Stock market thoughts?

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JOhnH

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I read an article a little while back where Ron Paul was once again calling for a stock market crash worse than the Great Depression. I never have given his predictions much credence though.

But lately, I am wondering what is happening. My stock broker says the economy is still strong and if we sell now, we will be breaking the cardinal rule selling high.

But he said that a few weeks and a few months ago and I watch as my portfolio drops precipitously. I'm hanging in there because I agree with him that there is no real economic reason for this drop, and I hate to sell low, but . . .

What are you financial geniuses doing?
 
For the past several years friends of mine in the financial industry have been predicting a crash, using various metrics that basically say that the stock market is going up way faster than the various economic indicators that it's supposed to keep track with. Some have gone so far as to take 100% of their money out of stocks and put it into cash waiting for it to happen. Of course, the market's been booming the past few years.

I expect that we're in for a "readjustment" soon, maybe we're starting it now, where things go downhill. Worse than the Great Depression? Who knows, possible, maybe in line with the recession of a decade or so ago. It could be that we're also seeing that whole "Markets don't like uncertainty" thing.

Me? I cashed out some of my investments that were making money so that I could make sure I had some cash reserves on hand, left the ones that are losing money alone, and left all of my 401k/retirement investments alone. Theory being that way I have cash on hand if something comes up, or I can invest when I think the market's at the bottom or close to it. Since my 401k gets money dumped in every pay check, I figure that does a good job of aggregating risk on when to invest for long-term needs.
 
Tough to say, lots of odd movements in the market at the moment. Typical fund managers/day traders jumping at every headline/blip in earnings. Like Ted mentioned, I'd be more inclined to think readjustment than full-on recession, but I don't stare at stock tickers all day long.
 
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I'll add in that this statement caused me to look at my 401ks from my previous employers. Since I no longer work at those, the money is just doing what it's doing with the investments. They were essentially flat for the year, slightly down. More or less in line with what the Dow has done for the year thus far, maybe I'm doing a hair better. I didn't check my current employer's 401k which still calculates a rate of return for me but that of course is going up continually since I add funds every pay period.
 
JOhnH said:
My stock broker says the economy is still strong and if we sell now, we will be breaking the cardinal rule selling high.
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Dump that jackwagon. Selling HIGH is the ever lovin' goal.

What was he telling you 10 years ago, "Don't break the cardinal rule of selling in a low?"
 
Over the last year, we sold a lot of stock to finance our hangar home in TN.

Coincidentally, I just did a spreadsheet to see if we had "gotten out in time" on the stocks we sold. A few, such as Facebook and Google, are down from where we sold them. But the majority are actually up right now, in spite of the market's recent machinations.

Over the long haul, steadily investing in quality companies through ups and downs is most often the key to success. Trying to "time" markets or reading charts much less so. And don't get me started on "Technical Analysis".
 
Ravioli said:
Dump that jackwagon. Selling HIGH is the ever lovin' goal.

What was he telling you 10 years ago, "Don't break the cardinal rule of selling in a low?"
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Exactly. And the rule is that you sell high. The market is now low and if we sell now, we break the rule.
Except, what if it goes lower; much lower?
 
The next crash/depression is coming in two years, per my boss. If anyone would know, its him.
 
Unless you're about to retire in the next few years I wouldn't worry. Your stocks are only a loss if you sell. When they start getting low and people are scared and pulling everything is my time to buy it up. But then again I'm not even close to retirement age.
 
Groundpounder said:
The next crash/depression is coming in two years, per my boss. If anyone would know, its him.
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That was what people who were "in the know" said 2 years ago to me.
 
JOhnH said:
Exactly. And the rule is that you sell high. The market is now low and if we sell now, we break the rule.
Except, what if it goes lower; much lower?
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Low? You're kidding, right?

The market is valued at the same level as about 15 months ago and it was overvalued by conventional metrics like P/E ratios then. It's hardly low now.

It's low when the P/E ratio is around 6 or 7. Currently, the P/E ratio is about 19.2.

Yeah, I know there are other ways to value the market.
 
JOhnH said:
What are you financial geniuses doing?
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For equities I already own, nothing. I bought them with a long term horizon in mind. And this current volatility is quite overdue, historically speaking.

For equities I don't own, but would like to, I'm watching the sale currently underway and hoping for further discounts...my cheapest candidates are still about 10% overpriced right now.
 
Tom-D said:
It is just buyer, adjustment due to party change
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That doesn’t have anything to do with it. The volatility has been going since well before mid-term elections. What we’ve been seeing for the past 3-4 months is in essence a buyers strike.

Economically, we’re doing great, but a few areas are beginning to weaken. The bulk of the volatility has been the market trying to price in earnings for 2019, as fear is setting in of an earnings growth slowdown, with the effects of the import and export tariffs. Today, the Fed raised by .25 of a point with two projected hikes in ‘19, which the market clearly didn’t like.

If you haven’t sold yet, I wouldn’t. Take the opportunity to add while there’s bloody murder in the streets.
 
I think that stocks were unreasonably high and this is the correction that was due.

I sold some earlier and the year, and was considering selling more in early October, before I went on vacation. But I didn't, and I don't think I will now. I'll wait it out.
 
Price is determined by supply and demand. Price is lower because there are lots of supply (sellers) and less demand (buyers).

Right now investors are spooked by a few things - what the fed might do, international trade and what the future of tariffs will be, in particular China because we have allowed ourselves to become so intertwined. At some point in the future, these things will be resolved and consumer confidence will be restored. Until then, the market will go down and it will go up, maybe by a lot. But eventually, the sun will shine again and people will gain confidence in it all.

Personally, I think there's still a little downside in the market, but not a huge crash coming. Such a crash will not be predictable, it will just happen. If it does, have some cash and buy immediately. Otherwise, how low will it go and when will it go up is anyone's guess and someone will guess right.
 
bflynn said:
At some point in the future, these things will be resolved and consumer confidence will be restored.
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Eh, the CCI has been at record levels nearly all year, so that’s not the issue at hand.

The S&P closed at a 52wk low, just above the 2500 level today. If the market fails a restest there, it’s likely going significantly lower, but I might keep an eye out for a bounce tomorrow.
 
Every market crash is preceded by publicity of wide spread fraud.
 
Groundpounder said:
The next crash/depression is coming in two years, per my boss. If anyone would know, its him.
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2 years? LOL Try summer 2019. I wish it would get here sooner, I'd like to buy my "15 year airplane" next year and start doing some bucket list traveling.
 
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simtech said:
Unless you're about to retire in the next few years I wouldn't worry. Your stocks are only a loss if you sell. When they start getting low and people are scared and pulling everything is my time to buy it up. But then again I'm not even close to retirement age.
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How about those of us that retired a few years ago? We pull money out of the stock market to cover expenses (like 100ll and hangar fees). That money that we pull out will never bounce back, and we are not putting more in.

Fortunately, I have ridden the market for years during the ups and down, (mostly ups) and am living off of profits. If I had sold during those many scares we have had, I would be worse off. So I am hanging in there through this latest downswing. I just hope it doesn't swing down too much more. I might have to sell the Bo.
 
I listen to Bloomberg every morning on the way in (Jonathan & Tom) and it seems every guest says correction/bear market in 2020. So I'm going with @hindsight2020 on this one and assuming it will happen sooner.
 
JOhnH said:
How about those of us that retired a few years ago? We pull money out of the stock market to cover expenses (like 100ll and hangar fees). That money that we pull out will never bounce back, and we are not putting more in.

Fortunately, I have ridden the market for years during the ups and down, (mostly ups) and am living off of profits. If I had sold during those many scares we have had, I would be worse off. So I am hanging in there through this latest downswing. I just hope it doesn't swing down too much more. I might have to sell the Bo.
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I haven't got that far in life yet to think about that. I have a few family members retired that do well. They always pick stocks with good dividends and live off the dividends and not to concerned with the stock itself. Im trying to gravitate more toward that as well but those to can take a hit so its all a gamble.

Im actually working on long term real estate, rental houses for cash flow. It too is a gamble but typically a better return and its long lasting. Ill know more on how I feel about that by the end of next year. haha But so far its not half bad.
 
If you bring up a chart showing the dow, the father you zoom out the scale 1w/1m/6m/1year/2yrs/etc the more you see the overall trend has always been up. Sometimes there are pretty big dips but it always comes back. I've also noted that whenever it climbs a lot in a short period, as had been happening from around 2016 to just a few months ago, there's usually a big drop after. I assume a lot of that is people trying to sell high. Then you see it tend to bounce back up after a drop, which I assume is people trying to buy low.

Patience seems to be the name of the game.
 
PaulS said:
I hope this brings down airplane prices so I can buy one.
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Oh they will. Toys like airplanes tend to be largely financed when prices are on the upwsing, since in a demographic of little to no new recreational pilots (a lot of pro pilots are turbine snobs; the rest are too broke to own airplanes, which is why they became pros in the first place) only credit access increases the demand, not new certificate holders. These things are only worth as much as someone else is able to borrow for it, which is a canyon away from just merely being willing to. Credit access will cool in 2019, wages will continue to underwhelm, cost of living will continue to clobber the W-2 class much to the chagrin of the trickle down religion crowd, and with it so will go that insufferable sophism people call "consumer confidence", right down the toilet. :rolleyes:

As credit contracts, these cash broke people panic and shed their "payments", usually at a sizeable discount. Such was the story of my Arrow. As far as I got the prior owner to admit to, circa 40% discount end-to-end (plus 100% discount on a 430W installation, so really closer to 50% discount all-in) from the time his co-owners decided to use their housing bubble refi money in '07 to get into the flying ownership game, to the '13 recession era and tail end of the gas price hikes, when the last one lost his shirt and sold the remaining share to the guy who firesold it to me. To be fair, the last owner lost the least amount of money, since he probably bought his partners up for pennies on the dollar. At any rate, I've seen this movie before, and it's about to happen again.

I don't make the rules, I just play my part in this ecosystem.
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Hi everyone.
Stock has become a computer game, and in my opinion, was always a gamble. Now days investors have gone nuts, they are investing in companies that have no Real values other than a sales pitch form some salesperson talking to some retarded money managers. Computers are set up to sell at some peak minus a small percentage decrease and they sell millions of shares, in a few seconds, and they can control the market. Every other idiot follows the trend and the same companies that started the trend now buy low and the yo-yo cycle starts all over. If you are not the one that controls that cycle you will lose money, which is most of the small investors.
None of the present large companies are providing any real products, to justify their value, just a bunch of BS.
 
More money is lost in worrying about bear markets than actual bear markets.

If you “get out”, when is the all-clear to get back in? When prices are 20% higher and everything looks great? The psychology of timing the market is nearly impossible. Unless you’ve got a proven and systematic approach it’s best to figure out how much risk you can handle and then stick with it perpetually.
 
I'm vested in the stock market with the 401(k), so no real option but to let it ride. With other investments, I went with a staggered CD strategy, none containing more than the FDIC-insured limit of $250K, and some short term cash in a money market account. A 2-year CD is returning 3.0% now, not a ton of gain but safe and steady. The market will see nothing but volatility with the current administration.

Don't want to get cut "catching the falling knife," but I might revisit the market with an index fund after the DOW corrects back to 21,xxx. We are DUE for that! I think that fundamentally the economy is strong, and the rebound will be something along the lines of 6 months to a year.
 
Anyone giving you a prediction with a time table is either a fool or trying to sell you something. Much of the financial services industry is based upon the notion that investing is complicated and requires extensive research, it isn't and it doesn't.

The market will go up, and it will go down. We know that as a fact. 60% of the time it is up. You do the math.

IF you knew when to get out (you don't), you'd also need know when you get back in? But if you did like most people you'd just sit on the sideline with a pile of cash and lose out on years of return, cash eaten away by inflation and worry about when to get back in...

Rebalance to your (preferably written down) Asset Allocation only if necessary, and check back in a year.
 
My time table is the future. I predict stocks will go up and they will go down in that time frame.

I am not trying to sell anything and if anyone thinks my prediction is foolish, tell me which part is wrong.
 
ja_user said:
This is very easy to see 6 months after it happens :)
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Not necessarily. When the S&P breaks through low after low and various moving averages without finding support, it’s typically not done yet. A double bottom bounce is pretty definite on a chart and is usually a bullish signal. Does it always work? No of course not, but it’s usually safe to nibble.

For now, my bets are that if the S&P can’t hold 2500 , we’ll be in for many more bloody days. When the market acts like this, it’s safer to be short than long.
 
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