US Stock Market in 2015- Has it Topped Out?

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Think about your long-term plan and what kind of assets you need to get there. Think about how the market has been through this before, many times and much worse. Remember that these bouts of stress are why stocks return more than other assets to begin with. If stocks were steady-eddy, up-and-to-the-right all the time, they would not have the return potential they do. And your long-term portfolio would suffer because of it.

Morningstar.com commentary
 
dr doze said:
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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For anybody that is retired, they shouldn't have a huge exposure to equities. If they did, their mistake. For somebody that won't need funds for decades, that's why you ride it out for the long term regardless of what happens today or tomorrow.
 
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Mman said:
For anybody that is retired, they shouldn't have a huge exposure to equities. If they did, their mistake. For somebody that won't need funds for decades, that's why you ride it out for the long term regardless of what happens today or tomorrow.
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Well, If I had the stomach to keep my allocations the same in February of 2009 my portfolio would be worth $500K more today. But, every few days the market kept going down so by 12/08 I had enough with "investing" my money down a black hole. Things looked really bleak at that time. I didn't sell anything but stopped adding to my positions 12/08.

My point is that we all have our limits and mine was tested back in late '08/early '09. I held the line but didn't keep adding throughout the market drop. I know my limits and since then have maintained about a 50% exposure to equities (in '13 it dropped to 45% due to market gains). For those that think they can stomach a 50% drop in their portfolio let me tell you it isn't easy to do regardless of what you may believe.

If the market craters another 15% down from here you need to be adding to your positions and not holding the line. Keep some powder dry for the real crash which could be 40% lower from here so don't go "all in". This is why an 80/20 (under age 35) or a 75/25 portfolio is the most one should have even if a young investor. That 25% dry powder gives you the means to add to your positions during a market correction or sell during market highs to maintain that 75/25 allocation.
 
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BLADEMDA said:
Well, If I had the stomach to keep my allocations the same in February of 2009 my portfolio would be worth $500K more today. But, every few days the market kept going down so by 12/08 I had enough with "investing" my money down a black hole. Things looked really bleak at that time. I didn't sell anything but stopped adding to my positions 12/08.

My point is that we all have our limits and mine was tested back in late '08/early '09. I held the line but didn't keep adding throughout the market drop. I know my limits and since then have maintained about a 50% exposure to equities (in '13 it dropped to 45% due to market gains). For those that think they can stomach a 50% drop in their portfolio let me tell you it isn't easy to do regardless of what you may believe.

If the market craters another 15% down from here you need to be adding to your positions and not holding the line. Keep some powder dry for the real crash which could be 40% lower from here so don't go "all in". This is why an 80/20 (under age 35) or a 75/25 portfolio is the most one should have even if a young investor. That 25% dry powder gives you the means to add to your positions during a market correction or sell during market highs to maintain that 75/25 allocation.
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Benjamin Graham suggested every investor of any age should have at least 25% exposure to stocks and at least 25% to bonds. The other 50% depends on the situation so everybody should be between 75/25 and 25/75.

As for everybody having their limits, yes we all do. John Bogle suggested that we should never look at our balance in our retirement account. Just pick an asset allocation and add money to it regularly. Then when you retire call a cardiologist because you'll have an MI from seeing how high the balance is. The problem is that too many people check their portfolio daily or even several times a day when the actual value is completely irrelevant on a day to day basis and then they emotionally want to make decisions based on the short time span.


Humans are stupid. We are terrible investors if left to our emotions. It's far better to have zero emotional input, pick an allocation, and go with it without ever deviating unless you are close to retirement and are deviating to decrease risk exposure. But then we see things like CNBC with a million quotes across the bottom of the screen as if they mean anything. As an example, this morning was Apple as a company 10% less valuable than in was Friday afternoon? Did anything change over the weekend for them that would have such a significant impact on their valuation as a company? Of course not. What did change was the price people were willing to pay for a share of their stock this morning (although that quickly recovered). There was no change to their current or long term profitability yet people felt the need to sell shares of the stock out of nothing more than fear.

If you own stock, treat it as if you owned a private business. If your neighbor came by every minute of the day offering a different price to buy your business from you, would you even care? Of course not, unless his offered price got so high that you couldn't refuse. You certainly wouldn't care if he offered you a lower number as you'd tell him to get lost and you certainly aren't selling for that low.
 
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It's just hard to time the market. I will be in it for the long haul. Taken a brutal beating especially with Apple and Bidu. Win some, lose some. Still have great dividend paying stocks like ATT and Verizon. Just diversify yourself. Don't get married (or divorced if you get married!). We will be just fine in 10-20 years. Have 12 months straight cash savings. Usual investment advice. I've will have one kid's college prepaid college education paid off (he's 5 years old) and other will be paid off in 5 years plus supplementing with 529s. It's not sexy. But most of us should be able to retire when we are in our late 50s/early 60s.

As much as most of us hate Obamacare, the ACA really helps semi affluent people in their 50s/early 60s. Keep your "income" below 400% of poverty, Obama basically has taken care of your health care. My next door neighbor is retired and 58 years old. Him and his wife paid a whopping $200/month for their health care plus a low $2000 max out of pocket expense since they keep their "income" around 50K and live off savings and don't touch their IRAs. Obama is basically giving them 15K a year in "free money".

And by "retired" I mean, we would have the option of working a few days here and there/part time work if we chose and if we are in good health.
 
aneftp said:
It's just hard to time the market. I will be in it for the long haul. Taken a brutal beating especially with Apple and Bidu. Win some, lose some.
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How did you take a beating on Apple? It's currently @ 108 in premarket trading which is only about 20% off it's all time high and will likely keep trucking higher over the next 5 years.
 
Mman said:
How did you take a beating on Apple? It's currently @ 108 in premarket trading which is only about 20% off it's all time high and will likely keep trucking higher over the next 5 years.
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I brought close to $100k worth of apple at $130. That's a quick 30k drop in a couple of months. A lot of money.
 
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aneftp said:
I brought close to $100k worth of apple at $130. That's a quick 30k drop in a couple of months. A lot of money.
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It's only a 22K drop right now or < 20% which is normal for stocks to do in the short term. It's only money lost if you planned on selling it right now. If you planned on holding for 10 years, it's irrelevant.
 
Hang on for the ride DOWN. Fast Money traders are expecting another 10% drop from here. I'll be adding more equities likely as the market drops 5% more then another 3-5% again. I can't pick the bottom but some are saying 1680 for S and P 500.

Doze has me sold on the S and P 500 and the Russell 1000 for my buys. In addition, I will be getting CVX and XOM. The energy sector will be decimated before this correction is over.

I've got orders in for GDX when it hits 52 week low. Gold Miners are HATED right now. That's the time to buy.

Gilead held up today. Kudos to Sevo. I'll wade into a Biotech ETF if they get hit again. I must say that for those of us under-invested in equities we have been waiting around for this correction. Like I told Doze months ago I wasn't a buyer until there was a correction. The correction is here and it is a big one.
If you missed out on the 2011 correction or the 2009 bottom (tough to time that one) you finally get another shot over the next 70 days.

Stay tuned.
 
Here we go again. It's going to be an interesting day.

Love these threads BTW. :thumbup:
 
I know it's just one day.... but.... the last 48 hours have been good. I've been waiting for this. Best day on wall street in 7 years. Could all be erased tomorrow, but I'm starting to sense a bottom in this correction.

Pretty sure interest rates are going to stay low.

Whooohooo! :banana:
 
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3 fund plan. Don't touch anything.

But of course I'm a resident, if I had more cash flow I'd have bought a **** ton last 24 hours.
 
The 500 companies can be divided into 11 sectors. Each sector contains different number of companies.

Sector Number of Stocks Shiller P/E Regular P/E
Energy 40 10.30 17.60
Utilities 29 19.20 16.00
Financial Services 67 19.20 13.40
Industrials 73 20.60 18.60
Basic Materials 25 21.00 18.60
Consumer Defensive 40 21.30 22.30
Technology 64 25.20 17.10
Consumer Cyclical 79 25.70 19.00
Communication Services 10 27.90 23.60
Healthcare 56 28.80 23.00
Real Estate 20 52.20 26.40
S&P 500 500 23.7 18.8
 
BLADEMDA said:
The 500 companies can be divided into 11 sectors. Each sector contains different number of companies.

Sector Number of Stocks Shiller P/E Regular P/E
Energy 40 10.30 17.60
Utilities 29 19.20 16.00
Financial Services 67 19.20 13.40
Industrials 73 20.60 18.60
Basic Materials 25 21.00 18.60
Consumer Defensive 40 21.30 22.30
Technology 64 25.20 17.10
Consumer Cyclical 79 25.70 19.00
Communication Services 10 27.90 23.60
Healthcare 56 28.80 23.00
Real Estate 20 52.20 26.40
S&P 500 500 23.7 18.8
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Stock Market is expensive except for Energy. If we get a 1% rise in interest rates or even 2% the market will either pull back or not go up. The reason for these high valuations is the FED's low interest rates. We are 20% over-valued due to the FED so be aware that higher interest rates may cause a "reset" of valuations.
 
BLADEMDA said:
Stock Market is expensive except for Energy. If we get a 1% rise in interest rates or even 2% the market will either pull back or not go up. The reason for these high valuations is the FED's low interest rates. We are 20% over-valued due to the FED so be aware that higher interest rates may cause a "reset" of valuations.
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Look up Magic Formula Investing. There are still some cheap stocks out there.
 
Markets are heading lower again. We could be in a Bear market. I suspect at least another 5-10% lower from here. I've got my buy orders in for ETFS and stocks (I'm going to buy GILD- Thanks SEVO). S and P could hit 1730-1750 in the next 30 days.
Looking forward to the correction to buy more quality companies at a discount to fair value.
 
BLADEMDA said:
Markets are heading lower again. We could be in a Bear market. I suspect at least another 5-10% lower from here. I've got my buy orders in for ETFS and stocks (I'm going to buy GILD- Thanks SEVO). S and P could hit 1730-1750 in the next 30 days.
Looking forward to the correction to buy more quality companies at a discount to fair value.
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I bought some GILD last week and might buy more this week. They are raking in cash right now. Assuming they produce no new drugs in the next 3-5 years the stock will still tread water on income from their HepC drugs alone. If they have anything else start making money they almost can't help but appreciate in value.
 
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For the record I am a buyer of the stock market as the prices drop. I've had several of my orders "filled" recently and look forward to more buying opportunities if the market pulls back to last year's low in October of 2014. My orders will trigger at around 1860-1870 (S and P 500) and several times again if the market drops even further to 1820 then 1730.


http://www.cnbc.com/2015/09/30/why-a-stock-market-crash-isnt-likely-commentary.html

Even though the stock market isn't cheap at an S and P of 1860 the prices look reasonable.
 
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