# The Market from Here



## The Rabbi (Jan 2, 2015)

What I am seeing is eerily reminiscent of 2007.  Yeah yeah I know there are significant differences.  There always are.
But then there was weakness in subprime mortgage bonds.  There was debate as to whether the damage would be contained or not.  ANd it wasnt.  Because investors are typically diversified so declines in one asset value will cause declines in the others as well, as pressure tosell to maintain cash increases.
This time I am seeing declines in commodities, esp oil and copper.  This seems to be the end of the comoodity boom.  And once the declines set in, how much longer until other assets experiences similar declines?


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## Moonglow (Jan 2, 2015)

Miss econonutz threads? Browbeating economists....


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## The Rabbi (Jan 2, 2015)

Moonglow said:


> Miss econonutz threads? Browbeating economists....


Trying to boost your post count while stoned?


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## Moonglow (Jan 2, 2015)

Deflation is the word you are missing....


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## Moonglow (Jan 2, 2015)

You people missed the mark on quantitative easing, so a dip in oil that brings major advantages to the US are detrimental....? These robber barons that have monopolies on the distribution network will never drop their consumer products prices like they do labor....


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## FA_Q2 (Jan 2, 2015)

The Rabbi said:


> What I am seeing is eerily reminiscent of 2007.  Yeah yeah I know there are significant differences.  There always are.
> But then there was weakness in subprime mortgage bonds.  There was debate as to whether the damage would be contained or not.  ANd it wasnt.  Because investors are typically diversified so declines in one asset value will cause declines in the others as well, as pressure tosell to maintain cash increases.
> This time I am seeing declines in commodities, esp oil and copper.  This seems to be the end of the comoodity boom.  And once the declines set in, how much longer until other assets experiences similar declines?


My grandfather called this one back when the housing bubble first burst.  He said that commodities like oil would be next and he is usually correct about these things.


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## Sonny Clark (Jan 2, 2015)

The Rabbi said:


> What I am seeing is eerily reminiscent of 2007.  Yeah yeah I know there are significant differences.  There always are.
> But then there was weakness in subprime mortgage bonds.  There was debate as to whether the damage would be contained or not.  ANd it wasnt.  Because investors are typically diversified so declines in one asset value will cause declines in the others as well, as pressure tosell to maintain cash increases.
> This time I am seeing declines in commodities, esp oil and copper.  This seems to be the end of the comoodity boom.  And once the declines set in, how much longer until other assets experiences similar declines?


Stocks go up, and stocks go down. Financial schemes and scams come and go. Some work, some don't. The generally thought, according to some analysis and economists, is that stocks are inflated and over-priced. Whether that's true or not remains to be seen. At any rate, stocks and commodities are gambles based on future events and economic conditions. Some guess right, and some guess wrong. Basically, they are money games bases on economic trends and periotic data, which always fluctuated according to global economic conditions and world events. There are commodity speculators, money manipulators, and financial instruments that are not always based on economic health and stability. In other words, no one has a crystal ball into the future of world markets and economic strength of various countries and financial institutions. Speculation based on data and trends is about the best anyone can do. Remember, debt and currency values play an important part due to the co-dependency of one nation to another. Everything is tied together, and considered when considering economic behavior.


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## The Rabbi (Jan 2, 2015)

Sonny Clark said:


> The Rabbi said:
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> > What I am seeing is eerily reminiscent of 2007.  Yeah yeah I know there are significant differences.  There always are.
> ...


So your point is that the future is uncertain and prices fluctuate?
Thanks! I had no idea that was the case.


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## Sonny Clark (Jan 2, 2015)

The Rabbi said:


> Sonny Clark said:
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Well, that's generally about all one can say when it comes to stocks, commodities, and their long range outlook. All your post did was to express speculation and possible scenarios. I mean, you're drawing opinions and assumptions based on what happened in the past, and attempting fit that in with your speculation and opinions. So, is what I said any different? If so, in what way(s)? You're doing as everyone else does, speculate and guess what might happen based on what has happened in the past, and assuming a similar trend had developed. Am I correct here? If not, what did I miss when I read your post?


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## The Rabbi (Jan 5, 2015)

Sonny Clark said:


> The Rabbi said:
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No that is not all one can say.  One can comment on whether stocks are fairly valued, over valued or undervalued based on some understanding.  One can comment on the business environment going forward based on observed trends.  One can say all sorts of things if one has been paying attention, as I have for the last 40 years.
And I did.  My belief is:
Stocks are grossly over valued based on historic valuations and other factors.
Commodities are experiencing a bust which is having repercussions across the financial sector
When one asset class experiences a significant drop in value, it tends to spill over to other asset classes.
This really isnt rocket science.


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## SteadyMercury (Jan 5, 2015)

So what have you done with your portfolio? Reduced equities exposure because of high valuations? If so where did you put it?


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## The Rabbi (Jan 6, 2015)

I see the market was down over 300 points yesterday on weakness in oil, among other factors.  Big declines coming as valuations just arent sustainable.


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## FA_Q2 (Jan 6, 2015)

The Rabbi said:


> I see the market was down over 300 points yesterday on weakness in oil, among other factors.  Big declines coming as valuations just arent sustainable.


as steady mentions, what are you doing then?


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## The Rabbi (Jan 6, 2015)

FA_Q2 said:


> The Rabbi said:
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> > I see the market was down over 300 points yesterday on weakness in oil, among other factors.  Big declines coming as valuations just arent sustainable.
> ...


Sitting on cash mostly.  That is very difficult, btw and takes lots of discipline.


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## saveliberty (Jan 6, 2015)

I'm making small gains in bonds waiting for the market to correct a little more.  Possibly today I'll venture into stocks.  Expect a bounce short term, then back out.


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## SteadyMercury (Jan 6, 2015)

The Rabbi said:


> Sitting on cash mostly.  That is very difficult, btw and takes lots of discipline.


Since when have you been sitting on cash, and when do you plan to get back into the market?

There were a few posters with this response earlier this year saying fan shittage was imminent, they ended up missing out on a fairly solid 2014 for the US stock market.

I did my rebalance at the beginning of January so I guess I did scrape some chips off the table (apparently just in time) although they mostly went into my intl stock portion since that sucked wind.


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## The Rabbi (Jan 6, 2015)

Aand my thesis was the weakness in oil would spread to other sectors, just as the weakness in subprime spread well beyond.  Whaddayaknow?
How the Bear Market in Crude Oil Has Polluted Non-Energy Stocks - Yahoo Finance


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## SteadyMercury (Jan 6, 2015)

Since when have you been sitting in cash, and when will you get back in?


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## Toro (Jan 6, 2015)

The Rabbi said:


> What I am seeing is eerily reminiscent of 2007.  Yeah yeah I know there are significant differences.  There always are.
> But then there was weakness in subprime mortgage bonds.  There was debate as to whether the damage would be contained or not.  ANd it wasnt.  Because investors are typically diversified so declines in one asset value will cause declines in the others as well, as pressure tosell to maintain cash increases.
> This time I am seeing declines in commodities, esp oil and copper.  This seems to be the end of the comoodity boom.  And once the declines set in, how much longer until other assets experiences similar declines?



I think the decline in commodities is a function of both global supply dynamics and demand from outside of the US. I don't think this is anything like 2007.  The US economy is going to continue to strengthen. 

However, that doesn't mean stocks can't go down. The market is expensive and QE has ended. Long tern returns from here will be lower than average.  I am trading but I don't own a lot of stocks at the moment. I own more stocks in China than I do anywhere else.


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## william the wie (Jan 6, 2015)

SteadyMercury said:


> The Rabbi said:
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> > Sitting on cash mostly.  That is very difficult, btw and takes lots of discipline.
> ...



Judging from all the missing posts somebody was a very bad boy, not my problem. I would like to post on this thread.


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## The Rabbi (Jan 6, 2015)

SteadyMercury said:


> Since when have you been sitting in cash, and when will you get back in?


Awhile.
When valuations look good.  I have a list of desireable stocks and watch them.


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## saveliberty (Jan 6, 2015)

I jumped in late today.  S&P has been down too long and oil shouldn't continue at this rate of decline much longer either.


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## william the wie (Jan 6, 2015)

saveliberty said:


> I jumped in late today.  S&P has been down too long and oil shouldn't continue at this rate of decline much longer either.


The market is betting on $25/bbl out of Iraqi production.


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## SteadyMercury (Jan 7, 2015)

The Rabbi said:


> Awhile.
> When valuations look good.  I have a list of desireable stocks and watch them.


Why so vague? Was it a year, six months, a month?

I'm genuinely curious because I'm more of a boring buy and hold lazy portfolio type so am always fascinated by others who say they yank money in and out of the stock market based on whatever news and intuition.

What would valuations looking good be? Like a certain P/E?


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## william the wie (Jan 7, 2015)

SteadyMercury said:


> The Rabbi said:
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> > Awhile.
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The whole world wants to know


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## The Rabbi (Jan 7, 2015)

SteadyMercury said:


> The Rabbi said:
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Itt ook place over a period of time.  Typically I buy and hold.  But as you know "Mister Market" comes to you every day offering to buy or sell shares and when valuations look rich it's time to sell.
Lots of things go into valuation.  PE, dividiend yield, price to book, historic price, long term price trend, industry outlook, management skill, etc. I am a value investor.


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## sjay (Jan 7, 2015)

The Rabbi said:


> SteadyMercury said:
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> > The Rabbi said:
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The Rabbi said:


> SteadyMercury said:
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It took place over a period of time says Rabbi.I'm also very curious,like when did you first start bailing out, when did you finish,how many seperate times,in what multiples, otherwise you're not saying much at all.


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## SteadyMercury (Jan 7, 2015)

What period of time? Like did you sell 50% last year and 50% in May of this year?

As with sjay I'm curious about how market timers do it, yet it seems impossible to get anything but an extremely vague response.


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## The Rabbi (Jan 7, 2015)

sjay said:


> The Rabbi said:
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Over the last 12-18months. Sorry I dont have records of trades in front of me.


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## SteadyMercury (Jan 7, 2015)

Wasn't asking for record of trades, just a general idea of when you started bailing which you obviously knew.

It'll be interesting to see how the market goes from here, useless predictions as usual are all over the map. One one headlines page you can see Bill Gross' corpse making his annual claim that the bull market is done, while on another someone else is saying the growing economy and GDP will push us up another 9-10%.

At least I got my rebalance in.


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## william the wie (Jan 7, 2015)

I'm interested in the timing mechanism and transactions costs. SM May of this year needs to be edited


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## SteadyMercury (Jan 7, 2015)

I can think of few things I'm less interested in than timing mechanism and transactions costs.


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## william the wie (Jan 7, 2015)

Don't know about you but I don't like costs.


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## SteadyMercury (Jan 7, 2015)

My transactions are transferring between mutual funds in same family twice a year when I rebalance, there are no transaction costs.

My timing mechanism is calendar saying January 1 or July 1.

Therefore timing mechanism and transactions costs aren't relevant to my investing.


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