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I wish I could have more confidence that this high had staying power but something tells me it is a temporary high, just got a bad feeling about it. An analyst was just saying that this pattern has striking similarities to Mar - Sep 2000 just before the huge declines.
On TradingView technicals are at "Strong Buy" but the traders are all SHORT! Many are chanting ominous warnings, we'll see what happens in Sep.
I don't see how the two compare - even the highest PE tech companies like Amazon actually make money, unlike all the pets.com shops that went public and worried about making money later.
recoveries are way longer if you look at real returns which is what counts , not nominal returns. 2000 took 13 years. those time frames are very different once you look at your real returns and some are quite long . if spending down it is only real returns and time that matter .
Last edited by mathjak107; 08-25-2018 at 03:18 PM..
It is interesting that in this market correction, the S&P 500 barely dipped below the 200 MA for more than 1 day.
Whereas in the last market correction (July 2015 - July 2016), the S&P 500 spent a number of months below the 200 MA.
For every chart you show me indicating a pattern leading to an expected result, I can show you many more where the exact same pattern leads to nothing at all.
Stocks are what a statistician would call "not serially correlated." Which means when a stock is heading in a particular direction, the odds are 50/50 the stock continues in that direction or reverses course.
Anyone can see what a stock has done. What we want to know is what a stock will do. But no one can. We can’t because despite what someone may have told you, no amount of charting tells us anything about what a stock will do other than the random occasion of unexpected luck.
The only pattern to discern for the market is there are years the market is going up and there are fewer years where the market has dropped. One can see and calculate what the average number of months between events has been, but no, that doesn't tell you anything about when the next cycle will happen or how long it will last or how deep a drop might go. The future is always unknown.
My takeaway is there are cycles and while there's no proof that in the future a market that goes negative will ever become positive again, there is faith and belief that some general patterns of increase and decrease will occur, and based on that belief and looking at the past, I'm choosing to be in the market now and going forward.
For those who think, "this is it, this time will be different; the market is done," then get out of the market and be at peace.
or they can not bet on just prosperity and allow for other outcomes .. there are portfolio models that could not care less if equities ever recovered and they would still stay well a head of inflation . most of us have just been conditioned to think in terms of maximizing the up cycle and then just going along for the ride to wherever the other parts of the cycle drag us .
while typical conventional allocations to bonds may mitigate some downside damage they cannot retake control and run with the ball to make things positive if equities take a nasty drop . they just don't have enough lift in typical allocations . historically it would take 3x the allocation to a total bond fund to offset the nasty drops in a total market equity fund . that would produce some pretty weak results in a bull.
the ratio of up years to down years play a big role in the accumulation stage so more equities always won .
but for those spending down more equities may not help at all . number of up years is irrelevant . all that counts is those down years and for how long they are down in real return . the fact one day the bull will up lift things is irrelevant when spending down .
we saw that with those who retired in 1965 or 1966. they had the greatest bull market in history as part of their period . yet they spent down so much during the bad years there was not enough left for the bull to act on .
so there is different criteria in spending down that is important as opposed to the accumulation stage where pedal to the metal usually works just fine .
but there are a few all weather portfolio's that don't care whether it is the high inflation 1970's again or the great depression , they profit under either .
yeah , if you are in the accumulation stage there is a price to pay for this insurance . but you will do far far better , likely staying 3-6% a head of inflation with a defensive model than hiding in cd's .
Last edited by mathjak107; 08-26-2018 at 03:18 AM..
A well-diversified and allocated portfolio doesn't only count on prosperity; it never did. Fundamentals properly assume a wide swath of outcomes.
It’s obvious a deep spiral of fear for both short and mid-to-long term has enveloped. A crescendo pitch of justifying flip flop moves based on emotion has followed, and has been inserted into most discussions.
For those who think, "this is it, this time will be different; the market is done," then get out of the market and be at peace.
a conventional portfolio only counts on prosperity . someone risk adverse who chooses to be in equities has no choice but to ride it down and through the cycle if they are any greater than 30/70 which really is not so hot on the upside . so my opinion is someone that risk adverse should consider one of the all weather portfolio's before choosing to avoid equities or go very very low in allocation ...
the lifting that a intermediate term bond fund and short term bond funds do is peeing in the ocean in a down turn in a recession . conventional portfolio's do not gain much in recessions . they strive to only make a bit of the damage a bit less . which for those we are discussing who you say should not be in equities would not work well enough in mitigation for them .
an all weather portfolio is likely a better choice for them then getting out and no an all weather portfolio is not the same as a balanced portfolio which needs prosperity to do well and just rides the down turns with little mitigation . .
Last edited by mathjak107; 08-26-2018 at 08:38 AM..
here are some examples of all weather portfolio's that have tighter swing ranges and less losing years typically . .keep in mind volatility in downturns has been running a lot higher since 2000 so these swings are actually worse today on the conventional portfolio's which carry little mitigation weight . i know my 60/40 was down over 30% in 2008 and that is untypical for 60/40.
Last edited by mathjak107; 08-26-2018 at 08:40 AM..
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