Mr Dave

Seems like we break new ground just about every day.
The Dow's over 17k, S+P is over 1960...and, for a while now, it has felt artificially inflated.

Who knows how today's events (Malaysia Airlines flight 17...and the pending revelation of who shot it down) might affect the market, but I can't see it being a good outcome, no matter what answers lie ahead.

I moved out of most of holdings today and into cash or bond funds.

Curious what you all see in your crystal balls.
Just wanted to share my [over]reaction.

s.hasan546

I feel like there is another correction coming in the near future. 1-2 years. Real estate has been at crazy highs, same with the markets. BUT I'm Still bullish for the next 6 months- 1 year. I day trade more tho so i make cautious bets. Going forward I would invest remember the saying "any profit is good profit". little or small. Make money and don't get greedy. Im happy i sold out of GWPH @ $100

UnkieTrunkie

This.

MA 17 - theoretically a singular event. Reglardless of the beligerent party, if it stays as a singularity, the market should be able to absorb it.

Artifical Inflation - Yes, and No. I believe what's happened is that banks are hitting their new liquidity limits, and are now back to making lucrative (still) low interest loans to companies if they have any modicum of cash already on hand. . . the catch is, these loans are just being used for M&A, stock buybacks, and for personal investors, stock purchases. In other words, not a lot of CapEx, so subsequently, not a lot of churn into durable goods.

Things I'm thinking about:

QE- It's progressively unwinding. . . or is it? Maybe? October is the target; until otherwise modified. Ugh. This is one of the more unpredictable things in the market, so we could see keeping stocks from going up, until Dr. Yellen says something that's consistently, definitively, ambiguous enough for the market to call stable for 3-6 months. In the meantime, let me cling to anything that feels de-risked. . . like Mega Caps. . . or cash. . .

Inflation- So, here's where shit gets weird: imagine there's an increase on the cost of consumer items, and nobody cared except the Middle Class, who have been in the middle of a pogrom since 2002 (or earlier, depending on your nihlism)? Retail news will be relevant to see how the winds change. . . but whether this will translate into noticable stock price change is another question altogether.

Chinese Pollution Regulations, and California Cap-and-Trade. . . hard to see how this will price in, and both have tons of secondary effects that are even harder to see.

My advisor is still bullish. In terms of stocks, there's plenty of headroom to keep going. Whether or not a robust portfolio makes my life easier is a different question.

Mr Dave

Wow -- I have so much to learn.


Incredible post, thank you for all that info.

My move was one of healthy skepticism and cost me virtually nothing to make.
Everything I sold was for a profit.

If the market doesn't change much over the next week or two, I've lost nothing.

If it continues to go up, I can get back in having only missed a few weeks' growth (IMO worth the cost of my current protection).

But if it drops...


FWIW -- I realize that my line of thought could be applied to any generic day on the calendar.
I've just been waiting for a tipping point and I think the market has a 3-6% correction that's far overdue...

Mr Dave

For me, the paranoia has to do with the NEXT step in geopolitics:

IN MY BRAIN:
The plane was shot down by Russians.
300 Citizens of the world perished in the event.
In the coming days, multiple countries are going to pressure Russia for answers / reparation / admission of fault...which they will never receive. Ever.
This will lead to increased sanctions from the US and SHOULD Europe sanction Russia in any meaningful way, the global economic answer will be chaos.

*shrug*


EDIT:

Well...that's timely.

http://gawker.com/bubble-watch-the-b...ble-1606802530
Two years of uninterrupted gains in U.S. stocks are sowing anxiety among financial professionals, with three in five saying the market is on the verge of a bubble or already in one, the Bloomberg Global Poll found.

Forty-seven percent of those surveyed said the equity market is close to unsustainable levels while 14 percent already saw a bubble, according to a quarterly poll of 562 investors, analysts and traders who are Bloomberg subscribers.

UnkieTrunkie

Let me preface by saying I think you've been investing a lot longer than I have: if there's anything working in my favor, it's that the notes from my advisor have been right more often than not, and that I have some friends with whom I can discuss macroeconomics and not have it devolve into politics. I also work for a Fortune 500 company/NASDAQ 100 company, and what's in my employer's best interest sometimes is in my best interest (so I pay attention every now and then). However, you've still had more skin in the game a lot longer.

So, 3 in 5 are worried about when the disco party is going to stop. If you asked about sentiment over the last 21 months, they said the same thing. 2 years of growth has equalled 7 quarters of polled pessimism. Aside from two times, a mid-term election year has always resulted in the Presidential party losing seats. . . which means that very little financial change will probably go through (I'll assume you remember Clinton's last two years - that's not the first time that's happened). . . which in turn means that markets will be predictable, which is what investors like. . . they just need to decide to like it.

And if you look at stuff day-to-day, there's plenty to not like. Before MH17 and this week's Russian beligerence, there was an incursion into Gaza, and before that, Iraq v3, and Crimea (again), and before that, the entire auto industry taking a crap from airbags and ignition switches, and. . . and. . . aside from some corrections in tech*,** stocks keep going up.

I don't believe that the Ukraine crisis will change sentiment on U.S. stocks. If anything, it will compel investors to continue to leave their (non-Russian) money here. That said, if you're bullish on the FTSE, talk to someone smarter than I/you/us.

I CAN fathom that there'd be a 3-6% correction around October. However, is it enough for me to assume the bears are moving in? 3%, hardly, but 6% would make me hedge. Even then, more level heads may have already taken earlier bull money and moved it into more conservative investments (like Blue Chip bonds and/or dividend-yielding MegaCaps). I know that my manager has been clamoring for ETNs; definitely getting out of short-term plays

All that said, I'd still keep my most of my money in conservative market positions: we're not at the end of the bull yet, it just may be bumpy through Q2, but that in itself is nothing new.

*Nearly forgot, there has been noticable profit-taking from the tech big boys. I can't suss out whether that's the bubble unwinding, a general sentiment of the sector, or an internal/inside modulation from employees/officers/institutional investors.

**Bear too in mind that CapEx-dependent tech firms (HPs, IBMs, Microsofts, etc.) should see growth in macroeconomically down or exceedingly up markets, as businesses try to maximize efficiencies with automation. I believe that most of the efficiencies that were to be found during the Great Recession were found, so there's not a lot of CapEx churn (stated earlier).

Last, but cerainly not least, I have no degrees in Finance or Economics. I have a &%*#ing Music degree. This free bloviating is worth what you paid.

Mr Dave

No-charge bloviation greatly appreciated.

I was obviously wrong in my read of the immediate knee-jerk reaction to the day-to-day stuff...but who knows what tomorrow holds.
Admittedly, the day-to-day stuff shouldn't scare one out of the markets.
I was just starting to feel like the guy standing in the middle of the rickety, old, wood suspension bridge that looks near-collapse...and wanted to move a little closer to one side.

Truthfully, I was scarred by the 2007/2008 peak-crash (is anything worse than getting monthly or quarterly statements of diminishing value?) and I'm a little more risk-averse in my old age...of 37.

s.hasan546

i will say that even tho i am optimistic for the market overall, Tech is what scares me. Tech is getting way overvalued IMO. Especially some of these newer companies. Seeing what valuations these companies are getting funded at are shocking sometimes. feels like another tech bubble to me.

UnkieTrunkie

I'm in the (Silicon) Valley, and trust me, there's a feeling of 1999 all over again in terms of consumer spending (artisinal toast) and some irrational behavior (more artisinal toast). A couple of things:

1. I'm with you (s.hasan), I can't quite suss out where (some/most?) of the IPO valuations are coming from. I want to believe it's market makers trying to pump n' dump, but there may be more nuance there than my caveman brain can handle.

2. There's value in the size of userbase. Fine, I could understand that for advertising. . . but it appears that the data set generation is as valuable as the potential advertising market (per app). I see value, but not the monetary amounts being discussed.

3. There appears to be value in the widget/sharing/interconnection process. Somehow, that's extensible. However, selection for the best sharing scenario per business model seems fickle.

4. As I write this, I'm not ruling out that the price of the company is being dictated by the outstanding cash of the potential purchaser modulo the outstanding cash of the potential purchaser's primary competiton.

SlowTeg

I think it's important these days to keep in mind that the stock market is about as "free" a market as a citizen in China is "free." This might be obvious to you guys already, but the President/Fed touting stock indexes at all time highs and that it's a reflection of the economy is troublesome.

I wouldn't focus too much on the micro stuff, as any one event could start an avalanche in reality, so there's no point focusing on that. The economic path sure looks like stagflation these days as the Fed will continue to print money (I don't believe QE will be ending, it can't), and shocker, we are seeing an increase in inflation (annual rate over 2%). Of course, we know better that it's well over 2% for the middle class who devote more and more of their money towards food/housing. Like all statistics, you can bend them any way you want.

I sure wish I had a better idea of the upcoming storm (I was fortunately able to get out of the way in '07), but our economy is centrally planned these days. It all hangs in the hands of the Fed/government to continue printing money/amassing more debt. The federal government running a large deficit and the Fed printing money is a strong driving force for the market and buoying the economy.