PDA

View Full Version : Dow 18,000


lamboguy
12-23-2014, 10:34 AM
wow, never thought we would get there this fast. up 3000 since May 2013. i only wish i knew which direction it is going from here!

badcompany
12-23-2014, 11:08 AM
Here's a hint:

http://i95.photobucket.com/albums/l142/thinlizzy21/8071db528f4ed26be3a09ca1613dd8b5_zpsb7c539db.jpg

classhandicapper
12-23-2014, 11:15 AM
wow, never thought we would get there this fast. up 3000 since May 2013. i only wish i knew which direction it is going from here!

Up - until all the monetary stimulation from the Fed, BOJ, and ECB causes such significant mis-allocation of capital in the real economy almost no amount of printed and cheap money can keep the real economy propped up anymore.

Ocala Mike
12-23-2014, 01:43 PM
So, serious question here - no Obama bashing, please!

Has any other American president presided over nearly a tripling of the Dow during his administration? FDR, maybe?

ReplayRandall
12-23-2014, 01:59 PM
So, serious question here - no Obama bashing, please!

Has any other American president presided over nearly a tripling of the Dow during his administration? FDR, maybe?

Under the Reagan administration, the bull market almost quadrupled from 1982-1987....

Clocker
12-23-2014, 02:23 PM
So, serious question here - no Obama bashing, please!

Has any other American president presided over nearly a tripling of the Dow during his administration? FDR, maybe?

"Presiding" infers some kind of cause and effect. Presidents rarely have the ability to positively affect the market in the long term, and this president is no exception. The market is up because of the QE policy of the Fed and because there are few other options for big investors who need to show consistent growth. And because a lot of large companies have a lot of cash, and are buying back their own stock rather than use the money for real expansion. I am not aware of anyone in the financial community that has tried to posit any linkage between the current market and the current administration policies.

badcompany
12-23-2014, 03:41 PM
So, serious question here - no Obama bashing, please!

Has any other American president presided over nearly a tripling of the Dow during his administration? FDR, maybe?

Personally, I wouldn't give ANY President credit or blame for the performance of the stock market.

The whole idea is silly. Under Obama, Citigroup rose 300%, in his first year.

However, the rise was from $1 a share to $4, and that wasn't much consolation to those who purchased the stock in the $40-50 a share range a few years prior.

Saratoga_Mike
12-23-2014, 05:43 PM
Up - until all the monetary stimulation from the Fed, BOJ, and ECB causes such significant mis-allocation of capital in the real economy almost no amount of printed and cheap money can keep the real economy propped up anymore.

The ECB's balance sheet peaked late 2012/early 2013 - money hasn't been easy in the EU since that time. Low EU long rates reflect deflationary expectations. I assume you approve of the ECB's policies over the past two years?

Saratoga_Mike
12-23-2014, 05:49 PM
"Presiding" infers some kind of cause and effect. Presidents rarely have the ability to positively affect the market in the long term, and this president is no exception. The market is up because of the QE policy of the Fed and because there are few other options for big investors who need to show consistent growth. And because a lot of large companies have a lot of cash, and are buying back their own stock rather than use the money for real expansion. I am not aware of anyone in the financial community that has tried to posit any linkage between the current market and the current administration policies.

The thought that the "real" economy hasn't improved just isn't true. Could it be better with a more business friendly president in place? Probably, but it's improved over the past few yrs.

JustRalph
12-23-2014, 07:49 PM
Be afraid. Be very afraid

Clocker
12-23-2014, 08:20 PM
The thought that the "real" economy hasn't improved just isn't true. Could it be better with a more business friendly president in place? Probably, but it's improved over the past few yrs.

It has improved, but much slower than any recovery in modern times. And the low levels of investment spending are a symptom of that.

Robert Goren
12-23-2014, 08:21 PM
Be afraid. Be very afraidOn this, I agree with you.

Clocker
12-23-2014, 08:31 PM
On this, I agree with you.

Ditto, that 18,000 has a decidedly bubbly odor.

_______
12-23-2014, 10:48 PM
A guy is walking a hyperactive dog. Sometimes it runs ahead of him and sometimes it trails behind. The leash can be short but at other times it stretches to allow the dog more latitude.

Even though they'll travel the same path, the dog will cover a lot more ground.

The guy is the econmy and the dog is the stock market.

Unless you think the economy is about to contract, it's hard to see an argument that the dog is going somewhere the man isn't. Bull markets don't die of old age. Something happens to kill them.

It's hard to argue that we have excess enthusiasm when, 5 years after a bottom, people are still cautious about the market.

ReplayRandall
12-24-2014, 12:26 AM
A guy is walking a hyperactive dog. Sometimes it runs ahead of him and sometimes it trails behind. The leash can be short but at other times it stretches to allow the dog more latitude.

Even though they'll travel the same path, the dog will cover a lot more ground.

The guy is the econmy and the dog is the stock market.

Unless you think the economy is about to contract, it's hard to see an argument that the dog is going somewhere the man isn't. Bull markets don't die of old age. Something happens to kill them.

It's hard to argue that we have excess enthusiasm when, 5 years after a bottom, people are still cautious about the market.


I liked your analogy, Don. Btw, do you remember what stopped the Bull market cold in 1987, after a 5 year run?

_______
12-24-2014, 01:03 AM
I think program trading took much of the blame at the time. People were tring to arbitrage the difference between Chicago futures and New York cash. A case could be made that earnings didn't support the 8 month 44% run up from January.

I wonder how someone would have done if they bought at the peak in August 87 and just held on for 27 years.

badcompany
12-24-2014, 06:51 AM
I think program trading took much of the blame at the time. People were tring to arbitrage the difference between Chicago futures and New York cash. A case could be made that earnings didn't support the 8 month 44% run up from January.

I wonder how someone would have done if they bought at the peak in August 87 and just held on for 27 years.

People want the upside gains without the downside risks.

Sorry, folks. That falls into the category of having your cake and eating it, too.


http://i95.photobucket.com/albums/l142/thinlizzy21/F601D8C5-7577-4B79-8610-CCE29203AF86_zpsckbirrve.png (http://s95.photobucket.com/user/thinlizzy21/media/F601D8C5-7577-4B79-8610-CCE29203AF86_zpsckbirrve.png.html)

sammy the sage
12-24-2014, 08:58 AM
stock market worth is inversely proportional to dollar's purchasing power....

if smart enough one can see where this headed eventually...

now whether 2 months, 2years, or 20 years from now...am NOT smart enough to TIME or tell ya when...

acorn54
12-24-2014, 09:12 AM
see investing in the stock mkt as a no-brainer. where else can you park your investment money? getting 1% on your retirement savings isn't getting you to retirement. only game in town is the stock market.
forget timing- no one has a crystal ball. just dollar-cost average.
forget managed funds, just paying salary to a person who is highly unlikely to beat the index over the life of your investments.

Saratoga_Mike
12-24-2014, 01:09 PM
It has improved, but much slower than any recovery in modern times. And the low levels of investment spending are a symptom of that.

Normalize housing investment and things would look pretty good actually

Saratoga_Mike
12-24-2014, 01:22 PM
stock market worth is inversely proportional to dollar's purchasing power....

if smart enough one can see where this headed eventually...

now whether 2 months, 2years, or 20 years from now...am NOT smart enough to TIME or tell ya when...

I don't understand this statement.

1990 to 2002 the DXY (dollar index) appreciated about 30% and the S&P 500 appreciated roughly 230%. Stronger dollar = stronger mkt in this timeframe

2002 to 2011 the DXY declined by 33% and the S&P 500 increased about 10% in value. Weaker dollar = so-so mkt in this timeframe

2011 to today the DXY is about 13% stronger and the S&P is up about 80%.
Modestly stronger dollar = stronger mkt in this timeframe

I used rough numbers from weekly charts.

Robert Goren
12-24-2014, 02:35 PM
I have got to believe somewhere,some place in side of a large bank, a gambler figured out a to make a quick buck and that way will bring the whole system crashing down pretty soon.

PaceAdvantage
12-24-2014, 04:26 PM
Who will be left holding the bag when it all goes to hell? :lol:

Why, it was only 5-6 scant years ago where articles were being written about people being close to retirement having their nest eggs decimated in the stock market crash of 2008. And here we are, only a few years later...

You can dollar cost average all you want, but if you're in the wrong spot when the music stops playing, you're screwed 10 ways to Sunday....

badcompany
12-24-2014, 05:47 PM
People love to harken back to the Good Ol' Days of the stock market when things were better. Most of these people haven't bothered to study Stock Market history. The only difference between now and 100 years ago is technology.

It's always been a dangerous place to put your money and most people have no business being in it.


http://i95.photobucket.com/albums/l142/thinlizzy21/33794b4e6c1f3150e3f931b81e48d777_zps6500f4ed.jpg

thaskalos
12-24-2014, 07:02 PM
People love to harken back to the Good Ol' Days of the stock market when things were better. Most of these people haven't bothered to study Stock Market history. The only difference between now and 100 years ago is technology.

It's always been a dangerous place to put your money and most people have no business being in it.


http://i95.photobucket.com/albums/l142/thinlizzy21/33794b4e6c1f3150e3f931b81e48d777_zps6500f4ed.jpg
I got involved in horse betting many years ago because an astute investor advised me to only put my money in stable investments. I figured...an investment with four legs would be as stable as it gets.

badcompany
12-24-2014, 07:25 PM
I got involved in horse betting many years ago because an astute investor advised me to only put my money in stable investments. I figured...an investment with four legs would be as stable as it gets.

It's the size of the body compared to the legs that's the problem ;)

http://www.edinburghpark.com.au/images/sales/2010/2010-Lot479-lg.jpg

acorn54
12-25-2014, 05:40 AM
Who will be left holding the bag when it all goes to hell? :lol:

Why, it was only 5-6 scant years ago where articles were being written about people being close to retirement having their nest eggs decimated in the stock market crash of 2008. And here we are, only a few years later...

You can dollar cost average all you want, but if you're in the wrong spot when the music stops playing, you're screwed 10 ways to Sunday....


fortunately i am in a position where, even if i lose 50% of my net worth in stocks (which is highly unlikely unless we are headed for a doomsday scenario), i am well ahead of the game. it still comes down to the fact that the stock market is the only game in town. also at retirement if you draw down your nest egg in stocks at say 4-7 percent annually you are likely to have a stream of income for some time to come. in addition to one's social security, possibly pension, one should be able to have a decent retirement.

thaskalos
12-25-2014, 06:56 AM
it still comes down to the fact that the stock market is the only game in town. also at retirement if you draw down your nest egg in stocks at say 4-7 percent annually you are likely to have a stream of income for some time to come. in addition to one's social security, possibly pension, one should be able to have a decent retirement.

Not too long ago, people were calling REAL ESTATE the "only game in town"...and were swearing off the stock market for good. :)

Robert Goren
12-25-2014, 07:46 AM
Not too long ago, people were calling REAL ESTATE the "only game in town"...and were swearing off the stock market for good. :)The equities markets has a predictable cycle. It reach an all time high and stay there for a while. Then it crashes and floats around the bottom for a while. Then it goes into catch up mode. It spends several years trying to catch up to the old highs with several mild set backs along the way. Then it starts all over again. There is very short window to get out. If you are in it long enough, you will be ahead even at the bottoms, but who wants to sell then. Or buy them for that matter.(there may more to go on the down side). It falls really fast and it takes a long time comparatively to come back. The good news is that the government will move heaven and earth to make sure it doesn't stay on the bottom very long.

acorn54
12-25-2014, 10:05 AM
The equities markets has a predictable cycle. It reach an all time high and stay there for a while. Then it crashes and floats around the bottom for a while. Then it goes into catch up mode. It spends several years trying to catch up to the old highs with several mild set backs along the way. Then it starts all over again. There is very short window to get out. If you are in it long enough, you will be ahead even at the bottoms, but who wants to sell then. Or buy them for that matter.(there may more to go on the down side). It falls really fast and it takes a long time comparatively to come back. The good news is that the government will move heaven and earth to make sure it doesn't stay on the bottom very long.

correct, the government will move heaven and earth to make sure it doesn't stay on the bottom very long, and there are very good reasons, pension funds, that support people's retirements are dependent on the acturarial predictability of the stock market, as well as the entire financial structure. it would put an increased burden on the system if the stock market was allowed to fail.

classhandicapper
12-25-2014, 10:50 AM
I liked your analogy, Don. Btw, do you remember what stopped the Bull market cold in 1987, after a 5 year run?

I believe interest rates were rising (bonds were collapsing). That was my first experience with a market collapse like that. I started investing the year before in 1986. I worked on Wall St at the time for Citibank and watched the prices collapse on the ticker at the Unisys building with a good friend that got me into the stock market. I'll never forget that!

In 1986 I bought 200 shares of MSFT because my company put a PC on everyone's desk. I concluded that "this" was going to be big. I made $700 and sold it.

I took all the money and bought Compaq computer because they beat IBM to either the 286 or 386. I made a few hundred (can't remember exact amount or details of the technology) and sold.

I would have made 100s of thousands if I held. I stopped counting when the pain reached a certain point. :lol: That experience taught me the value of buy and hold and long term investing. I handle bear markets way better than losing streaks at the track.

classhandicapper
12-25-2014, 10:54 AM
see investing in the stock mkt as a no-brainer. where else can you park your investment money? getting 1% on your retirement savings isn't getting you to retirement. only game in town is the stock market.


This is how central banks create bubbles and get people into trouble.

The Fed gives away easy money, which expands money and credit, some of which flows into the stock market (and/or other assets), because people are searching for a better return with little focus on the values of those underlying assets. You get a bubble and eventually a bust.

pandy
12-25-2014, 10:59 AM
The equities markets has a predictable cycle. It reach an all time high and stay there for a while. Then it crashes and floats around the bottom for a while. Then it goes into catch up mode. It spends several years trying to catch up to the old highs with several mild set backs along the way. Then it starts all over again. There is very short window to get out. If you are in it long enough, you will be ahead even at the bottoms, but who wants to sell then. Or buy them for that matter.(there may more to go on the down side). It falls really fast and it takes a long time comparatively to come back. The good news is that the government will move heaven and earth to make sure it doesn't stay on the bottom very long.


Which is exactly when you hit a certain age, in retirement, you have to either get out of stocks completely, or only keep a small percentage of no more than 20% in stocks. Long bear markets are possible and if you're 70 years old when the market crashes and you have most of your money in the stock market, you may never get that back unless you live to 100.

pandy
12-25-2014, 11:01 AM
This is how central banks create bubbles and get people into trouble.

The Fed gives away easy money, which expands money and credit, some of which flows into the stock market (and/or other assets), because people are searching for a better return with little focus on the values of those underlying assets. You get a bubble and eventually a bust.

I agree. Only gamblers should be playing the stock market. But with interests rates so low, it pushes people who are conservative with their money into the stock market and these are the people that get hurt the most when it collapses because they aren't protected.

acorn54
12-25-2014, 11:14 AM
Which is exactly when you hit a certain age, in retirement, you have to either get out of stocks completely, or only keep a small percentage of no more than 20% in stocks. Long bear markets are possible and if you're 70 years old when the market crashes and you have most of your money in the stock market, you may never get that back unless you live to 100.

it depends all on how you w/draw your money upon retirement. of course if you panic at a crash in the market prices you will defeat the purpose of stocks as an investment/retirement vehicle.
however if you ignore market movements and religiously draw 4-7 percent annually, which is about .003%-.0058% monthly of total present value of your portfolio value you are properly managing your money.

pandy
12-25-2014, 12:02 PM
One thing that concerns me about the average investor who has his/her money in mutual funds in their 401k, these portfolios usually take a huge hit when there's a crash and bear market because there is no protection. The nice thing about purchasing individual stocks is that you can put stop loss orders in to protect most of your money in case of a market crash. There is no such protection in mutual funds.

Lucent Technologies had one of their main offices here in the Lehigh Valley, PA. At one point they had 30,000 employees nationwide, several thousand from this area. When their stock collapsed in 2009, thousands of their employees lost their entire life savings. This is what happens when people who don't know anything about gambling "invest" in the stock market.

classhandicapper
12-25-2014, 12:05 PM
it depends all on how you w/draw your money upon retirement. of course if you panic at a crash in the market prices you will defeat the purpose of stocks as an investment/retirement vehicle.
however if you ignore market movements and religiously draw 4-7 percent annually, which is about .003%-.0058% monthly of total present value of your portfolio value you are properly managing your money.

The problem is that most people have no ability whatsoever to value businesses. They don't even think in those terms. They buy and sell momentum, whatever is hot/cold etc... and wind up buying at tops and selling at bottoms.

If you could convince those people to dollar cost average into a diversified portfolio of large blue chip companies (like the S&P), they'd probably do fine even if they bought at a bubble top a few times, but most won't.

pandy
12-25-2014, 12:18 PM
The problem is that most people have no ability whatsoever to value businesses. They don't even think in those terms. They buy and sell momentum, whatever is hot/cold etc... and wind up buying at tops and selling at bottoms.

If you could convince those people to dollar cost average into a diversified portfolio of large blue chip companies (like the S&P), they'd probably do fine even if they bought at a bubble top a few times, but most won't.


I agree with you. My dad was a stock broker for over 30 years. Inevitably towards the end of a bull market he would have people coming up to him and telling him they think they're ready to get into the market. I remember him telling me, "When people who are normally tight with money and have kept it in the bank or under their mattress suddenly decide to get into the stock market, it's time to get out."

acorn54
12-25-2014, 12:18 PM
both of you are correct , one does have to be educated financially, and of course most do not have a deep understanding of personal finance, and only have the mass media, talking heads "advice".

Robert Goren
12-25-2014, 08:36 PM
Which is exactly when you hit a certain age, in retirement, you have to either get out of stocks completely, or only keep a small percentage of no more than 20% in stocks. Long bear markets are possible and if you're 70 years old when the market crashes and you have most of your money in the stock market, you may never get that back unless you live to 100.The rule of thumb I have heard is (100- your age) is the % amount you should have stocks. If you are 70, then 30% should be stocks. The question is what should you do with the rest of your money. Generally it is bonds, but right now that is not where I would want to be because at some point interest rates will go up. But when? I think you have to be in something very close to cash that you can turn into cash very quickly. . I know no interest but, hey, it better than losing 10% of it. Inflation right now is not a problem so the Fed is not going to raise them much if at all. But inflation can appear in a hurry. Easy for me to say since I have no money.
The Fed lives by 2 rules.
Rule one: In a period of negative or little growth, cut interest rates.
Rule two: In a period of high inflation, raise interest rates.
The rest of the time, they do nothing. Right now we are the that period of doing nothing. You may not like it, but that is the way they operate.

ReplayRandall
12-25-2014, 08:44 PM
Easy for me to say since I have no money.
The Fed lives by 2 rules.
Rule one: In a period of negative or little growth, cut interest rates.
Rule two: In a period of high inflation, raise interest rates.
The rest of the time, they do nothing. Right now we are the that period of doing nothing. You may not like it, but that is the way they operate.

C'mon RG, how can you have no money when you give such great advice?..:confused:

badcompany
12-25-2014, 08:49 PM
C'mon RG, how can you have no money when you give such great advice?..:confused:

Yes, you'd think having the knowledge that markets go up, down or sideways would be be enough to fatten his wallet :confused:

ReplayRandall
12-25-2014, 08:54 PM
Yes, you'd think having the knowledge that markets go up, down or sideways would be be enough to fatten his wallet :confused:


You've put me on the "wrong hand" BC, poor read.......Happy Holidays..:cool:

badcompany
12-26-2014, 12:00 PM
Happy Holidays to you too, RR. Hopefully we'll all have some happy returns on investment in 2015. :ThmbUp:

That said, we have quite a few market wizards on this thread.

We do have a trading and investing board for you all to share your insights.

In fact, last year we had a thread with our best bets and ideas, started by Don aka "The man with no nick," who has done a great job of tallying the results.

I'm sure we'll have one for 2015. So, feel free to chime in.

lamboguy
12-26-2014, 12:17 PM
1.14%

Saratoga_Mike
12-26-2014, 12:20 PM
1.14%

I created a separate thread - you'll see it --hope to see the "why" behind your prediction on it.