Time to short Stocks!

[Toro]

Yeah, the margin requirements probably triggered it. But it was due.

 

[william the wie]

I am going to check but it looks like the melt-up in the face of insider trading is becoming epic.

 

[KissMy]

Bloomberg - Grantham Says Fed Asset Purchases May Make Stocks `Dangerously Overpriced'

Jeremy Grantham, chief investment strategist at Grantham Mayo Van Otterloo & Co., said the Federal Reserve’s attempt to boost the economy could push U.S. stocks to a level where they will be “dangerously overpriced.”

The Fed’s decision to purchase Treasuries and flood markets with cheap money will drive investors out of cash and encourage them to speculate in stocks, which are already overvalued, Grantham said in an interview with the CNBC cable television network.

“The S&P is already overpriced and if you push it up another 20 percent it becomes dangerously overpriced,” Grantham said in the interview, which was posted today on the network’s website. “In the not-too-distant future stocks will crack again.”

The Fed’s policies also drive up commodity prices, create fears of inflation and heighten tensions with countries concerned that the decline in the value of the dollar will hurt their exports

Jeremy Grantham is Long Gold.

 

[KissMy]

Meh

Silver is up something like 20% since the Fed announcement. All commodities have screamed higher. It was getting a little nuts. They were due for a correction. We'll see how long it lasts.

Yea silver was crazy high.

It is strange how stocks, bonds, commodities, gold, silver & currencies all reversed on heavy volume. Everyone ran from the dollar due to QE2 and now the dollar had a huge snap back rally. I wonder if it is over now or how far it will go? This could be a big correction but I think most of it already happened.

See I told you this could be a big correction. I got out of all commodities yesterday afternoon. I went to hog wild on silver on the run up. I lost a bit on my latest buys before getting out but still had a very profitable 2 weeks. The US, China & the rest of the G20 Governments are doing some serious currency & commodity manipulations. I think I will stay out until Monday & start looking for a low to re-enter on. Gold had almost a $150 profit taking dip after the QE1 run-up. This is likely a similar profit taking dip. Gold may break into the $1270's level before its next climb to new highs of over $1500.

 

[william the wie]

I don't think this market can be called for turns. I bought and sold some today for loss mitigation but for the most part I just leave good/bad enough alone

 

[KissMy]

I don't think this market can be called for turns. I bought and sold some today for loss mitigation but for the most part I just leave good/bad enough alone

I could tell the weak dollar trade was getting to easy & crowded. Equities, commodities & currencies are being liquidated for US dollars due to profit taking & over crowed trades. It wont be long now before this unwind hits terminal velocity & overshoots.

 

[Toro]

Maybe Zander was right!

Since QE2 was officially announced, the market has acted just awful.

 

[william the wie]

Maybe Zander was right!

Since QE2 was officially announced, the market has acted just awful.

Right too soon is wrong for most things in the market. The only exceptions I am aware of are undervalued dividend payers and black swan hedges.

 

[Zander]

Of course I am right...now that I liquidated my short!!

The problem with market timing is you have to be right twice. Which is why I have long advocated a "buy and keep buying and/or buy and hold" philosophy using low cost index funds or ETF's. With a conservative 60/40 allocation ( i absolutely adore the coffee house portfolio) and a sufficiently long time horizon, I believe a passive strategy will leave most individual investors far better off than trying to "beat" the market and, thanks to a healthy dose of bonds, without experiencing too much volatility.

That being said, I see a long term downtrend in stocks with massive volatility. Then again, I also see dead people.

That is why I am in cash and short duration T-bills/ T-bonds - I'll have lots of dry powder to buy when the trend reverses. (see, there I go dreaming I can time the market again.....)

 

[topspin]

75% of professionals can't time the market, that's why I go with an S&P ETF. Market timing is fun, not many can make a living off of it. I trade about 10% of my portfolio very actively and the other 90% is 50/50 oil and index.

 

[KissMy]

I can time the market direction well enough. I just can't pick & time stocks very well. That is why I trade ETFs.

 

[william the wie]

75% of professionals can't time the market, that's why I go with an S&P ETF. Market timing is fun, not many can make a living off of it. I trade about 10% of my portfolio very actively and the other 90% is 50/50 oil and index.

usually the more asset allocations and the simpler structure of the allocations the higher the returns.

 

[KissMy]

If you did not time the market for the past 12 years, then you lost money & value. That buy & hold shit died over a decade ago.

 

[Zander]

If you did not time the market for the past 12 years, then you lost money & value. That buy & hold shit died over a decade ago.

You are entitled to your opinion.

I have a netted a 9% annualized return over the past 20 years "buying and holding" a portfolio with approx. 40% bonds and 60% stocks I re-balance with new money once or twice a year. This is the first time in 20 years I have been out of stocks, and to be quite honest - I wish I never changed my strategy. Timing the market is a suckers game........

 

[KissMy]

If you did not time the market for the past 12 years, then you lost money & value. That buy & hold shit died over a decade ago.

You are entitled to your opinion.

I have a netted a 9% annualized return over the past 20 years "buying and holding" a portfolio with approx. 40% bonds and 60% stocks I re-balance with new money once or twice a year. This is the first time in 20 years I have been out of stocks, and to be quite honest - I wish I never changed my strategy. Timing the market is a suckers game........

It is not a suckers game. When stocks plunge & everyone is scared & running for cover, that is when you get in. When people are jumping for joy, that is when you get out. If it feels wrong, do it. Early in 2009 after stocks crashed & people were running for the hills & stuffing money in their mattresses. The Presidents Working Group began pushing up the market & the Fed was handing out money causing the markets to rise. You should have jumped into stocks.

Right now is the latest example. A couple of months ago Bernanke announced he may do some do some QE2 money printing if the economy did not improve at a faster pace. At that time he said the Feds decision would be announced on Nov 4th. Traders front ran the Fed & drove the dollar down most of the way before the Nov 4th announcement was made. Once that announcement was made & a few days later the remaining traders dumped dollars, that meant the majority had traded their dollars for Stocks, Commodities, Gold, Silver & other currencies.

I along with most others who dumped those falling dollars were feeling good & pounding our chest about Gold hitting $1435 per ozt, Silver near $30, Oil & stocks making 2 year highs. This is when you know there will be fewer & fewer people trading out of dollars. This is when you start trading into dollars because everyone else is scared of them. It is like everyone ran to one side of the boat & it is starting to roll over. People have to start coming back to the other side of the trade to take profits or they sink with the boat.

As I pointed out in my post on this thread last week. The dollar suddenly got stronger after most traders were glad to be out of those falling dollars.

Yea silver was crazy high.

It is strange how stocks, bonds, commodities, gold, silver & currencies all reversed on heavy volume. Everyone ran from the dollar due to QE2 and now the dollar had a huge snap back rally. I wonder if it is over now or how far it will go? This could be a big correction but I think most of it already happened.

This dollar strength should reverse soon. Once Europe bails out their troubled countries & the Euro starts to rise pushing the dollar down then jump back in. If we are not adding over 200k jobs a month, you can bet the Fed will keep on printing. Keep your eye out for weak jobs numbers & a dollar down turn. Then jump back in.

 

[topspin]

I call bs on anyone who can call the market directional turns.

 

[KissMy]

I call bs on anyone who can call the market directional turns.

The US dollar made a near term high of 79.462 on 11/16/2010 at 12:19PM

Since then Gold, Silver, Stocks & Commodities have been heading up together. That is a sign of a turn.

 

[william the wie]

I call bs on anyone who can call the market directional turns.

That's what asset allocation models have been doing for over 70 years since publication of "The Intelligent Investor" by Benjamin Graham made this practice public. I find Zander's use of only two asset classes, not to mention overbalancing to stocks somewhat strange but it is definitely in the ballpark and it is a market timing mechanism designed to catch the middles of trendlines. It does seem to have worked for him.

 

[Zander]

I call bs on anyone who can call the market directional turns.

That's what asset allocation models have been doing for over 70 years since publication of "The Intelligent Investor" by Benjamin Graham made this practice public. I find Zander's use of only two asset classes, not to mention overbalancing to stocks somewhat strange but it is definitely in the ballpark and it is a market timing mechanism designed to catch the middles of trendlines. It does seem to have worked for him.

I was a commodites trader and held a Series 3 license for several years when I was younger. I learned a lot. The most valuable lesson I learned is that 90% of commodities traders LOSE. These days I prefer to invest my human capital and brainpower in building my business rather than trying to "beat the market". That effort generates the income that I then use to invest. So when it comes to portfolio models - I like a nice simple strategy that outperforms 80% of active traders over 10 years.

Here is an exercise that illustrates my point. You are the contestant in this game. There are ten boxes, and you know how much is in each box. These are your choices, it looks something like this….

$1000 $2000 $3000 $4000 $5000
$6000 $7000 $8000 $9000 $10,000

Which box will you choose? (Remember, you know how much is in each box)

This is not a trick question. Anyone would choose the $10,000 box.

This time let’s change the rules a little. This time only the $8000 box is shown. It looks something like this….

$8000 ?? ?? ?? ??
?? ?? ?? ?? ??

Now which box will you choose?

The answer is also obvious – you would choose the $8000 box.

Why? Because the chance of increasing your winnings is not worth the risk of choosing an amount substantially less, unless of course you are a gambler....... When I want to gamble I will go to Vegas and play Craps. If KissmMy and others want to try to time the markets "seeking alpha" -go for it - your broker will appreciate the commission, and maybe you'll actually outperform the market. Of course over 10 years you will have an 80% likelihood of under-performing the market.


PS - I have other asset classes - I own commercial and residential real estate and a small amount of precious metals. I was just keeping things simple for the purposes of this forum.

 

[Paulie]

I call bs on anyone who can call the market directional turns.

That's what asset allocation models have been doing for over 70 years since publication of "The Intelligent Investor" by Benjamin Graham made this practice public. I find Zander's use of only two asset classes, not to mention overbalancing to stocks somewhat strange but it is definitely in the ballpark and it is a market timing mechanism designed to catch the middles of trendlines. It does seem to have worked for him.

I was a commodites trader and held a Series 3 license for several years when I was younger. I learned a lot. The most valuable lesson I learned is that 90% of commodities traders LOSE. These days I prefer to invest my human capital and brainpower in building my business rather than trying to "beat the market". That effort generates the income that I then use to invest. So when it comes to portfolio models - I like a nice simple strategy that outperforms 80% of active traders over 10 years.

Here is an exercise that illustrates my point. You are the contestant in this game. There are ten boxes, and you know how much is in each box. These are your choices, it looks something like this….

$1000 $2000 $3000 $4000 $5000
$6000 $7000 $8000 $9000 $10,000

Which box will you choose? (Remember, you know how much is in each box)

This is not a trick question. Anyone would choose the $10,000 box.

This time let’s change the rules a little. This time only the $8000 box is shown. It looks something like this….

$8000 ?? ?? ?? ??
?? ?? ?? ?? ??

Now which box will you choose?

The answer is also obvious – you would choose the $8000 box.

Why? Because the chance of increasing your winnings is not worth the risk of choosing an amount substantially less, unless of course you are a gambler....... When I want to gamble I will go to Vegas and play Craps. If KissmMy and others want to try to time the markets "seeking alpha" -go for it - your broker will appreciate the commission, and maybe you'll actually outperform the market. Of course over 10 years you will have an 80% likelihood of under-performing the market.


PS - I have other asset classes - I own commercial and residential real estate and a small amount of precious metals. I was just keeping things simple for the purposes of this forum.

Your scenario is seriously flawed though.

I can choose $8k, or pick from the rest of the 9 unknowns where only one of the 9 is higher than $8k? No one is going to gamble those odds.

The show Deal or No Deal is a better representation of how to play your odds.