# Markets might drop by 50%?



## Avorysuds

What do you markets guys think of this story?

Price to earnings ratios suggest that stock markets are overvalued and in need of price adjustment, say GMO's Jeremy Grantham and James Montier.

I'm not big on the stock market. I feel I understand the FED's role in creating bubbles but past that I don't do anything in stocks.

I'm not ready for another recession =( If that's what happens...


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## saveliberty

50% would be a depression, so you don't have to worry about a recession.  

Realistically, I'd say a 20% correction is on the horizon.  Most of the money in the market is insitutional money, so they'll take the hit and government always bails them out.  The big losers?  Your retirement fund, if you leave it in too long.


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## Moonglow

> Markets might drop by 50%?



Repeat something daily for 6 years and one day it might come true...


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## saveliberty

Corrections usually are closer together than this Moonglow.  The longer it takes, the more likely it will be bubble-like.  Meaning much bigger and longer lasting.  Of course government will bailout the banks, AGAIN.  Only the little guy with his retirement account gets burned.


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## Moonglow

It's normal for a summer market and Buffett was being shadowed....The dump on thursday was due to profit taking...and QE assumptions based on speculation of the labor report...and pork bellies are rising due to the diarrhea virus destroying pig herds....


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## Delta4Embassy

saveliberty said:


> 50% would be a depression, so you don't have to worry about a recession.
> 
> Realistically, I'd say a 20% correction is on the horizon.  Most of the money in the market is insitutional money, so they'll take the hit and government always bails them out.  The big losers?  Your retirement fund, if you leave it in too long.



Heard someone on CNBC the other day when down over 300 ask if this might be a 10% correction. That'd be about 1700 pts. Down like 700 from max atm I believe. 50% seems unrealistic though.


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## eagle1462010

The Feds just cut asset buying by 10 Billion a month.  Down to 26 BILLION a month from 80 Billion a month.

The Feds are slicing their FIAT Machine.  Interest rates from the Discount window remain at .25% as they have been since the crash.

As is borrowing on a monumental scale.


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## Toro

Perhaps but unlikely. 50% corrections are very rare.  I think there have only ever been three. 

More likely, we will have a 20% to 30% correction and substandard returns over the next decade. 

But maybe I'm wrong. I like GMO.


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## Toro

BTW the graph is a little deceptive. The first 40%+ decline was after the Tech bubble. The second was after the Housing bubble. Even though stocks and other assets are expensive, we don't have the same excesses we had over the past few decades. At least not yet.


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## Dont Taz Me Bro

I believe the market is overvalued, but a 50% drop is highly unlikely.  I'd be more concerned with the stability of the dollar.


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## LoneLaugher

......and........they might not. 

If you know for sure......let me know.


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## JakeStarkey

I expect a 15 to 25% correction later in the year, but no more.


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## rightwinger

Let it drop 50%

I'm ready to buy in at that level


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## JakeStarkey

Just so.


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## eagle1462010

rightwinger said:


> Let it drop 50%
> 
> I'm ready to buy in at that level



And to hell with all those who get hosed in the process with that kind of a drop.  A correction is coming, and people in this country are going to pay a price for it.  In the lose of jobs and losing homes again.

To those who get toasted in the next crash, like the Big 4, they need their assets seized and put out of business.  Thus, ending the BS Too Big to Fail.


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## william the wie

Toro said:


> BTW the graph is a little deceptive. The first 40%+ decline was after the Tech bubble. The second was after the Housing bubble. Even though stocks and other assets are expensive, we don't have the same excesses we had over the past few decades. At least not yet.



Also too many people are calling for a correction. Marketwatch has had two explanations this week of why the market will crash. Since I write puts I almost always have an S&P put but its been a while since I bought an S&P call to lock in profits.


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## Zander

A 50% drop would not surprise me. The stock market is not rational or orderly. It's emotional and chaotic. 

If a drop of  40-50% is unbearable to you mentally or financially, that means you&#8217;ve  either got too much money invested in stocks or you're a wimp. In either case you need to adjust your asset allocation (or grow some balls!).


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## sameech

saveliberty said:


> 50% would be a depression, so you don't have to worry about a recession.
> 
> Realistically, I'd say a 20% correction is on the horizon.  Most of the money in the market is insitutional money, so they'll take the hit and government always bails them out.  The big losers?  Your retirement fund, if you leave it in too long.



depends on the company.  The Dow is a poor indicator of overall market conditions.  Sure there are companies that will take huge hits, but that will just bolster underperforming stocks or companies like MSFT that trades pretty consistently at the historical trendline for the market of 15:1 P/E.  There are other companies that have used the low interest environment to buy back shares which will make them more attractive in a dividend focused market instead of a hyped up P/E one. 

If there is a major correction, I would expect to see companies like Amazon and Google to take the brunt of it.  The financial sector should be fine.


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## william the wie

Zander said:


> A 50% drop would not surprise me. The stock market is not rational or orderly. It's emotional and chaotic.
> 
> If a drop of  40-50% is unbearable to you mentally or financially, that means youve  either got too much money invested in stocks or you're a wimp. In either case you need to adjust your asset allocation (or grow some balls!).


Nobody has balls that big. A while back AAII came up with a real humdinger of a magic formula investment for outsize returns that so far as I know no one has ever been willing to pull the trigger on. Here it is in all of its glory:

Buy a more or random sample of companies that have no PE, 50-200 depending on your budget.

Repeat annually.

Sell when an average or nearly average PE is achieved.

Your portfolio screen will end up covered with companies that no longer exist. (Might have been small sample size in my case.)

Variance of return is stomach churning, which is why I did only one iteration. 

Checking for funds who use this strategy I couldn't find any.

Then I looked at the most recent AAII journal. Nobody can stomach high variance of return in investments, speculations yes, investments no. Even Algo programmers renormalize models so they won't be fired.


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## Delta4Embassy

Eventually the market's gonna crash. It's inevitable as the valueless currency we use can't be sustained forever. At some point, like other countries (most recently Argentina,) we too will default on our debt and the house of cards will come crashing down. I don't know what's gonna happen then, but as the line in "Ultraviolet" went, "What would have happened if I didn't pass one of these tests?" - "Nothing good."


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## Toro

Delta4Embassy said:


> Eventually the market's gonna crash. It's inevitable as the valueless currency we use can't be sustained forever. At some point, like other countries (most recently Argentina,) we too will default on our debt and the house of cards will come crashing down. I don't know what's gonna happen then, but as the line in "Ultraviolet" went, "What would have happened if I didn't pass one of these tests?" - "Nothing good."



Those may all happen, but they may happen 100 years from now. In the meantime, people huddled in their bunkers waiting for such a crash will all be dead and have missed great investment opportunities.


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## saveliberty

Managing market risk is as important as recognizing investment opportunity.


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## jwoodie

The market is currently buoyed by prospects for a GOP Senate.  If that fails to materialize, the crash will come sooner.  If it does materialize, the crash will come later:  2017 if Hillary wins, 2018 if she doesn't.


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## OnePercenter

Dont Taz Me Bro said:


> I believe the market is overvalued, but a 50% drop is highly unlikely.  I'd be more concerned with the stability of the dollar.



The market is investors betting against each other. How do you place value on that?


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## Mr Liberty

jwoodie said:


> The market is currently buoyed by prospects for a GOP Senate.  If that fails to materialize, the crash will come sooner.  If it does materialize, the crash will come later:  2017 if Hillary wins, 2018 if she doesn't.



Elections don't cause crashes. The market may go up or down a little as it always does on news; however, it does not crash because a Democrat is elected.


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## SteadyMercury

Toro said:


> In the meantime, people huddled in their bunkers waiting for such a crash will all be dead and have missed great investment opportunities.


I suspect the overwhelming majority of the people singing the non-stop "market gonna crash" song don't have much money to invest anyway.


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## saveliberty

I'm completely happy with an average 8.5% annual return and only three weeks exposure to the stock market.  I just play the big drops and get out with a 2 or 3% gain each time.


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## Zander

saveliberty said:


> I'm completely happy with an average 8.5% annual return and only three weeks exposure to the stock market.  I just play the big drops and get out with a 2 or 3% gain each time.



Until you don't.


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## saveliberty

Five consecutive years and I'm on pace to beat my average by quite a bit this year.


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## rightwinger

It s more likely for the market to go up 50%


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## KissMy

The stock market is based on after tax corporate profits. Since the 2001 Bush's tax cuts &  loopholes, the tax system heavily subsidizes big corporations by burdening workers. There is little chance corp profits will decline much crashing the market. The market may correct a bit if profits drop, but it wont be very far because *there is currently no stock bubble.*

Since Bush's tax cuts. the loopholes have cut the effective corporate taxes to 12.6% That is less than payroll tax deductions from their paycheck before income tax pay deductions on minimum wage workers. Middle class pays almost half their earnings in those tax pay deductions. This tax burden makes US workers very expensive to employ & gives corporations a huge tax cut. Corps fire all the tax burdened expensive workers & employ the low tax cheap foreigners. Only a tax overhaul will lower worker taxes, subsidized corp profits & stock prices while bringing more high paying jobs back to the USA.

*Subsidized Corp After Tax Profits VS Jobs*





*There is currently no stock market bubble. The market is currently undervalued & more likely to go up than down.

Subsidized Corp After Tax Profits VS Stock Prices*


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## SteadyMercury

saveliberty said:


> Five consecutive years and I'm on pace to beat my average by quite a bit this year.


Five consecutive years of success during one of the greatest five year bull market runs in history? You could have had great success plopping all your money in a total market index fund, and you'd have swept up some dividends as well.


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## saveliberty

Point is your money is at risk everyday, mine was only three weeks a year.


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## OnePercenter

The market is a large financial bubble that can burst at any time. There are a handful of people that control the market to make sure that doesn't happen. Predicting what these people do makes you LOT'S of $$$$.


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## KissMy

Q3 GDP will be huge & will beat the street. Sell on that news. The election turmoil & QE cuts may ding Q4 GDP & corp profits. That may cause a 10%+ market correction. Keep eyes on GDP, Earnings, Fed & congress for Q4.

Q2 GDP was heavily impacted by bad weather. Construction in the Midwest was up 28%, the Northeast was up 14%. But that was driven negative by a 30% drop in the South due to very wet conditions. That has built up huge pent-up demand in the South that builders will currently will not be able to meet. Construction hiring & spending will have to explode. Get ready for a hot Q3 GDP & earnings report sending the market soaring. Then sell, sell, sell because QE is supposed to end in October.


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## Zander

saveliberty said:


> Five consecutive years and I'm on pace to beat my average by quite a bit this year.



Everyone is a genius in a bull market.


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## SteadyMercury

saveliberty said:


> Point is your money is at risk everyday, mine was only three weeks a year.


Those three weeks have the same chances of positive/negative returns as any other days of year. 

Everyone who yanks their money in and out thinks they are smart enough to beat the market, but studies show most do not and you've obviously got a sample bias having brilliantly pulled in and out during a five year strong bull market.


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## Zander

KissMy said:


> The stock market is based on after tax corporate profits. Since the 2001 Bush's tax cuts &  loopholes, the tax system heavily subsidizes big corporations by burdening workers. There is little chance corp profits will decline much crashing the market. The market may correct a bit if profits drop, but it wont be very far because *there is currently no stock bubble.*
> 
> Since Bush's tax cuts. the loopholes have cut the effective corporate taxes to 12.6% That is less than payroll tax deductions from their paycheck before income tax pay deductions on minimum wage workers. Middle class pays almost half their earnings in those tax pay deductions. This tax burden makes US workers very expensive to employ & gives corporations a huge tax cut. Corps fire all the tax burdened expensive workers & employ the low tax cheap foreigners. Only a tax overhaul will lower worker taxes, subsidized corp profits & stock prices while bringing more high paying jobs back to the USA.
> 
> *Subsidized Corp After Tax Profits VS Jobs*
> 
> 
> 
> 
> 
> *There is currently no stock market bubble. The market is currently undervalued & more likely to go up than down.
> 
> Subsidized Corp After Tax Profits VS Stock Prices*



Thanks for the laugh!!


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## saveliberty

SteadyMercury said:


> saveliberty said:
> 
> 
> 
> Point is your money is at risk everyday, mine was only three weeks a year.
> 
> 
> 
> Those three weeks have the same chances of positive/negative returns as any other days of year.
> 
> Everyone who yanks their money in and out thinks they are smart enough to beat the market, but studies show most do not and you've obviously got a sample bias having brilliantly pulled in and out during a five year strong bull market.
Click to expand...


Not everyone has the same investment objectives.  Some want to maximize returns, some look for an income stream and others good return with more moderate risk.  

As far as yanking money in and out of the market, brokerage houses do it everyday in fractions of a second trades.  These same people tell you to let it ride.  Might want to think about that.


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## SteadyMercury

saveliberty said:


> As far as yanking money in and out of the market, brokerage houses do it everyday in fractions of a second trades.  These same people tell you to let it ride.  Might want to think about that.


What on earth are you talking about? Brokerage houses don't tell me to let it ride, they only make money if I trade.


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## saveliberty

SteadyMercury said:


> saveliberty said:
> 
> 
> 
> As far as yanking money in and out of the market, brokerage houses do it everyday in fractions of a second trades.  These same people tell you to let it ride.  Might want to think about that.
> 
> 
> 
> What on earth are you talking about? Brokerage houses don't tell me to let it ride, they only make money if I trade.
Click to expand...


  Ask them what to do when your stock loses 20%.  

It is the pat answer every broker uses.


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## SteadyMercury

Odds are they'd be correct. Again, studies show the majority of people who try to time the market consistently underperform the market, but of course on message boards everyone is a big winner.

I'm sure there are people who do well, but I'm sure not impressed with someone patting themself on the back for doing well during a 5 year bull market.


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## saveliberty

Again, you have totally failed to understand this is a risk reduction strategy, not a return maximizing one.  By the way, all your profit is on paper until you sell.


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## SteadyMercury

Nope, you fail to understand you aren't reducing risk by yanking all your money in and out of the market on certain days.

By the way, regularly rebalancing tends to move a lot of that profit into non-equity asset classes after a long bull market.


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## saveliberty

SteadyMercury said:


> Nope, you fail to understand you aren't reducing risk by yanking all your money in and out of the market on certain days.
> 
> By the way, regularly rebalancing tends to move a lot of that profit into non-equity asset classes after a long bull market.



Interesting, so I didn't really protect my money by being out of the market this last week?


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## SteadyMercury

saveliberty said:


> Interesting, so I didn't really protect my money by being out of the market this last week?


This week you did, but for a given year moving it all in and out nope. 

Sounds like all you've been doing is underperforming the market, while keeping all the risk.

But what gives why didnt you buy on the dip on July 30?


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## william the wie

saveliberty said:


> SteadyMercury said:
> 
> 
> 
> Nope, you fail to understand you aren't reducing risk by yanking all your money in and out of the market on certain days.
> 
> By the way, regularly rebalancing tends to move a lot of that profit into non-equity asset classes after a long bull market.
> 
> 
> 
> 
> Interesting, so I didn't really protect my money by being out of the market this last week?
Click to expand...

A balanced portfolio forces the investor to buy low and sell high within his portfolio. It's a different way of reducing risk.


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## Politico

* What do you markets guys think of this story?*

Not gonna happen.


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## sameech

saveliberty said:


> SteadyMercury said:
> 
> 
> 
> 
> 
> saveliberty said:
> 
> 
> 
> As far as yanking money in and out of the market, brokerage houses do it everyday in fractions of a second trades.  These same people tell you to let it ride.  Might want to think about that.
> 
> 
> 
> What on earth are you talking about? Brokerage houses don't tell me to let it ride, they only make money if I trade.
> 
> Click to expand...
> 
> 
> Ask them what to do when your stock loses 20%.
> 
> It is the pat answer every broker uses.
Click to expand...


perhaps, but since my portfolio as a whole is up almost 25% on the year on a cost basis, a 20% loss in value would still be a return on investment better than the .45% APR banks are offering on savings accounts these days.


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## SteadyMercury

The whole concept of someone thinking they are reducing risk by being in the market for only x number of days per year is just silly, dips tend to cluster and many of the larger single day dips in the market happen within a week of another one. The only way you're reducing risk of stocks in a given year is to not invest in the stock market for that year.

It is almost like hearing someone saying they figured out a betting system to beat Vegas, you just have to roll your eyes and smile at them.


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## william the wie

SteadyMercury said:


> The whole concept of someone thinking they are reducing risk by being in the market for only x number of days per year is just silly, dips tend to cluster and many of the larger single day dips in the market happen within a week of another one. The only way you're reducing risk of stocks in a given year is to not invest in the stock market for that year.
> 
> It is almost like hearing someone saying they figured out a betting system to beat Vegas, you just have to roll your eyes and smile at them.


It depends on taxes. 5/1-10/31 average total equity returns over a decade rarely exceed 2%. The better arguments:

Balanced portfolios work in all markets. Modigiliani, the one with the Nobel, back tested his commodities, real estate, bonds and equities portfoilio over several decades and it outperformed the alternatives. I much prefer the AAII system that is based somewhat on his system but it does work and it is simple.

Low beta issues tend to go up when the market goes sideways and option premiums are nearly as high as high beta issues. Being the house is a betting system that does work in Vegas, it also works on Wall St.


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## Zander

Politico said:


> * What do you markets guys think of this story?*
> 
> Not gonna happen.



That's what they were saying in 2008 too...


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## Politico

Yeah I would put that pipe down son.


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## Toro

Markets could also go up 50%.


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## william the wie

Toro said:


> Markets could also go up 50%.


I don't like the implied equivalence. The current Dow PE is 16 vs. an average of 15 since 1929. Net revenues are increasing fast enough to go up 50% with a reduction in PE by the end of the year. Without a third qtr. earnings disaster across the board a 50% decline is unlikely in the extreme. A 10% correction to get some more bear action on the other hand does seem quite likely and probably necessary to maintain the wall of worry.


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## jwoodie

The Market is about future expectations, not past performance.  We are circling the drain but, like in the days before the housing crash, we keep doing the Greenback Boogie.  Everyone should have their Sell orders in place.


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## Toro

william the wie said:


> Toro said:
> 
> 
> 
> Markets could also go up 50%.
> 
> 
> 
> I don't like the implied equivalence. The current Dow PE is 16 vs. an average of 15 since 1929. Net revenues are increasing fast enough to go up 50% with a reduction in PE by the end of the year. Without a third qtr. earnings disaster across the board a 50% decline is unlikely in the extreme. A 10% correction to get some more bear action on the other hand does seem quite likely and probably necessary to maintain the wall of worry.
Click to expand...


I think stocks are quite expensive here. However, the market could still go up 50%. I don't think it will over the next few years, but it could. 

My guess is that the market will go up by 50% over the next decade or so.


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## jwoodie

A wise investor once told me his secret:  Always sell too soon.  Those who try to time the market are either gamblers or fools.


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## sjay

jwoodie said:


> A wise investor once told me his secret:  Always sell too soon.  Those who try to time the market are either gamblers or fools.


I know some one who sold too soon dec.2012 to be exact, kicking his behind ever since.So much for that expert advice.


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## TruthSeeker56

There will be a 50%+ stock market correction by the end of 2015. 

And please, DON'T take that to the bank.


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## SteadyMercury

TruthSeeker56 said:


> There will be a 50%+ stock market correction by the end of 2015.
> 
> And please, DON'T take that to the bank.



Don't worry I won't be taking any of your "wisdom" to any bank. 

From 2011:



TruthSeeker56 said:


> The stock market has been doomed to collapse for a long time now.  What has happened over the last few days is NOTHING compared to what is going to happen in the next few months.
> 
> Anybody who has a 401K or Roth IRA or is otherwise invested in the U.S. stock market needs to cut their losses and bail out NOW, before it's too late.


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## william the wie

Actually losing money in a bull market is quite frequent


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## william the wie

QFT


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## KissMy

*Markets might drop by 50%* 

*Markets Made Another New High!!!*


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## jwoodie

KissMy said:


> *Markets might drop by 50%*
> 
> *Markets Made Another New High!!!*



Shades of 2008...


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## rightwinger

In our history, Markets have increased by 50% many more times than they have decreased 50%


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## Snouter

I was hoping the pump and dumpers who host CNBC would drive it down more.  I still have some limit orders open that did not take.


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## william the wie

personally I really don't care.


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## rightwinger

S&P 500 broke 2000 for the first time today

Still waiting on that 50% Market crash


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## Avorysuds

rightwinger said:


> S&P 500 broke 2000 for the first time today
> 
> Still waiting on that 50% Market crash




Markets are still waiting for the Fed-R to stop it's never ending stimulus.... This last hit was oddly just as the Fed-R said they were going to tapper, then they didn't and markets went back up.... Just like the time before, and again before that.

One day Obama will have to stop giving the bankers money to flaot this fake economy where the rich get richer and the poor get poorer RW.


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## SteadyMercury

Avorysuds said:


> Markets are still waiting for the Fed-R to stop it's never ending stimulus....


I'm not sure they are, the stock market tends to have known future events priced into it before they happen and everyone knows the stimulus, which has already been greatly reduced in scale, is going to end in October. I think worldwide volatility and the related perception of US economic stability is floating the market more than anything.

If I had to wager I'd bet we'll have a correction of at least 10% before the end of the year, then again I've been saying that for sometime and haven't been right yet so what the fuck do I know.


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## william the wie

The China real estate market crash could cause a sell off but a crash?


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## Avorysuds

SteadyMercury said:


> Avorysuds said:
> 
> 
> 
> Markets are still waiting for the Fed-R to stop it's never ending stimulus....
> 
> 
> 
> I'm not sure they are, the stock market tends to have known future events priced into it before they happen and everyone knows the stimulus, which has already been greatly reduced in scale, is going to end in October. I think worldwide volatility and the related perception of US economic stability is floating the market more than anything.
> 
> If I had to wager I'd bet we'll have a correction of at least 10% before the end of the year, then again I've been saying that for sometime and haven't been right yet so what the fuck do I know.
Click to expand...

The Fed-R did one single cut in stimulus spending and it was tiny... The whole stimulus thing should have ended by now according to the Fed-R's projection and claims yet here it is almost just as big as it has ever been. So you can pretend all day long that in a month or 2 the stimulus will end but if they were scared to tapper at 10 billion a month I doubt they will tapper 35 billion a month for 2 months or 70 billion in 1 month.


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## SteadyMercury

Nope, it has been reducing the monthly purchases by $10 billion per month.

This time will be $25 billion, then October will be the final one at $15 billion.


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## william the wie

some degree of taper tantrum could happen but the main risk is geo-political.


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## madeinjapan

saveliberty said:


> Five consecutive years and I'm on pace to beat my average by quite a bit this year.


the last 5 years have been very good...not indicative of your investing prowess.


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## KissMy

*Obama Outperforms Reagan On Jobs, Growth And Investing*


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## Abishai100

*Early Risers*

Speculation is never practical, but more and more analysts are suggesting that this is the time to consider investment strategies that focus on 'long-term valuation prediction models.'

For example, current widespread dialogue surrounding eco-activism and renewable energy research makes it profitable to invest early in the environment/energy sector.

Looking at the wavy market (since 2006 really), bubbling concerns about real estate opportunities and crashes should catalyze more table talk about real estate development.  There's no reason to constantly investigate this sector from the back-end.

In fact, eco-friendly themed condominium communities are being planned and managed by motivated developers.

To inject money into a rise-and-fall market, you have to move like a surfer.





Wind farm - Wikipedia the free encyclopedia


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## sameech

The climb in P/E's is more related to equity than revenue.  Some stocks will see maybe a 10-20% adjustment, but on balance, the market as a whole is functioning, just not in a way that dividend hawks are used to.


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## iamwhatiseem

Toro said:


> Perhaps but unlikely. 50% corrections are very rare.  I think there have only ever been three.
> 
> More likely, we will have a 20% to 30% correction and substandard returns over the next decade.
> 
> But maybe I'm wrong. I like GMO.



I could go along with that (20-30%) I would lean more toward 30% however.
Myself, I will continue to hold out of the markets until a significant correction happens. The market is obviously over valued, but certainly not like pre-housing bubble. 
The question for me, and everyone else I suppose, is will the correction occur rapidly...or will we several falls with no growth over several years. My bets would be a sudden decline. Since the main investment firms and banks know they will will make money no matter what. All thanks to our governments willingness to give them our money, and subsidize them even when times are good.
 The banks and investment firms can't make money with no growth, the bubble mentality is doing them very well. So it will continue.


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## SteadyMercury

iamwhatiseem said:


> Myself, I will continue to hold out of the markets until a significant correction happens.


So what did you do exactly? Like at what point did you get out, and did you just park all your money in cash?


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## Toro

I am sitting mostly in cash.  Markets have been behaving poorly for months.  Nearly half of listed stocks in the US are down by more than 20% from their highs.  The Russell 2000 looks like it is rolling over.   Many energy stocks look like death.  Volatility has picked up, particularly when it has looked like the market was going to have a positive intra-day reversal.  So I'm cautious here.


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## iamwhatiseem

SteadyMercury said:


> iamwhatiseem said:
> 
> 
> 
> Myself, I will continue to hold out of the markets until a significant correction happens.
> 
> 
> 
> So what did you do exactly? Like at what point did you get out, and did you just park all your money in cash?
Click to expand...


Unfortunately yes.
In a market like what we see now, unfortunately a good option is to sit on it. 
Not doing so, IMO, is damn risky until this all washes out.
To answer your first question, I have been out since the end of May. I don't typically look for signs of a market about to fall..I look for a market that seems to be reaching it's summit.


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## william the wie

Relative value and degree of volatility are the only things that can be measured sufficiently well to give you an edge. If your strategy is not based on those two things generally you are screwed.


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## JWBooth

I dont know about 50%, but the market continues to slide. Last I looked it was down nearly 200 points on the day


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## SteadyMercury

When will you get back in?


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## iamwhatiseem

SteadyMercury said:


> When will you get back in?



Tough question. I want to say when I see 13000...but even then I am afraid the next climb is not going to be a rocket ride like we saw after 2008. But then who knows.
I really don;t want to go in ever again, and I may not. There are other things you can do beside the Russian roulette of the markets. The stock market is not a place where you can "let it ride" any more.


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## Moonglow

But the greed/panic factor is riding high!


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## Moonglow

Now you see why Buffett sold off in July and August...


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## HenryBHough

Feels like time to get out of cash and into........stuff.

A non-profit I work with had a bunch of cash building up toward a new building.  They had it in equities into which they had dollar cost averaged.  About a year ago they drew it down and started the building even tho they knew they didn't have enough money to finish it.  They did have enough to get the shell up and weather tight.  That part is done and it sits empty.  Since it reached that point the material in it has gone up in price by over 30% but it's theirs and it's secure.  Had they sat on the cash and waited to have enough for the whole job they would have needed that 30% MORE in cash and that doesn't take into account the cost of labor.  Now they're building up cash only to the point where they buy batches of the materials they will need for the interior and stashing it safely inside.  It's better than "money" in the bank!


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## Moonglow

The airlines are taking a beating...


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## Mac1958

.

As I type this, the S&P is down about 7% since September 18.

Another 3% to 8% and we'll have the correction I've been hoping for, for a couple months now.

.


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## william the wie

This market make me happy that I have my XSP put.


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## kaz

Avorysuds said:


> What do you markets guys think of this story?
> 
> Price to earnings ratios suggest that stock markets are overvalued and in need of price adjustment, say GMO's Jeremy Grantham and James Montier.
> 
> I'm not big on the stock market. I feel I understand the FED's role in creating bubbles but past that I don't do anything in stocks.
> 
> I'm not ready for another recession =( If that's what happens...



Wow, no investor ever thought of checking a P/E ratio before investing.  Obviously if they find out about this everyone will sell off their holdings.


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## Toro

There have been 12 bear markets since WWII.  Eight of them presaged a recession within a year.  Four bear markets - in 1962, 1966, 1987 and 1998 - did not.


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## chikenwing

European economies are slowing a bit as are others,its a bit more than just a value adjustment.


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## HenryBHough

A the current rate of decline I'd say the (downward) 16,000 barrier should be crawled under by weekend.


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## william the wie

Me, I've liquidated a position today at a loss  I was using it as my hedge against the dollar sinking. Sort of like carrying parachute on a sub in this market.


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## SteadyMercury

Avorysuds said:


> The Fed-R did one single cut in stimulus spending and it was tiny... The whole stimulus thing should have ended by now according to the Fed-R's projection and claims yet here it is almost just as big as it has ever been. So you can pretend all day long that in a month or 2 the stimulus will end but if they were scared to tapper at 10 billion a month I doubt they will tapper 35 billion a month for 2 months or 70 billion in 1 month.


Well here we are at end of October, and the QE has wrapped up right on schedule.

Thanks for your input.


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## konradv

DOW almost at a new high.


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## konradv

konradv said:


> DOW almost at a new high.



S&P 500 also near a new high and the NASDAQ near a 52 week high.


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## auditor0007

saveliberty said:


> Corrections usually are closer together than this Moonglow.  The longer it takes, the more likely it will be bubble-like.  Meaning much bigger and longer lasting.  Of course government will bailout the banks, AGAIN.  Only the little guy with his retirement account gets burned.



In my book, there is no need for a big correction.  In 1993, the DOW was around 3500.  In 2003, after a small downward correction, the DOW stood at 8000.  Now eleven years later, the DOW sits at 17,300.  The increase between 1993 to 2003 was much greater than from 2003 to 2014.  If we remove the great collapse of the market in 2008/2009, the market would just have shown average growth for the entire period.  Much of the growth in the market was just an adjustment from the massive losses during the crash.  On top of that, Main Street is getting stronger by the day.


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