market stabilized at some point before jumping in.
Click to expand...

You can be a very rich man by simply dollar cost averaging and always buying for the long term.
 
Time for bargain hunting. CVS was trading at $82, already back to $100. Apple was down to $90.

Ishares global healthcare etf down 35%

Even NBG looks interesting at $.60, but now is a time to buy quality.
 
dr doze said:
Bought emerging markets yesterday because I hit a rebalancing band.
Click to expand...
That might hurt you, given the news from developing markets this morning. Trouble with emerging markets is their recovery times tend to be measured in years, not months, and this looks like the start of a stagnation trend care of the Chinese. They don't have as many effective toys as the feds to make things bounce back, but they're trying a few things right now, let's see if their new pension and investment option schemes work to stabilize their market...
 
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cincincyreds said:
The s and p 500 is at the same place today as it was on Sept. 30, 2014. This is when the criminal Fed stopped pumping the heroine QE into the arms of the wall street traders. The fed balance sheet has been flat the for the last year and so has the stock market. Instead we are distracted by Caitlyn, the raping mexicans, Jared from Subway, and trying to figure out wherever the blood is coming from.

Wake up people!


The economic recovery is nothing but FRAUD! Debt is not wealth. It's propped up by BS subprime auto loans of 0% for 7 years now I see on tv, young people enslaved by 6 figure student loan debt at 8% that can never be repaid, pretending that people who don't look for jobs are not unemployed, i.e. they don't count, underreporting the correct amoutn of inflation so social security doesn't become insolvent as quickly, artifically inflated stock market, real estate and bond markets with negative real interest rates.

Thus, the Fed is controlled by Wall Street. These entities are criminals. People need to wake up, realize what's going on. Wherever the blood is coming from is from the oligarchs that control this country!
Click to expand...

Spot on, expecting a massive crash by end of next month.
 
MAJOR crash in many ETFs this morning as some were down 20% due to the rush to sell. If you haven't looked at your ETFs check out the lows they made this morning because some were down big on the open. When people rush to sell all at once the system gets overwhelmed and prices plummet.
 
Art Hogan, chief market strategist at Wunderlich Securities, noted that the sharp opening losses were due to great uncertainty among traders and the implementation of a rare market rule.

The New York Stock Exchange invoked Rule 48 for the Monday stock market open, Dow Jones reported.

The rule allows NYSE to open stocks without indications. "It was set up for situations like this," Hogan said. The rule was last used in the financial crisis.

Stock index futures for several major indices fell several percentage points before the open to hit limit down levels.

Circuit breakers for the S&P 500 will halt trade when the index decreases from its previous close by the following three levels: 7 percent, 13 percent, and 20 percent.

"Fear has taken over. The market topped out last week," said Adam Sarhan, CEO of Sarhan Capital. "We saw important technical levels break last week. Huge shift in investor psychology."
 
The stock selloff may mean that investors will need to rebalance their retirement portfolios.

Rebalancing is that sometimes painful and counterintutive process of buying or selling assets to maintain your desired mix of assets. For example, if you have a portfolio evenly split between stocks and bonds, you would need to purchase stocks to keep your 50-50 allocation target when the stock market generates major declines.

"We are rebalancing and using cash to buy stocks that have had an entire year of gains erased over the past two months," said Gustavo J. Vega, a certified financial planner with Ameriprise Financial in Miami. "Gold also looks like an attractive hedge at this point and we think it should be added as well as other alternatives."

Rebalancing can generate capital gains taxes in taxable accounts, but it doesn't have to. "Look for opportunities to harvest tax losses, and reinvest in a similar (but not the same) portfolio or rebalance with fresh money," Chris Chen, a certified financial planner in Waltham, Massachusetts. For retirement accounts that are tax-deferred, such as 401(k)s and traditional and Roth IRAs, you can adjust your asset allocation without worrying about the tax consequences.

Though rebalancing is no silver bullet for stock market volatility. A2010 study on the benefits of rebalancing by The Vanguard Group found that "the only clear advantage as far as maintaining a portfolio's risk-and-return characteristics is that a rebalanced portfolio more closely aligns with the characteristics of the target asset allocation than with a never-rebalanced portfolio."


http://www.cnbc.com/2015/08/24/what-should-you-do-with-your-retirement-portfolio-now.html
 
Mad Jack said:
That might hurt you, given the news from developing markets this morning. Trouble with emerging markets is their recovery times tend to be measured in years, not months, and this looks like the start of a stagnation trend care of the Chinese. They don't have as many effective toys as the feds to make things bounce back, but they're trying a few things right now, let's see if their new pension and investment option schemes work to stabilize their market...
Click to expand...

" it is from time to time the duty of a serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself. "

John Maynard Keynes
 
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dr doze said:
" it is from time to time the duty of a serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself. "

John Maynard Keynes
Click to expand...
True- detachment and acceptance are what separate serious investors from gamblers.
 
US stocks pare losses after China’s ‘Black Monday’
Robin Wigglesworth in New York, Patrick McGee in Hong Kong and Jamil Anderlini in Beijing
1992a852-c9c8-4ac6-92c0-3a14dc60b9bd.img
 
Mad Jack said:
True- detachment and acceptance are what separate serious investors from gamblers.
Click to expand...


Yes. But, TRUE investors disagree on how much (if any) exposure you need to Emerging Markets for a diversified portfolio. I'm limiting mine to 4% of my total equities position. Emerging market is the most volatile sector one can invest in and it is perfectly rational to avoid buying into that sector whatsoever.

Instead, Developed foreign market equities are on sale right now (large and small)- that is the space to be buying over EM.
 
Mman said:
You can be a very rich man by simply dollar cost averaging and always buying for the long term.
Click to expand...


As long as one realizes that the long run might very well be decades. Few have the patience, the discipline, and the resources to ride that out. Harder still for the retiree or soon to be retiree who has limited earning capacity going forward. For this type of person overestimating risk tolerance and discipline is a mistake that very likely won't be recoverable and have a major permanent effect on their lifestyle.

http://blog.aarp.org/2015/08/19/stocks-for-the-long-run-really/
 
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BLADEMDA said:
Yes. But, TRUE investors disagree on how much (if any) exposure you need to Emerging Markets for a diversified portfolio. I'm limiting mine to 4% of my total equities position. Emerging market is the most volatile sector one can invest in and it is perfectly rational to avoid buying into that sector whatsoever.

Instead, Developed foreign market equities are on sale right now (large and small)- that is the space to be buying over EM.
Click to expand...
Depends on your time horizon. I've currently got just under 9% of my investments in developing markets- used to carry a lot more, because I was investing in my 20s and the risk:reward was fine for a young investor, but as I've gotten older I've just let that part of my portfolio sit steady without rebalancing. Ideally 10% or less of your portfolio should be in high risk markets, IMO. It's more of an optional investment category than a critical one, a place to throw a few extra dollars in if you want to diversify and add potential growth but can handle the risk of loss if the developing markets go South.
 
At the depths of the Great Financial Crisis, the U.S. Federal Reservearrested the market rout by introducing quantitative easing to explicitly support asset prices. That plan worked for over six years — but now it's failing.

102892332-RTX1M5BF.530x298.jpg

Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.
The U.S. stock market (as measured by the S&P 500) climbed over 200 percent from its lows in March 2009 to its peak this year. The primary driver of this move was the perception that central banks can support asset prices — this perception was tested repeatedly until it became market reality. Markets cajoled not only the Fed into supporting asset prices, but also the European Central Bank, the Bank of Japan and thePeople's Bank of China. Each market selloff was met with more central bank support and the primary driver of higher asset prices was reinforced.

Read MoreGet ready: Looks like a bloody Monday

The secondary driver of the stock market reality was the perception that higher asset prices would create economic growth. More specifically, investors have been betting that higher asset prices would create economic growth strong enough to withstand the removal of central bank support. This has been dubbed "escape velocity." Unfortunately, the U.S. and global economy have failed to reach escape velocity and markets are in the nasty process of withdrawal.

http://www.cnbc.com/2015/08/24/the-only-thing-that-can-save-this-market-commentary.html
 
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