berlinablackie

s2000Junky

I'm waiting for 08 again so i can jump in and get my 10 years of bliss. Should be anytime now Until then CIT bank 1.55% and climbing... and the mattress

vader1

Getting more and more uneasy. After the quickest correction ever, stocks struggling to move upward.......and why should they? 25/1 PE ratios for the DOW. Putting more and more assets into cash. Good move? Who knows?

berlinablackie

vader1

Yeah, it could. But don't you ask yourself, if valuations are completely inflated already and a decent earnings report drives them up higher, is that a good thing?

I can't even imagine someone wanting to pay more (and I don't mean a good buy on one particular individual stock)for stocks in general if earnings surge 10% on stocks that are already 30% overvalued (historically) in the first place.

It HAS to come back to earth, but I have no idea what is going to trigger it if nothing has already.

s2000Junky

A key recession signal is back at levels last seen during the financial crisis

https://www.msn.com/en-us/money/mark...cid=spartanntp

trapper

According to some theories there has been "Possible Trouble" ahead since about the beginning of the year when the 10yr yield exceeded and has generally stayed above 2.6%.
This 2yr/10yr yield curve has been slowly flattening since July 2016 and did hit a new low this week.
However no recent recession has occurred without the dreaded inversion and recent articles have indicated that the Fed will do everything possible to keep that from happening..
That being said, the Fed doesn't have much to work with since short term interest rates are still so low they don't have much room to lower them and they don't have many other options. .
They've kept rates so low for so long they've put themselves in a box.
And long term [20yr & 30yr] rates are also falling which compounds the problem.
If the economy [ours and/or the world] falters or inflation rears it ugly head in the USA we are, IMHO, in big trouble.

s2000Junky

I agree.

I don't like being pessimistic, but there is a healthy dose of cynicism when viewing things most realistically these days, when looking at our house of cards. I'm not real confident in what if any safeguards we have in place now today. Its just been another big smash and grab by those who are in positions to leverage and we will all pay the price for that again in some regard. When is the question.

vader1

I am not sure this is a smash and grab and always painting things as some conspiracy by the evil rich manipulators is too simplistic.

Rates after the housing collapse fell to zero. You could not make any money and would lose against inflation in just about anything (bonds, savings accounts, cd's) unless you invested in stocks. All the money poured into stocks when they hit bottom causing them to surge up in value. With surges in value came more people pouring money into the market because that is where they could earn a return, very much like people buying homes on spec during the housing bubble. Now rates are going to have to go back up. The fed is trying to do it slowly so as not to tip things too fast. But stocks are at a point, in my uneducated opinion, where they can't go higher unless earnings go way up (and I mean way up). So if earning are pretty much peaked, and therefore the value of the underlying stocks have peaked, when the fed raises rates to the point where you can get a better return on bonds or savings or money market than you can get from dividends, then the money will FLOOD from the market into other instruments and the market will tank and all the panic selling that goes with it. I am old enough to remember bank CD's paying a guaranteed 7% interest. If they paid that, every worried retiree would be pulling huge amounts out of the market to earn a no risk 6 or 7%. We have a long way to go to get that high, but if savings rates hit 4% and you thought the market was going to stay flat for a few years where would you put your money?

What rates have to get to, to tip this thing the other direction I don't know. I don't think it is too far off. One more hike? Two more hikes? Three more hikes? Four more or a full one percent? That gets us into mid 2019. So it could be a year or more off. But it will tip and them slam down hard. I don't know when that will be. I do have now 30% in cash. If the dow goes up to 25,500 I pull out another 10%. If it goes to 26,000 another 5%. And if it gets to 26,500 another 5% and so on. When it crashes I buy back in. My goal is not to make a killing (though that would be nice) it is just to not lose the full brunt of what will inevitably come. I am protected some against a fall, I earn a little if it keeps going up, and lose big if it goes up rapidly, which I am not sure is even possible at this point.

This could be horrible for me if the market rockets upward to 30,000, but I actually think I am playing it safe and if I miss out on some short term gain, ok by me. I think it has the potential to fall as far as 19,000 but 21,000 is my buy back in threshold.

jeffbrig

My philosphy is that corrections will come and go, and it's impossible to time the market - it's gambling and speculation. Do it if it's fun, but don't pretend you have some particular knowledge or insight, even with technical analysis. Imagine if you had gone to cash as soon as Trump was elected....a lot of people claimed the sky would be falling. Well, you would have missed out on a fantastic 2017 - I gained nearly 30%. For a typical correction (let's ignore the great depression), recovery is usually pretty quick, within a year). As long as your investment horizon is long term (only invest money you won't need for a few years), you should just stay in, and ride it out. If you pull funds out too far in advance, you lose out on potential gains. If you miss calling the bottom, you likely miss the biggest day of gains in the recovery. Just stay invested, and keep adding more money at regular intervals (as much as your situation allows). Dollar cost average into the dips. You'll do fine over the long haul.

And if you're struggling to make money consistently, look no further than a boring ol' S&P 500 index fund. Over 90 years since it's inception, and it's averaged right about 9% annual growth.