# Is this market a bear trap?



## william the wie (Oct 14, 2010)

The Dow is about 50% above its dividend yield valuation of 6700. 

The market is poised for a panic out of equities and into commodities.

Gold is below its inflation adjusted trend line of $3000/oz based on its 1/1/33 price.

But haven't all of these conditions been redlining since 1998 or even earlier? So why should the market return to reality right now? Why shouldn't the sugar high last another week, month, year or decade?


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## iamwhatiseem (Oct 14, 2010)

I haven't put mine back in....it is critically too high right now.
Right now it is as if every tid bit of good news, no matter how small drives up another 100 points in a day.
Things are a little better...there have been some good signs since the first of August...but absolutely nothing that could be responsible for driving the markets as high as they are..it cannot continue. if we don't have an adjustment now - it will be a much larger one later, and we could be right back into another slide.


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## Sallow (Oct 14, 2010)

I was in at the beginning of the year and just liqudated to do renovations on my apartment.
I bought ford, american steel, citibank and a couple of others that I can't remember right now.

Made a small fortune.

And many companies are reporting some pretty good earnings. If you do the research and trend for a little bit before getting in...might be a good time. But use money you can afford to lose..


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## iamwhatiseem (Oct 14, 2010)

Sallow said:


> I was in at the beginning of the year and just liqudated to do renovations on my apartment.
> I bought ford, american steel, citibank and a couple of others that I can't remember right now.
> 
> Made a small fortune.
> ...



I am in the neighbourhood of pushing 35% return since this all began.


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## Sallow (Oct 14, 2010)

iamwhatiseem said:


> I haven't put mine back in....it is critically too high right now.
> Right now it is as if every tid bit of good news, no matter how small drives up another 100 points in a day.
> Things are a little better...there have been some good signs since the first of August...but absolutely nothing that could be responsible for driving the markets as high as they are..it cannot continue. if we don't have an adjustment now - it will be a much larger one later, and we could be right back into another slide.



There is ALOT of construction going on. Those are probably the sorts of companies to check out.


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## Sallow (Oct 14, 2010)

iamwhatiseem said:


> Sallow said:
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> > I was in at the beginning of the year and just liqudated to do renovations on my apartment.
> ...



Grats.


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## LordBrownTrout (Oct 14, 2010)

I'm seeing commodities heading north, precious metals as well.  I was leery at the end of 2007 and pulled my safe stocks out.  Still haven't put anything back in.


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## Flopper (Oct 14, 2010)

Sallow said:


> iamwhatiseem said:
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> > I haven't put mine back in....it is critically too high right now.
> ...


*A lot of that construction is the 800 billion in stimulus money the Democrats have pumped into the economy.  I have to wonder what's going to happen when the money dries up.*


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## Toro (Oct 14, 2010)

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.


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## Paulie (Oct 14, 2010)

Toro said:


> But I could change my mind





This is the Toro disclaimer that should be attached to all Toro investment opinions.


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## Toro (Oct 14, 2010)

Paulie said:


> Toro said:
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> > But I could change my mind
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Well, that's 'cause I often change my mind.

I once read an interview with a former employee of Soros.  He said that Soros is only right 20%-30% of the time.  But when he's wrong, he identifies it quickly and gets out of his position ASAP.  Cutting your losses is an integral part of investment success IMHO.


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## william the wie (Oct 14, 2010)

Toro said:


> I believe we are in a trading range that will play out over several years.
> 
> But I could change my mind if I think I'm wrong.


 what DJIA or S&P range do you expect? I know the arguments for continued upswing and for downturn but all the range arguments I have heard rely on wild swings:

The US consumes less until a major exporter to the US goes belly up. During the crisis lots of money flows into the US and consumption increases for a a time until the slow sink resumes.

However looking at the results for Japan when it played this game with us two decades ago I think it might be difficult to get play dates in the future.


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## Toro (Oct 14, 2010)

william the wie said:


> Toro said:
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> > I believe we are in a trading range that will play out over several years.
> ...



I have no idea what the ranges are.  We will only know in retrospect.  I think the March 09 lows are probably the lows we'll see.  I doubt we'll get to new highs.  Somewhere in there.  But wherever it is, it is a traders' market.  However, there are definitely bull markets, such as gold and silver.  And it is much easier to make money in a bull market than a traders' market.


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## loosecannon (Oct 14, 2010)

william the wie said:


> The market is poised for a panic out of equities and into commodities.



This is just beginning and it is all about a falling dollar not a weak stock market. See Sept 2007-July 2008 for evidence.

The stock market has been divorced from fundamentals since the mid 90's at least.


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## loosecannon (Oct 14, 2010)

Sallow said:


> There is ALOT of construction going on. Those are probably the sorts of companies to check out.



NJ canceled the biggest project in the nation, our residential construction is only 20% of what it was in 2005, and state contracts have all but dried up.

We must live in different nations.


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## loosecannon (Oct 14, 2010)

Toro said:


> Paulie said:
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Meanwhile Buffet makes it a point to buy at the bottom and gamble on long term results. He wants bargains not quick profit taking.


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## loosecannon (Oct 14, 2010)

william the wie said:


> Toro said:
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> > I believe we are in a trading range that will play out over several years.
> ...



as long as 401K's are force feeding the stock markets it seems unlikely they can fall below current levels for long. 10,000 has been the magic resistance number for almost a decade now. "Conventional wisdom" still says that long term stocks always exceed inflation. That will likely remain true until the US pension system is overhauled.


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## Toro (Oct 14, 2010)

loosecannon said:


> Toro said:
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When I invest, I buy more as stocks fall.  When I trade, I sell as stocks fall.


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## william the wie (Oct 14, 2010)

Toro said:


> william the wie said:
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I can see your reasoning, which is solid and you may be right even though I disagree with you. Where I differ is that I think the urge for revenge is taking over not only in foreclosuregate here but also in the Chinese real estate market and the EMU debt crisis. Once the first economy hits the to hell with it this isn't fair point those dominoes are going to start falling. The level of market rationality, it's direction and/or rate of change is notoriously difficult to measure just so long as your stops work well enough for you to keep posting I'm happy.


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## william the wie (Oct 14, 2010)

loosecannon said:


> Toro said:
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What tends to be forgotten is that virtually all of his wealth was created in the 70s bear market and he has had a difficult time since I believe 96 to do nearly as well. Since the meltdown his returns have improved markedly but I doubt he will live long enough to be vindicated again. His mentor Graham had the same problem in 1956 and retired.


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## william the wie (Oct 14, 2010)

loosecannon said:


> william the wie said:
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I thought the asset allocation shifts to bonds had more or less stopped the end of the month effect being larger than the options expiration effect. I could be wrong but that is what has been reported lately. The bond bubble certainly supports the allocation shift theory as well.


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## Jacob Adom (Feb 5, 2015)

Stock market can be a trap for those who don't invest cautiously. If you want to become a pro in stock market trading, then visit OTC Bully for tips on how to invest your hard earned money.


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## SteadyMercury (Feb 15, 2015)

Jacob Adom said:


> Stock market can be a trap for those who don't invest cautiously. If you want to become a pro in stock market trading, then visit OTC Bully for tips on how to invest your hard earned money.


Yes, that is who I'd believe... someone who claims to know the key to making money in stocks, but instead spends their time spamming message board about said key.


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## william the wie (Feb 18, 2015)

SteadyMercury said:


> Jacob Adom said:
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> > Stock market can be a trap for those who don't invest cautiously. If you want to become a pro in stock market trading, then visit OTC Bully for tips on how to invest your hard earned money.
> ...


And using the wayback machine to do it too.


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## AdvancingTime (Feb 26, 2015)

An unholy alliance of the Federal Reserve, the government, and the too big to fail has left those of us who question the validity of the recovery in a precarious position. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the timid and weak bears out of their positions in this manipulated market. _*
Over the years we have witnessed the type of market reversal the big banks supported by the Fed can generate with a concerted effort to buy S&P 500 index futures at crucial support points. This has proved more than enough to turn the markets from red to green in the blink of an eye. *_The article below looks into why even if they are right bears should not be confident.

* http://brucewilds.blogspot.com/2014/04/bears-have-little-reason-for-confidence.html*


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## william the wie (Feb 26, 2015)

Running the stops goes back to the 1830s or earlier.


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