Stock Market: Good Buy or Goodbye?

[quote]DJS wrote:

[quote]countingbeans wrote:
Depends on how long you plan on investing, where you invest, diversification and risk tolerance.

If we are talking 40 years of investment, fuck yeah, and you should have been putting all 15,500 in your 401(k) last year and early 2009.

If you are talking 1-5 years, i wouldn’t. I think our economy is going to be bumpy as hell for awhile.[/quote]

It’s 16.5 this year. woo hoo![/quote]

LOL.

It took me like 6 months to convince my wife we were getting the deal of a lifetime buying in when the market was at 7.

[quote]Bill Roberts wrote:
If one takes the Clinton-era bubble as being an anomaly that likely won’t be repeated anytime soon, then no time in the last 70 years has the P/E ratio been much higher than presently.

And if you exclude the peak of the Roaring 20’s, then it’s never been much higher than presently, and usually lower.

With regard to future earnings – which are ultimately, other than the possibility of sale for assets, what yields return on the investment – there is a political party in power that favors higher corporate taxation, higher costs of employing persons, things such as carbon taxes, and higher taxation of capital gains and dividends.

Thus giving reason to expect less cash in the pocket from each share of stock owned.

If the reverse were true, then I’d have an expectation of stock values rising, even after inflation.[/quote]

I’m leaning this way, because the PE IS historically pretty high. Wanted to get a consensus. It seems that waiting for a PE of 12 or so greatly increases the odds in my favor.

I got into gold heavily at $270 (metals and the stocks), btw. Been thinking of just slightly reducing our position and going to TIPS.

[quote]iwong wrote:
I’m a little on the fence here. While I agree with the sentiment that the U.S. dollar is going in the tank because we keep jacking up the supply, currency is always relative to some other currency. Even though we are printing money by the bundle and theoretically devaluing our dollar, other currencies like the euro or yen have only gained some ground (but not a staggering amount) because their respective countries have also been hit by the global recession. So despite domestic economic upheaval, it seems to me that there is still a sense of status quo as far as currency risk. The U.S. is the only country that can truly print more money with little recourse.

Now getting to precious metals, they along with other hard commodities are generally viewed as a hedge against a falling dollar. But if the dollar isn’t falling relative to other currencies, then how effective of a hedge are these types of investments? This is why I have the opinion that although china holds a ton of U.S treasuries, they are essentially stuck with them. Yes, china has us by the balls because they can sink us if they so choose. But at the same time, we essentially have them because china has no feasible alternative. Should china dump a massive amount of treasuries (and really tank our dollar), it would be a case of cutting your nose to spite your face. This is why they are now stockpiling on the aforementioned precious metals and commodities. Thus, in spite of the recent rally, I am still somewhat bullish on precious metals and commodities. To me, it is more of an issue of simple supply and demand over the long term rather than hedging against the dollar. I do think that $2,000 gold is possible because china will horde it.[/quote]

I think when the world markets finally do recover, China is going to be the bees knees, and once we switch to IFRS a shit ton of their companies will list on our exchanges for various reasons.

I just worry about state control fucking up what could multiply the standard of living world wide.

[quote]countingbeans wrote:

[quote]John S. wrote:

How is the market going to correct itself? [/quote]

Let me know when you finish your economics class that covers this…

Otherwise I’m done. I listen to Millionaires, I’m not going to argue with someone in college about this.[/quote]

I too am listening to millionaires.

I would love to hear how the market can correct itself with all this money being dumped in. They are not going to raise interest rates.

Have fun with the market after the stimulus is over.

[quote]Headhunter wrote:

[quote]Bill Roberts wrote:
If one takes the Clinton-era bubble as being an anomaly that likely won’t be repeated anytime soon, then no time in the last 70 years has the P/E ratio been much higher than presently.

And if you exclude the peak of the Roaring 20’s, then it’s never been much higher than presently, and usually lower.

With regard to future earnings – which are ultimately, other than the possibility of sale for assets, what yields return on the investment – there is a political party in power that favors higher corporate taxation, higher costs of employing persons, things such as carbon taxes, and higher taxation of capital gains and dividends.

Thus giving reason to expect less cash in the pocket from each share of stock owned.

If the reverse were true, then I’d have an expectation of stock values rising, even after inflation.[/quote]

I’m leaning this way, because the PE IS historically pretty high. Wanted to get a consensus. It seems that waiting for a PE of 12 or so greatly increases the odds in my favor.

I got into gold heavily at $270 (metals and the stocks), btw. Been thinking of just slightly reducing our position and going to TIPS.[/quote]

I guess I’m somewhat shocked you would buy into our government.

It really is your generation that is taking it in the ass with this meltdown.

EDIT:
CPI (as of October) was still down from last year though. We are up from 2007 less than 3% but pretty much flat from 2008.

[quote]countingbeans wrote:

[quote]Headhunter wrote:

[quote]Bill Roberts wrote:
If one takes the Clinton-era bubble as being an anomaly that likely won’t be repeated anytime soon, then no time in the last 70 years has the P/E ratio been much higher than presently.

And if you exclude the peak of the Roaring 20’s, then it’s never been much higher than presently, and usually lower.

With regard to future earnings – which are ultimately, other than the possibility of sale for assets, what yields return on the investment – there is a political party in power that favors higher corporate taxation, higher costs of employing persons, things such as carbon taxes, and higher taxation of capital gains and dividends.

Thus giving reason to expect less cash in the pocket from each share of stock owned.

If the reverse were true, then I’d have an expectation of stock values rising, even after inflation.[/quote]

I’m leaning this way, because the PE IS historically pretty high. Wanted to get a consensus. It seems that waiting for a PE of 12 or so greatly increases the odds in my favor.

I got into gold heavily at $270 (metals and the stocks), btw. Been thinking of just slightly reducing our position and going to TIPS.[/quote]

I guess I’m somewhat shocked you would buy into our government.

It really is your generation that is taking it in the ass with this meltdown.

EDIT:
CPI (as of October) was still down from last year though. We are up from 2007 less than 3% but pretty much flat from 2008.[/quote]

Gold has had a great run and the dollar has been beaten up pretty bad. Being long the dollar in TIPS wouldn’t be too bad, IMHO.

Its also kind of the case of: “What do I do with the money NOW?” Nothing stands out except perhaps agri-business.

[quote]countingbeans wrote:

[quote]iwong wrote:

I think when the world markets finally do recover, China is going to be the bees knees, and once we switch to IFRS a shit ton of their companies will list on our exchanges for various reasons.

I just worry about state control fucking up what could multiply the standard of living world wide. [/quote][/quote]

Not familiar IFRS (other than its some system of accounting) or its effects, please enlighten me.

[quote]iwong wrote:

Not familiar IFRS (other than its some system of accounting) or its effects, please enlighten me.[/quote]

As is, National (American) businesses report under a different system than the rest of the world. America uses GAAP while the rest of the globe uses one form of IFRS or another. (Multi-nationals already report under both, which is more expensive.)

Once we converge/convert some people think that global investment dollars will flow into America more freely, AFTER the litigation settles. (A lot of these same people believe there would be more foreign investment in America if the litigation culture wasn’t so strong here in the first place.) The general thought seems to be that comparability of statements will loosen fears and risk assessments. (Among other improvements that come with IFRS.)

My main fear is with the basis of IFRS being judgment based (much like GAAP was a few decades ago) it leaves a lot of room for “interpretation” and not a lot of room for audit. But I am fairly certain the only way the SEC is agreeing to this is the prospect of pleasing China and getting them to bring more money here. American financial markets historically have the most volume, if it become simple to register, maybe they will. I really am speculating here, sorry if that wasn’t clear. But I feel like IFRS is the beginning of a building a bridge, making it a true global economy.

[quote]Headhunter wrote:

Its also kind of the case of: “What do I do with the money NOW?” Nothing stands out except perhaps agri-business.
[/quote]

Yeah, that is why your generation is screwed IMO. Who the hell knows where this economy is going… Any guaranteed return is better than getting caught up in another halving of your investments. I mean, what are you supposed to do? Hedge your hedges? LOL.

You guys don’t have 20-35 years to earn, you have to do that shit now, and if we are about to go into the next 5 years of stagnation, or small recessions followed by small recoveries, anything with guaranteed growth sounds like the best option.

[quote]John S. wrote:
If you want inflated dollars then do it.

If you want real money buy Gold and Silver.[/quote]

If you want stability invest in Gold in Silver.

If you want to bet against the house and try your luck go ahead and play the stock market game. Some can really make a good living betting against the house, just the large majority of people will lose. I had a buddy at my gym who supplemented his income quite well dabbling in the market. I think some of his key points were always know about what your buying and buy and sell for profit quickly. The longer you hold stocks the less your going to get out on average.

We are in a liquidity driven bull market in stocks since march, in an overall bear market. Either the dollar is toast or risk assets are toast, and the dollar carry trade has the potential to end catastrophically. the good news is the existing power structure depends on it, so bye bye dollar is most likely.

Economic fundamentals are manipulated up by statistical adjustments and the only “good” news is stimulus driven BS that will kick us in the ass.

Oh yes, and the entire banking system is insolvent and everybody knows it. When will they recapitalize themselves at our expense? Ask apan maybe they know…

[quote]Bill Roberts wrote:
If one takes the Clinton-era bubble as being an anomaly that likely won’t be repeated anytime soon, then no time in the last 70 years has the P/E ratio been much higher than presently.

And if you exclude the peak of the Roaring 20’s, then it’s never been much higher than presently, and usually lower.

With regard to future earnings – which are ultimately, other than the possibility of sale for assets, what yields return on the investment – there is a political party in power that favors higher corporate taxation, higher costs of employing persons, things such as carbon taxes, and higher taxation of capital gains and dividends.

Thus giving reason to expect less cash in the pocket from each share of stock owned.

If the reverse were true, then I’d have an expectation of stock values rising, even after inflation.[/quote]

Do you know what created the Roaring 20’s?

[quote]countingbeans wrote:

[quote]iwong wrote:

Not familiar IFRS (other than its some system of accounting) or its effects, please enlighten me.[/quote]

As is, National (American) businesses report under a different system than the rest of the world. America uses GAAP while the rest of the globe uses one form of IFRS or another. (Multi-nationals already report under both, which is more expensive.)

Once we converge/convert some people think that global investment dollars will flow into America more freely, AFTER the litigation settles. (A lot of these same people believe there would be more foreign investment in America if the litigation culture wasn’t so strong here in the first place.) The general thought seems to be that comparability of statements will loosen fears and risk assessments. (Among other improvements that come with IFRS.)

My main fear is with the basis of IFRS being judgment based (much like GAAP was a few decades ago) it leaves a lot of room for “interpretation” and not a lot of room for audit. But I am fairly certain the only way the SEC is agreeing to this is the prospect of pleasing China and getting them to bring more money here. American financial markets historically have the most volume, if it become simple to register, maybe they will. I really am speculating here, sorry if that wasn’t clear. But I feel like IFRS is the beginning of a building a bridge, making it a true global economy.[/quote]

So in your opinion, are you saying that the changes in accounting procedure will result in more investment money from china or more chinese companies being listed on various stock exchanges?

also, do you know what horseshit PE estimates are going forward? 16.5 could look like a bargain when earnings start missing big without new stimulus/layoffs/govt money/accounting tricks.

not that trailing PE matters, but it was a hoot when it was up around 140 (not a typo). crazy.

[quote]countingbeans wrote:

[quote]DJS wrote:

[quote]countingbeans wrote:
Depends on how long you plan on investing, where you invest, diversification and risk tolerance.

If we are talking 40 years of investment, fuck yeah, and you should have been putting all 15,500 in your 401(k) last year and early 2009.

If you are talking 1-5 years, i wouldn’t. I think our economy is going to be bumpy as hell for awhile.[/quote]

It’s 16.5 this year. woo hoo![/quote]

LOL.

It took me like 6 months to convince my wife we were getting the deal of a lifetime buying in when the market was at 7.
[/quote]

Yeah I’m completely with you on not buying high. When the dow hit 7K and everyone was SELLING their portfolios or cashing out of their 401ks I bought the 2X S&P ETFs. Most people do the opposite of what they should be doing. It’s instinct. Not to mention what the media was like then. I sold it over the last two days. +115%

[quote]iwong wrote:

[quote]countingbeans wrote:

[quote]iwong wrote:

Not familiar IFRS (other than its some system of accounting) or its effects, please enlighten me.[/quote]

As is, National (American) businesses report under a different system than the rest of the world. America uses GAAP while the rest of the globe uses one form of IFRS or another. (Multi-nationals already report under both, which is more expensive.)

Once we converge/convert some people think that global investment dollars will flow into America more freely, AFTER the litigation settles. (A lot of these same people believe there would be more foreign investment in America if the litigation culture wasn’t so strong here in the first place.) The general thought seems to be that comparability of statements will loosen fears and risk assessments. (Among other improvements that come with IFRS.)

My main fear is with the basis of IFRS being judgment based (much like GAAP was a few decades ago) it leaves a lot of room for “interpretation” and not a lot of room for audit. But I am fairly certain the only way the SEC is agreeing to this is the prospect of pleasing China and getting them to bring more money here. American financial markets historically have the most volume, if it become simple to register, maybe they will. I really am speculating here, sorry if that wasn’t clear. But I feel like IFRS is the beginning of a building a bridge, making it a true global economy.[/quote]

So in your opinion, are you saying that the changes in accounting procedure will result in more investment money from china or more chinese companies being listed on various stock exchanges?[/quote]

Not like the next week no, but eventually yeah. I also think there is a lot of money in other developed countries that very well may come here once we are all on the same page, whether it be direct investment or through capital funding.

I tell ya what, I have to be this optimistic otherwise I spent the last decade studying a dead system (GAAP), that we are giving up for nothing.

[quote]Deorum wrote:

[quote]John S. wrote:
If you want inflated dollars then do it.

If you want real money buy Gold and Silver.[/quote]

If you want stability invest in Gold in Silver.

[/quote]

Are any of you actually looking at the graph with the price of gold listed?

Speculating that gold will continue to rise significantly above its current record high, is not stability nor is it any less of a gamble than investing in say Ford Motor.

If you bought gold Post 1980 or Pre 2006, then hells fucking yeah it was stable, but right now it isn’t.

[quote]milktruck wrote:
We are in a liquidity driven bull market in stocks since march, in an overall bear market. Either the dollar is toast or risk assets are toast, and the dollar carry trade has the potential to end catastrophically. the good news is the existing power structure depends on it, so bye bye dollar is most likely.

Economic fundamentals are manipulated up by statistical adjustments and the only “good” news is stimulus driven BS that will kick us in the ass.

Oh yes, and the entire banking system is insolvent and everybody knows it. When will they recapitalize themselves at our expense? Ask apan maybe they know…

[/quote]

Eh, I don’t share your chicken little pessimism.

I see a lot of sets of books from a few different industries, and I don’t see the sky falling. I see a shit load of stagnation, but not the end of the world.

[quote]DJS wrote:

[quote]countingbeans wrote:

[quote]DJS wrote:

[quote]countingbeans wrote:
Depends on how long you plan on investing, where you invest, diversification and risk tolerance.

If we are talking 40 years of investment, fuck yeah, and you should have been putting all 15,500 in your 401(k) last year and early 2009.

If you are talking 1-5 years, i wouldn’t. I think our economy is going to be bumpy as hell for awhile.[/quote]

It’s 16.5 this year. woo hoo![/quote]

LOL.

It took me like 6 months to convince my wife we were getting the deal of a lifetime buying in when the market was at 7.
[/quote]

Yeah I’m completely with you on not buying high. When the dow hit 7K and everyone was SELLING their portfolios or cashing out of their 401ks I bought the 2X S&P ETFs. Most people do the opposite of what they should be doing. It’s instinct. Not to mention what the media was like then. I sold it over the last two days. +115%[/quote]

CHA-Ching!!! Good work man

PERSONAL SPECULATION: I think the road from 10 to 7 was all panic and loss of long term focus. And the recovery from 7-10 was just those people going, “Oh the world didn’t stop spinning.”

Without creating jobs I don’t see this upward tend continuing. But I do like the lowered expectation from listed companies. If we can get shareholders and issuers thinking about long-term profits rather than quarterly profits, the economy as a whole will be better off.

[quote]countingbeans wrote:

[quote]Headhunter wrote:

Its also kind of the case of: “What do I do with the money NOW?” Nothing stands out except perhaps agri-business.
[/quote]

Yeah, that is why your generation is screwed IMO. Who the hell knows where this economy is going… Any guaranteed return is better than getting caught up in another halving of your investments. I mean, what are you supposed to do? Hedge your hedges? LOL.

You guys don’t have 20-35 years to earn, you have to do that shit now, and if we are about to go into the next 5 years of stagnation, or small recessions followed by small recoveries, anything with guaranteed growth sounds like the best option. [/quote]

I’ve actually done quite well, the gold stocks giving a real boost.

Here’s a cool blog where the author shows that, for the last 100+ years, gold and stocks alternate, with the Dow actually equalling the gold price. He’s betting on gold until gold is $3000 and the Dow is 6000 (1:2) before begins to look at stocks again. Throw in the mania the Chinese might soon have for getting rid of their dollars and buying gold, and he makes a preety good case:

“Notice that when a swing in one direction starts, it doesn’t stop until it gets to an extreme at the opposite end (though not without wild twists and turns along the way to keep investors alternating between fear and greed). The implication of this chart is clear: at some time in the next decade, the price of one ounce of Gold will be equal (or nearly equal) to the price of the entire Dow Jones Industrial index. As of today, Gold is in the neighborhood of $800-850/ounce and the Dow Jones is in the 10000-10500 range. Clearly, this current “cycle” has a long way to go.”