Stock Market Prediction

[highnote]

Originally Posted by pandy

But, aren't there uncertainties in today's market that didn't exist years ago? For instance, many American companies have greatly benefited from emerging markets in China, India, South America. Are those markets going to stay strong? The Fed used quantitative easing to artificially keep the stock market from falling. And for the past twenty years the market has gotten used to a very low prime interest rate. Once these new economic policies kick in, the Fed will almost surely have to continue to raise interest rates to protect against inflation. How will the market react to higher interest rates?

Good points! Stay vigilante and don't get complacent!

I am holding on to Hecla Mining as a hedge in case inflation ever takes off.

Actually, we do have a lot of inflation. Just hire a plumber or compare your monthly grocery bills to two years ago. Or the cost of eating at a nice restaurant.

[highnote]

Originally Posted by PaceAdvantage

Breaking out to all time highs on the S&P as I type this...viva Trump!

S&P has risen 65% during Obama admin. Will it do the same under Trump?

Fed either has to keep rates low and keep printing money, or Trump has to stimulate the economy.

The stock market is kind of like gravity. We know the effects of gravity and can measure and predict it, but we don't understand why it works the way it does.

We don't always know why the stock market moves in a given direction. What's important is that we know that the market is moving and we know the direction it's moving. Then we can react accordingly.

As I have written once today, the trend is your friend. And also, don't fight the Fed.

[PaceAdvantage]

My viva Trump was said in jest, thus the

I didn't think this multi-year rally had much legs left, but it's putting up a substantial appendage today, so far...

[highnote]

Originally Posted by PaceAdvantage

My viva Trump was said in jest, thus the

I didn't think this multi-year rally had much legs left, but it's putting up a substantial appendage today, so far...

I think there is a bit of a "relief rally". People realize that Trump being president is not the end of the world and he might actually be able to keep his word.

I like that he tweeted that Airforce One should be canceled since they can't contain the costs. Too often the military industrial complex companies think they have a blank check at the taxpayers' expense. It's about time we have a president who is not afraid to let everyone know who the boss is. We don't need pussyfooting presidents.

Of course, the proof will be in the pudding. Talk is cheap.

[reckless]

Originally Posted by highnote

They are not as speculative as you think. They have fairly sound fundamentals. They are just small companies with low stock prices. So I buy lots of shares. It doesn't take a big move to make 30 or 40 percent.

I bought PACD and CPSS at 3 and 4 dollars a month ago. They are up to 4 and 5 dollars now -- both have about 35% gains.

Also, these small stock trades are what Warren Buffett calls "cigar butts" -- mediocre companies at great prices. You find a cigar butt on the ground and can get one or two puffs for free, you make 50% per year with low risk. Charlie Munger came along and said they're great trades when your capital is limited, but the methodology is not scalable. So now Buffett buys great companies at reasonable prices.

Since I don't have the problem that Buffett has with having so much money it's hard to find places to invest, I can look for cigar butts.

Also, these cigar butts are only a fraction of my portfolio. My core holdings are Berkshire-Hathaway, Philip Morris and Weyerhouser. Those are up 8, 2, and 26 percent since I bought them 2 years ago this month. PM and WY yield about 4% in dividends.




Trump certainly hasn't hurt the market. But stocks have done very well under Obama, too, as the Fed has kept rates low. When he took office the S&P was at 1350. Today it is at 2225. That is a 65% gain. If Trump can do the same the S&P will be at 3671 in 8 years.

My near term target, based on the indicators I use, is 2350 to 2450 between Jan 2017 and Jan 2018.



My biggest "buy" indicator came back on July 12. I believe we are seeing the continuation of the bull market that was signaled back in July. On July 12, the ratio of the 10 day average of up stocks to down stocks on the NYSE was 2.18 to 1. That signaled huge momentum. It is a very rare indicator. It only happens once every several years. The last time it happened was back in March of 2009 -- just after Obama took office. Ironically, it also happened as he was just about to leave office. I will leave it to others to interpret that as they wish.

There were also signs at the end of June that a bull market was forming when the ratio of advancing volume to declining volume reached 9 to 1. That is big volume to the upside. And for the next 10 days people continued to buy which led to the 2 to 1 up stocks to down stocks ratio.

The trend is your friend.

Nice going ... glad you're doing well.

One of the very first things I ever learned about the stock market was .... time in the market is much more important than timing the market. I look at just few things when I study and buy a company: price; free cash flow history; FCF yield, ROE/ROIC; earnings yield (the inverse of P/E ratio), sales growth; earnings growth and dividend growth.

I am not a technical analyst by any means but every so often the stars align in a way that makes sense to me and very little sense to everyone else.

We have been in this position for a few years now... and the future at this moment looks even greater than ever for those that have a time horizon longer than a week or an hour.

(A whisper to all my PA friends, especially if they hate Trump but invest in the stock market. Put your hatred aside because he'll get a deal done to re-patriate all the trillions of profits held overseas by large US companies. When this gets done the market goes up 20-30 per cent within weeks and the skies the limit after that. Companies such as Apple, Microsoft, the large pharmas, and industrials could even double in no time. I'm 'releasing' this gem out now, just for all my friends on here. )

Once again, nice post and congrats, highnote.

PS--the cigar butt investment was a gem from Buffet's mentor Benjamin Graham. Warren actually moved away from that thinking even before meeting Munger, who was more superior to Buffett in the stock investing game, imo.

[highnote]

Originally Posted by reckless

(A whisper to all my PA friends, especially if they hate Trump but invest in the stock market. Put your hatred aside because he'll get a deal done to re-patriate all the trillions of profits held overseas by large US companies. When this gets done the market goes up 20-30 per cent within weeks and the skies the limit after that. Companies such as Apple, Microsoft, the large pharmas, and industrials could even double in no time. I'm 'releasing' this gem out now, just for all my friends on here. )

I agree. Repatriation of cash will allow companies to buy back stock and pay dividends. If we're lucky the companies will actually invest the money in R&D and expansion, but don't count on it. Most likely, stocks will rise due to buybacks and dividends.

The Fed will probably raise rates, which could offset the stock momentum. A 1/2 point raise is more likely than a 1/4 point raise. If that happens, then watch out. The market could fall.

So the timing of repatriation and interest rate raises will be an important factor in timing the market -- unless you use a long term, buy and hold strategy. And even if you do have a long term strategy, it might make sense to anticipate the interest rate hike and sit on the sidelines until the market stabilizes.

[highnote]

My cigar butts trades are doing well today:

DHT up 10% since Dec 5 purchase date.

UUUU up 16.5% since Dec 5 purchase date.

CPSS up 31% since Nov 7 purchase date.

PACD up 47% since Nov 7 purchase date.

Those gains far outweigh the losses I had from the Nov 7 purchases of STLY and PDLI. I sold both a week or so ago.

No doubt these trades are benefitting from the strong recent market. But I had written back on July 12 that the market could rise by 15% by Jan 12 given the appearance of a very strong bullish momentum indicator.

Couple that with the fact that small stocks tend to outperform large stocks at the turn of the year due to tax loss selling; many things were in place for this type of trade to have a good chance of success.

[_______]

I'm raising cash. Sold my WFC shares on the recent run up. Will be exiting or reducing multiple positions in the Energy sector before the end of the month.

I'll maintain some positions I've been in for years.

It's certainly been fun participating in a run like this but the idea that this market hasn't gotten ahead of earnings requires some assumptions about the future I think are overly rosy.

[highnote]

Originally Posted by _______

I'm raising cash. Sold my WFC shares on the recent run up. Will be exiting or reducing multiple positions in the Energy sector before the end of the month.

I'll maintain some positions I've been in for years.

It's certainly been fun participating in a run like this but the idea that this market hasn't gotten ahead of earnings requires some assumptions about the future I think are overly rosy.

I can't blame you for raising cash given the rapid run up. It would be good to have cash to buy stocks if the market crashes.

Right now, I am not fighting the tape. I don't want to sell into strength. The market has been strong for the past 5 months. I think it has another good month remaining. I'll use stops in case there is a big reversal.

[highnote]

Originally Posted by highnote

Right now, I am not fighting the tape. I don't want to sell into strength. The market has been strong for the past 5 months. I think it has another good month remaining. I'll use stops in case there is a big reversal.

One thing we know is that what goes up must come down ... eventually. Right now the market is red hot. I'll keep riding the wave, but will be on the lookout for signs of a reversal. So far, I haven't see any.

DHT and UUUU are up 11 and 25 percent since Monday.

CPSS and PACD are up 30 and 65 percent since Nov 7.

PACD in one month has become the best performing stock in my portfolio over the past two years. Those gains are NOT sustainable.

[highnote]

The market was up today, but decliners were greater than advancers by a few shares. That means there is a some selling going on, even though the S&P closed higher.

[Ocala Mike]

Took profits on AMD, and bought beaten-down TNDM.

[nik21precious]

Hi, i am wanting to start investing in stocks and i think it's a good time because share prices are lower. Can any one suggest me from which company i should start from?

[highnote]

Originally Posted by nik21precious

Hi, i am wanting to start investing in stocks and i think it's a good time because share prices are lower. Can any one suggest me from which company i should start from?

It depends on what your objective is. Are you looking to hold long term or short term. Are you interested in collecting dividends for purposes of income and/or reinvestment? Are you nearing retirement?

The best advice I can give is to read a lot of books.

Here is a link to several good ones:

http://www.fool.com/specials/2000/sp001107a.htm

You might even consider joining the Motley Fool website. They have some excellent message boards and offer other valuable investing information.

There are a many more good books.

Here is a list of authors whose books you should consider reading:

David Dreman
John Neff
Joel Greenblatt
Warren Buffett
Joseph Piotroski
James P. O'Shaunessy
Martin Zweig
Benjamin Graham
Kenneth Fisher
Peter Lynch

If you read these books, follow the authors' advice, I am certain that in 20 or so years your chances of being financially secure would be far greater than asking for stock picks from this message board. Although, there are some pretty good analysts here.

[Red Knave]

Originally Posted by ReplayRandall

Did you know that when the Depression started with the fall of the Stock Market in 1929, it fully didn't recover until 1955?

i keep hearing this and on the surface it's true but in real terms it isn't.
While it's true that the inflation adjusted return of the S&P 'Composite Index' from Oct 1929 to Oct 1955 was -3.25%, if you include reinvested dividends your return could have been 315%. That's an annualized real return of over 5.5%.
I know that I don't know where the market will be tomorrow but I would rather be invested in it than on the sidelines. Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.