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Sorry if I rubbed some wrong with this topic, I guess I should have titled it better.
Thanks for all the replies, keep the opinions coming.
Don't believe anybody telling you what the market is going to do within a specific time frame, it's all educated guesses at best. If you give it enough time, sure it will crash. But when? 1 year? 10? 50? it's pointless to look at markets this way.
Sorry it's pretty basic stuff but it's the only wisdom I can give you.
Sorry if I rubbed some wrong with this topic, I guess I should have titled it better.
Thanks for all the replies, keep the opinions coming.
Those of us who have been investing for a long time know that no one can predict stock market crashes with any kind of accuracy. And people who do make such predictions publically usually disappear into thin air when their dire predictions don't come true.
If the Fed keeps saying what they will do there is no monetary policy. Interest rates must be applied in shock fashion otherwise the market accomdates it. No way that's going to happen unless they make some fascinating lie.
Then you will have a large risk to equity. Otherwise trudging along with moderate credit growth means a dead bond market , hence no real threat to equity. Gold and silver might be able to adsorb, but its already taken on a lot of financial asset flight as it is. I was out of bonds a few years ago except for junk which I pared down early 2012, VWEAX, but the grind continues so I did not even completely exit. I am happy still happy to churn 5% in a tax deferred account.
Wealth has to go somewhere and one play bonds, is out and PMs can only take so much for so long.
The OP's link was to an article posted the site called "Money Morning" in July, 2012, so I guess they were pretty wrong unless stocks tank in the next six weeks.
Moreover, I think this outfit might be the same one that has the little blurbs on CNN.com about "billionaires dump stocks". I think they recirculate their "articles" every month or so.
Interest rates must be applied in shock fashion otherwise the market accomdates it. No way that's going to happen unless they make some fascinating lie.
Doomsday articles are written for a specific purpose - motivate gullible readers to move their money. The authors own or collude with investment firms who buy "hard assets" or short/inverse ETFs and other garbage with people's money.
It is the height of sleaziness to make or solicit market crash predictions. If we accept that crashes can't be predicted, then logically it follows that you shouldn't try. It then follows that people who do are either stupid or have an agenda.
I still wonder why I am nearly alone. If Japan was not enough did we expect same thing to no effect? They dropped rates to "stimulate the market". Since 2008 what's been stimulated? The first QE did and I have explained why. Even high quality existing equity could not borrow because the balance sheets were entirely shattered. How do you lend to someone who could be holding a book full of lies? So now da banksters could say "I got Treasuries" and the undead began to walk again. It basically put a bad heart back in because its better than no heart. After that I just keep watching something, easier to solve than most cross word puzzles, confuse the masses.
What am I going to do if the Fed says they are going to target a 4% rate? Draw up the papers to lend to you at 3%? As I have said many times before this stimulus caused Illinois pension liabilities to fall short from lack of fixed income. So they raised taxes. That is but one example of conflicting market signals. Why is going from 5% to 0% on money market funds going to cause fiscal stimulus? Cheaper capital equipment when the lack of demand is the problem?
The Fed telegraph is a placebo. Only if they blind side the market is there a real policy. Fiscal policy on the other hand is sledge hammer no one seems worthy to wield.
It's become fashionable to regard the Federal Reserve as either crooks or idiots or both. The trope says that our economy is phony, the stock market is a casino, and everything is propped up by artificial and nefarious means. Eventually this "house of cards" must collapse, taking millions of regular-folk with them.
My view is exactly the opposite of this. Central bankers worldwide had the gumption and verve to backstop market excesses, where spineless politicians did not, or could not. 5 years after the nadir of the 2008 crash, markets are reasonably healthy and P/E ratios are decent, not only by historical standards, but especially when compared with inflation and interest rates.
A substantial decline is possible at any time, but calling it a "crash" is needless sensationalism is outright irresponsible. The American stock market has had precisely one crash in its history: 1929-1932. Everything else was a bear market with comparatively quick recovery. 2007-2009 was brutal, but how many years passed before recovery? 2000-2003 was brutal, but again, how many years before recovery? What about 1987? 1973-1974? None of these declines was pleasant, and all called into question our asset allocation and risk tolerance. But in the long run, the best strategy, or nearly the best strategy, was to do precisely nothing, to make no changes whatsoever. And so I conclude: the most adroit response to bad news (or to good news) is to do absolutely nothing.
I have admitted my lousy prediction record but every now and then I hit one. I know I will have you on the edge of your seats or holding your noses but here is mine. I know this forum does not like politics to be discussed here and thus I will keep that part of my prediction brief.
Yellen will keep the QE party going all through 2014 but in 2015 will start to taper down a little at a time. This will make the market choppy with big rises and drops and that will carry over into 2016. Then right about Aug/Sep the market will dive { deja vu 2008} and settle back in the 7,000 - 8,000 range.
Of course there will be political back lash like in 08 that will favor the {R}s in the presidential race. You heard it here first
I have gone through 4 crashes in my life. I have avoided 3 of them.
The articles about a crash coming are back ground noise, I disregard them.
The one common factor before every crash are the stock market professionals that seem to come out of the wood work to defend the market. It has now become a daily routine on the business channels to "talk up" the markets to get people excited about the coming "good times'. In really good times, defending the stock markets is not required.
Markets crash much faster then they climb. Hanging on for an additional 5-10% gains for the risks you need to take is not smart. The markets in a crash can lose that 5-10% in 2 days. If you are not "on top of the markets" every min a 10% lose is very reasonable. Because of this it is important to get out before the crash, not while it's crashing. Professional investors have been removing money from the markets slowly, some are sitting on 50% cash now. Why wouldn't they be invested 100%?
Amateur investors are the only people that still think that the markets are OK.
Risk management is very important in the current investment environment.
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