Dow falls 450 points, having worst opening day in 84 years (invest, wage, jobs)
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What's out of whack is that the Fed has artificially levitating the stock market by printing $trillions of dollars. Everyone knows this. Now they've stopped. Regression to the mean is inevitable. Of course, it will overshoot in the opposite direction and socks will become cheap. Now they are expensive. If you stay in the market you are basically betting that the Fed will once again print $trillions of dollars to the detriment of worldwide economies
That is exactly right. Anyone who thinks stocks were never going to correct, is a fool.
All the market needed was for the fed to stop printing, and for interest rates to start moving in the wrong (UP) direction - which they are going to continue to do. Not to mention all of the other negatives out there - including the fact that we are overdue for a recession.
The party is over people. Doesn't bother me in the least. Other than a little dabbling here and there, I'm out of stocks until we get to more reasonable levels. For those near retirement I suggest cashing out of stocks and moving into bonds or safer investments.
they had negative real return last year and barely had any return the year before .
they may be more risky then stocks as rates normalize and inflation creeps up .
retirees should stick to their regular allocations with the long term money not needed to eat for 20-30 years just as it always has been invested .
trying to time things as to when to be in or out is a fools game .
just following the market cycles has worked just fine for more than 146 years whether it was the great depression , the world wars or every other world shaking event .
i would sooner bet on what was , what has been and what stands a reasonably good chance of continuing then the doomsdayer advice of "RUN" and bet the ranch on bonds only .
RUN has left folks a lot poorer then stay the course has and that has held true over every accumulation or retirement time frame ever in this country . .
Last edited by mathjak107; 01-09-2016 at 04:33 AM..
The indexes suffered their worse first week loss in history. A bit worse than 2008. I think the Fed should be congratulated for how nimbly and gracefully they manage the Bubbles they create.
There is absolutely nothing like having an economy managed by a bunch of Banker twits.
Oh, don't worry it isn't the Fed's fault, they can easily find a way to blame someone or someplace else for the bubbles they helped create.
Oh, don't worry it isn't the Fed's fault, they can easily find a way to blame someone or someplace else for the bubbles they helped create.
The twits at the Fed don't create Bubbles. They just print play money for the Billionaire Class. It's the Billionaire Class that creates Bubbles. A fine, but important distinction.
they had negative real return last year and barely had any return the year before .
they may be more risky then stocks as rates normalize and inflation creeps up .
retirees should stick to their regular allocations with the long term money not needed to eat for 20-30 years just as it always has been invested .
trying to time things as to when to be in or out is a fools game .
just following the market cycles has worked just fine for more than 146 years whether it was the great depression , the world wars or every other world shaking event .
i would sooner bet on what was , what has been and what stands a reasonably good chance of continuing then the doomsdayer advice of "RUN" and bet the ranch on bonds only .
RUN has left folks a lot poorer then stay the course has and that has held true over every accumulation or retirement time frame ever in this country . .
I think this is spot on. In addition the equity risk premium is >6% and the S&P500 divi yield is above the 10 year treasury yield. That's historically cheap for stocks. While s/t sentiment is not yet as washed out as at the August / September lows and the first 1-2 months after the FED initiates a rate hike are volatile, so it will probably go lower here the mid to long-term prospects are still good for stocks IMO. I find bargains in health care in particular, but also elsewhere.
I sold healthcare couple weeks ago, I think when the stock market jumped up. Sheer luck. I finally bought back some at maybe 5-8% discount in my Roth IRA. I think it will go down some more, but at least had I stayed I would have been down more.
Last edited by NewbieHere; 01-09-2016 at 01:06 PM..
What's out of whack is that the Fed has artificially levitating the stock market by printing $trillions of dollars. Everyone knows this. Now they've stopped. Regression to the mean is inevitable. Of course, it will overshoot in the opposite direction and socks will become cheap. Now they are expensive. If you stay in the market you are basically betting that the Fed will once again print $trillions of dollars to the detriment of worldwide economies
No, I'm betting that the companies I own will be notably more profitable ten and twenty years from now, and that I'm not paying a crazy price today. If you get these two thing right, nothing else matters. Yes there will be volatility along the way. I don't know when the next 20% correction will happen and I don't care.
We are nowhere close to year 2000 stock valuations today, at least in the big cap stocks. At one point in 2000 the biggest company (by market cap) traded at more than 100x earnings. Today the biggest company trades at 10x earnings.
The Shiler indicator is too pessimistic, and I encourage everyone to not pay much attention to it, or him. Even at the bottom of 2009 his indicator was saying that stocks were just fairly valued, and Shiller stated that stocks typically undershoot the average. In reality, stocks were insanely cheap. It was a once or twice in a lifetime chance to buy silly cheap stocks.
No, I'm betting that the companies I own will be notably more profitable ten and twenty years from now, and that I'm not paying a crazy price today. If you get these two thing right, nothing else matters. Yes there will be volatility along the way. I don't know when the next 20% correction will happen and I don't care.
We are nowhere close to year 2000 stock valuations today, at least in the big cap stocks. At one point in 2000 the biggest company (by market cap) traded at more than 100x earnings. Today the biggest company trades at 10x earnings.
The Shiler indicator is too pessimistic, and I encourage everyone to not pay much attention to it, or him. Even at the bottom of 2009 his indicator was saying that stocks were just fairly valued, and Shiller stated that stocks typically undershoot the average. In reality, stocks were insanely cheap. It was a once or twice in a lifetime chance to buy silly cheap stocks.
Well at least we're calling it a bet and not an investment anymore.
Betting and gambling, especially with resident money, is nothing something I encourage, but I'm sure the government world love it if everyone added Powerball to n their diversified portfolio.
No, I'm betting that the companies I own will be notably more profitable ten and twenty years from now, and that I'm not paying a crazy price today. If you get these two thing right, nothing else matters. Yes there will be volatility along the way. I don't know when the next 20% correction will happen and I don't care.
We are nowhere close to year 2000 stock valuations today, at least in the big cap stocks. At one point in 2000 the biggest company (by market cap) traded at more than 100x earnings. Today the biggest company trades at 10x earnings.
The Shiler indicator is too pessimistic, and I encourage everyone to not pay much attention to it, or him. Even at the bottom of 2009 his indicator was saying that stocks were just fairly valued, and Shiller stated that stocks typically undershoot the average. In reality, stocks were insanely cheap. It was a once or twice in a lifetime chance to buy silly cheap stocks.
as wall as the accounting on the shiller cape has changed enough over the years to be not comparable to the historical numbers and meanings
Well at least we're calling it a bet and not an investment anymore.
Betting and gambling, especially with resident money, is nothing something I encourage, but I'm sure the government world love it if everyone added Powerball to n their diversified portfolio.
Place your bets.
Yes, place your bets. Betting on cash and bonds will likely result in a loss of buying power over the next ten years. Betting on the Schiller PE is a poor idea. Gold? Oil? Making money in commodities is very difficult and risky.
I'll take my stocks, thanks.
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