Dow down 1,000, should we be worried ?

[Skeptic7]

9 hours ago, Brunolem said:

The average Joe is not in investing, the average Joe is in credit cards, buying things he doesn't need with money he doesn't have.

 

The average Joe has accumulated more debt than before the 2008 crisis, and his children have accumulated an historical amount of student debt.

 

One doesn't make stats out of one's personal situation.

 

The stats say that 3 Americans own as much as the lowest half of the population (160 million people!).

 

The stats say that all the wealth created since the previous crisis has gone into the pockets of the top 5% of the population, all of it!

 

The stats say that 38% of the working Americans make less than 20,000 dollars a year!

 

Finally, the financial markets do not reflect the economic reality, but the monetary policies of the Fed.

 

And these policies are unsustainable because their cost increases exponentially from one crisis to the next, with 2008 beating all records...until now...

Whatever bro. The point was to show that one doesn't have to fall into the same failure traps that most others choose. Many "average Joes" choose to be average...make bad decisions...have kids they can't possibly afford...rack up CC debt...live beyond (way beyond) their means. Much better choices available, but they continue to choose otherwise.

[Thailand J]

Stock market is not just for the rich.

Anyone can open a brokerage account, use it as a bank account plus household money managements and investments.

 

"Can you guess who’s been loading up on stocks at a faster pace than anyone during the past 30 years? It’s not Wall Street titans and kajillionaires on the Forbes richest lists. It’s mid- to lower-income households, particularly those pulling in less than $42,000 a year. "

https://www.marketwatch.com/story/these-people-have-been-buying-up-stocks-faster-than-anyone-since-1989-2018-11-19

 

The ultra rich are more interested in preserving the principal, keeping up with inflation.

https://www.marketwatch.com/story/how-to-protect-your-money-like-the-forbes-400-richest-americans-2018-11-20

[Skeptic7]

9 hours ago, Peterw42 said:

To put this in perspective, the Dow was 24,800 on the 2nd Jan 2018 and today 22nd Nov 2018 its 24,460.

That is no gain for the whole of 2018 !

 

6 hours ago, simoh1490 said:

I don't think the Dow is a very good indicator, for US markets the Nasdaq is a better guage and that's up 1.53% on the year, the S&P however is down 6.09% 

 

"The Dow Jones industrial average is the most widely followed U.S. stock index, but it may not be the best barometer of the equity market out there. ... The S&P 500, on the other hand, is a much better representation of the overall stock market."Feb 8, 2018

 

https://www.cnbc.com/2018/02/08/why-the-dow-isnt-the-best-index-to-follow-the-stock-market.html

 

And if we look at overseas markets elsewhere in the world they are mostly all down over one year between 5% and 15%, that's significant.

 

https://www.bloomberg.com/markets/stocks

To put it in real perspective...can't go by just 1 year and NO market goes straight up. They have corrections and down times and inevitable economic recessions, when they perform poorly. It's a normal process. Look at the S&P 500 and the NASDAQ 10 year charts or longer for an accurate picture. 

 

Of course, traditional advice is as one gets closer to retirement or retired (and based on their risk tolerance), one should probably concentrate more on capital preservation...and reduce their higher risk (higher reward) growth positions, in favor of less risky, more conservative investments. 

[marqus12]

more or less from the second half of 2019, the period of predominance of developing markets over developed markets will begin

[Patriot1066]

On 11/21/2018 at 2:21 AM, SheungWan said:

And if it goes down another 9% you will say the same thing again?

Possibly more!

 

its on the slide good time to consider buying!

[uli65]

no, I am not worried, I will enjoy to watch the crash of the biggest bubble in history????

[Brunolem]

12 hours ago, Patriot1066 said:

Possibly more!

 

its on the slide good time to consider buying!

Sellers need BTFD afficionados...otherwise who would buy their positions?

 

Just be careful when trying to catch a falling knife...it can be painful sometimes...

[Brunolem]

1 hour ago, uli65 said:

no, I am not worried, I will enjoy to watch the crash of the biggest bubble in history????

Strangely enough, almost no poster above appear to be aware of the bubble, even though the MSM and TBTF banks now realize it.

 

They are like the investors who were convinced in 2006-7 that it was normal to pay a million dollar for a crumbling house.

 

They are also convinced that the Fed will be able to reinflate the bubble once again after its collapse...yet there is only a number of times the Fed can use the same trick.

 

In 2008, the whole house of cards was about to collapse because of too much debt.

 

What did it take to reinflate the bubble(s)?

Well, a 50% increase of the already too heavy debt!

 

What will it take next time?

[Peterw42]

3 minutes ago, Brunolem said:

Strangely enough, almost no poster above appear to be aware of the bubble, even though the MSM and TBTF banks now realize it.

 

They are like the investors who were convinced in 2006-7 that it was normal to pay a million dollar for a crumbling house.

 

They are also convinced that the Fed will be able to reinflate the bubble once again after its collapse...yet there is only a number of times the Fed can use the same trick.

 

In 2008, the whole house of cards was about to collapse because of too much debt.

 

What did it take to reinflate the bubble(s)?

Well, a 50% increase of the already too heavy debt!

 

What will it take next time?

I think 2008 was not so much the debt level or housing bubble, it was the banks printing money to fund it. 2018 its the stock market printing money

[Thailand J]

I saw the real estate bubble in 2007 and sold all my 31 properties. I was making so much profit I felt guilty and refused  to face the buyers at closings. I presigned the papers and pick up the checks later. I felt better after I realized these "greater fools" would have bought from others if not from me.

 

At this point with Dow and S&P500 P/E at 15-16 I don't see stock market bubble, only bubbles in my kitchen sink.

 

I was 3% cash and 97% stocks until October, took full advantage of the 9 years long bull market. Now I am 20% cash 80% stocks, because I am afraid of the rising fed interest rates and pending trade war, which are the reasons for the recent volatility.

 

 

 

 

[Peterw42]

59 minutes ago, Thailand J said:

At this point with Dow and S&P500 P/E at 15-16 I don't see stock market bubble, only bubbles in my kitchen sink.

They are not 15 at the moment, they are 20. Thats a prediction of a 25% market correction/fall going forward, that is a bubble. 

To go from a P/E of 20 to a P/E of 15, thats either a price drop of 25% or an earning gain of over 50%.

 

Edited November 25, 2018 by Peterw42

[Thailand J]

I was talking about forward P/E.

I have seen bubble burst this is not it.

If Trump and China can come to a trade agreement and if the fed announce slowing down the pace of rate hike, the market will rally. Personally I will not put too much money back into the market. 3.5% CD rate in 2020 sounds more attractive.

[Brunolem]

2 hours ago, Thailand J said:

I saw the real estate bubble in 2007 and sold all my 31 properties. I was making so much profit I felt guilty and refused  to face the buyers at closings. I presigned the papers and pick up the checks later. I felt better after I realized these "greater fools" would have bought from others if not from me.

 

At this point with Dow and S&P500 P/E at 15-16 I don't see stock market bubble, only bubbles in my kitchen sink.

 

I was 3% cash and 97% stocks until October, took full advantage of the 9 years long bull market. Now I am 20% cash 80% stocks, because I am afraid of the rising fed interest rates and pending trade war, which are the reasons for the recent volatility.

 

 

 

 

Averages, and even more so estimated forward averages, are not necessarily a sound reference, especially when the indexes have been pushed forward by a handful of names, the FAANGs, while the others were stagnating.

 

While bubble is a question of personal perspective, what really matters is who is responsible for the actual level of the indexes, and the answer is: stock buybacks, funded by ultra cheap credit and lately by Trump's tax cut gift.

 

This is obviously not sustainable, especially in a time of rising interest rates.

 

So, at best, the indexes are going to level off for some time, at worse to crash if panic settles, or if the algos who actually run the markets start selling massively.

[Thailand J]

Even at p/e at 20+, after years of low interest it is not a tragic ending for the bull market. It's within the historic range of 15-25. It will not cause a crash...may be a correction.

 

The interest rate hike hits the housing and auto industries first, with consumers reluctant to take out loans at higher rates, therefore postpone buying. Tariffs on China imports increase cost and eat into company profits. If the fed's rate hide pace is faster then the economy can absorb and Trump goes to full trade war with China, we may see a recession and then we will have a market crash.

Edited November 25, 2018 by Thailand J

[SheungWan]

On 11/23/2018 at 9:03 AM, uli65 said:

no, I am not worried, I will enjoy to watch the crash of the biggest bubble in history????

How many years have you been saying that?

[SheungWan]

On 11/22/2018 at 9:45 PM, Patriot1066 said:

Possibly more!

its on the slide good time to consider buying!

That wouldn't have worked too well with oil or tech these last few weeks.

[Thailand J]

A healthy sell-off after 10 years run of gains complicated by the fed's rate hike and trade war is what's happening.

Recession by definition is having two consecutive quarters of GDP non-growth /contraction. Market tends to be oversold during a recession, a great buying opportunity. There were 12 recessions since 1945, the longest was 1yr 6 months in 2007-2009.

Interesting article:

https://www.bloomberg.com/news/articles/2018-11-25/grim-stock-signals-piling-up-as-wall-street-mulls-recession-odds?srnd=premium-asia

Edited November 25, 2018 by Thailand J

[sirineou]

On 11/22/2018 at 7:00 AM, Skeptic7 said:

Whatever bro. The point was to show that one doesn't have to fall into the same failure traps that most others choose. Many "average Joes" choose to be average...make bad decisions...have kids they can't possibly afford...rack up CC debt...live beyond (way beyond) their means. Much better choices available, but they continue to choose otherwise.

" Average Joes" would be surprised to find how invested in the market they are when it is time to collect their pensions. 

[Brunolem]

11 hours ago, Thailand J said:

A healthy sell-off after 10 years run of gains complicated by the fed's rate hike and trade war is what's happening.

Recession by definition is having two consecutive quarters of GDP non-growth /contraction. Market tends to be oversold during a recession, a great buying opportunity. There were 12 recessions since 1945, the longest was 1yr 6 months in 2007-2009.

Interesting article:

https://www.bloomberg.com/news/articles/2018-11-25/grim-stock-signals-piling-up-as-wall-street-mulls-recession-odds?srnd=premium-asia

A great opportunity for buying...as long as you can time the bottom...

 

No 555 here, but rather 666 as in 2009...

 

[mogandave]

Well it blows, but to put it into perspective, we’re only down this years gains, and still way up from two years ago.

Could be worse, could’ve bought bitcoin...

[Thailand J]

6 hours ago, Brunolem said:

A great opportunity for buying...as long as you can time the bottom...

 

No 555 here, but rather 666 as in 2009...

 

Market timing is difficult . You dont have to buy in at the hour when Dow was at the lowest in 2009. Anytime in 2007-2009 during the recession if you bought an index fund you would have doubled or tripled your money by now. Recession is scary, but it's a great time to add to your long term portfolio. Unless you believe US GDP will continue to decline.

 

 

 

[rott]

On 11/21/2018 at 3:13 PM, blazes said:

The difference this time (from 2008) is the massive amounts of debt saddling so many countries in the world.  We are all looking and ewaiting for the Black Swan.  No one knows in advance which particular small snowflake will cause the avalanche.

You mean there is more debt now (real terms not just inflation) than 2008/2009?

[uli65]

the big guys are ready to slaughter the dumb money fools.

after new year the party will start.

I have warned you. history repeats

[mogandave]

the big guys are ready to slaughter the dumb money fools.
after new year the party will start.
I have warned you. history repeats

Nice you seem to be rooting for it.

Personally, it doesn’t affect me, I always buy at the bottom and sell at the top.

[uli65]

please tell me the name of your oracle, I would like to use it

[mike787]

Not sure where the OP is seeking going, other than has anyone noticed the markets movements?...Yep! and I love it.  WHY?  Because 2 reason:  1. everything is on sale and going to be going much lower. 2. I am a long term investor 20+ years so all these equities on sale that i am accumulating will grow over the long term. 

 

If you can keep your head when all about you are losing theirs ...
If you can wait and not be tired by waiting ...
If you can think – and not make thoughts your aim ...
If you can trust yourself when all men doubt you ...
Yours is the Earth and everything that's in it.

 

 

Excerpt from original post worth reading.  

https://www.cnbc.com/2018/12/17/warren-buffett-says-read-this-poem-when-the-market-is-tanking.html

 

[mogandave]

Could you post on here when the bottom is please ….

If I told you I’d have to kill you...

[mogandave]

Not sure where the OP is seeking going, other than has anyone noticed the markets movements?...Yep! and I love it.  WHY?  Because 2 reason:  1. everything is on sale and going to be going much lower. 2. I am a long term investor 20+ years so all these equities on sale that i am accumulating will grow over the long term. 
 
If you can keep your head when all about you are losing theirs ...
If you can wait and not be tired by waiting ...
If you can think – and not make thoughts your aim ...
If you can trust yourself when all men doubt you ...
Yours is the Earth and everything that's in it.
 
 
Excerpt from original post worth reading.  
https://www.cnbc.com/2018/12/17/warren-buffett-says-read-this-poem-when-the-market-is-tanking.html
 

“Don’t listen to what they say, watch what they do.”

[mogandave]

So is the Obama recovery officially over?

 

[SheungWan]

8 hours ago, mike787 said:

Not sure where the OP is seeking going, other than has anyone noticed the markets movements?...Yep! and I love it.  WHY?  Because 2 reason:  1. everything is on sale and going to be going much lower. 2. I am a long term investor 20+ years so all these equities on sale that i am accumulating will grow over the long term. 

It has been said a long term investor is a short term investor who is seriously down right now.