U.S. stocks in freefall

[3CT_Paddler]

But yeah, people who started investing in 1966 experienced 18 years of sideway movement and 50% crashes.... In 1966, the DOW was about 1000, and in 1982 it was still 1000...

But things worked pretty well for them... All that money they saved over 18 years, was multiplied by TEN by 1999.

Of course, the obvious difference between 1982 and now is that in 1982 stocks were reviled and most people didn't want to own them. The Shiller PE/10 got all the way down to about 7. Today, the Shiller PE/10 is still above the historical average at 20 and there still are too many people around like you who think now's the time to buy more. I'm actually doing you stockbugs a favor by talking them down. If there were more people like me, there would actually be some chance you could get rich on them, but until then I wouldn't hold my breath.

You also have to factor in two very different Fed policies in place in 1982 and today. One was trying to combat inflation and the one today is trying to avoid deflation.

[Lbill]

You also have to factor in two very different Fed policies in place in 1982 and today. One was trying to combat inflation and the one today is trying to avoid deflation.

Important observation. In 1982, bond yields were in the double digits - the 10-year treasury paid 15%. Today that interest tate is less than 2%. Stocks are not going to get the jetpack boost from falling rates that they did beginning in 1982. If anything, rates are poised to head up, which isn't going to help stocks. Expected returns from stocks going forward from here are not inspiring. I'd like to see them at much, much lower prices.

[Snowjob]

You also have to factor in two very different Fed policies in place in 1982 and today. One was trying to combat inflation and the one today is trying to avoid deflation.

Important observation. In 1982, bond yields were in the double digits - the 10-year treasury paid 15%. Today that interest tate is less than 2%. Stocks are not going to get the jetpack boost from falling rates that they did beginning in 1982. If anything, rates are poised to head up, which isn't going to help stocks. Expected returns from stocks going forward from here are not inspiring. I'd like to see them at much, much lower prices.

Doesn't this all just point to stock picking individual stocks based on reasonable assumptions of recurring cash flow returned to investors by way of dividends and buybacks?

[nisiprius]

What? Nobody's bumped this thread yet today?

Perhaps people people are too busy replying to Rick Ferri's thread, I'm Bullish this October..

[Noobvestor]

What? Nobody's bumped this thread yet today?

Perhaps people people are too busy replying to Rick Ferri's thread, I'm Bullish this October..

I ... did respond to that thread too, but: yeah, I'm buying, more more more! I know I shouldn't be excited, but I am :/

[Lbill]

We have to get more than a measly 200-point drop in the DOW before winding this one up again -- maybe tomorrow.

[JDInvestor]

We have to get more than a measly 200-point drop in the DOW before winding this one up again -- maybe tomorrow.

Silver lining: I made a small buy today and got my lowest price since I started investing. Yaaaaay?

[grayfox]

Here is something interesting that I read on BI

Yesterday October 03, 2011 the S&P 500 closed at 1,099.23
On October 03, 2008 the S&P 500 closed at 1,099.23

The exact same number!

http://www.google.com//finance?chdnp=1& ... INX&ntsp=0

What are the odds of that?

[Lbill]

Here is something interesting that I read on BI

Yesterday October 03, 2011 the S&P 500 closed at 1,099.23
On October 03, 2008 the S&P 500 closed at 1,099.23

The exact same number!

I wonder if we'll get another match at 666, which the S&P 500 hit on March 2, 2009? What are the odds of that?

[Lbill]

The Bear is officially here!

Stock indexes tumble 2 percent
October 4, 2011 10:17 AM ET
NEW YORK (Reuters) - U.S. stocks fell 2 percent and the S&P 500 entered a bear market on Tuesday as European officials considered making banks take bigger losses on Greek debt.

[grayfox]

The Bear is officially here!

Stock indexes tumble 2 percent
October 4, 2011 10:17 AM ET
NEW YORK (Reuters) - U.S. stocks fell 2 percent and the S&P 500 entered a bear market on Tuesday as European officials considered making banks take bigger losses on Greek debt.

The odd thing is that this bear market actually started 158 days ago on 29-Apr-2011 when the S&P 500 peaked at 1363.61 The crossing of -20% just makes it official.

The bull market lasted from 06-Mar-2009 until the peak 784 days later on 29-Apr-2011. It climbed +104.5%, but it never got as high as the peak in Oct -2007. And as investors cheered the at the peak, there were really celebrating their own demise. There's irony.

[Lbill]

Bear cancelled due to a 200+ point meltup in the DOW in the last few seconds of the trading day. Check back tomorrow...

[HomerJ]

Bear cancelled due to a 200+ point meltup in the DOW in the last few seconds of the trading day. Check back tomorrow...

I was wondering if you would be honest enough to post that.

[Lbill]

I knew you'd be coming Mr. rrosenkoetter. I can understand why they went down 200+ points today. That actually made sense. Maybe you can explain the 300+ point melt up. It's getting so it's the stock rallies that seem crazy, rather than the drops.

[HomerJ]

I knew you'd be coming Mr. rrosenkoetter.

Maybe you can explain the 300+ point melt up. It's getting so it's the stock rallies that seem crazy, rather than the drops.

No idea. The rallies don't seem any more crazy to me than the drops.

[Lbill]

I agree. It's all crazy to me anymore. I can believe that the market will go up 1000 points tomorrow or it will drop 1000 points - or maybe it will do both.

[plnelson]

@LBill . . .

This is totally OT, but I'm curious. Your sig says,

"You can only understand life backward, but we must live it forward." ~ Søren Kierkegaard

Any idea if there's any significance that he says "you" in the first clause but "we" in the second one? I notice this every time I read your posts.

[Lbill]

You're right, so I changed it. I got that quote verbatim somewhere but it needed to be made grammatically correct.

[Lbill]

September confirms bear market:



From: J.D. Steinhilber, October 06, 2011

[Noobvestor]

September confirms bear market:



From: J.D. Steinhilber, October 06, 2011

I can't help it ... I look at this as a list of discounts. Glad I hold significant international and emerging.

[Lbill]

I can't help it ... I look at this as a list of discounts. Glad I hold significant international and emerging.

Noob - I hope you've been buying right. I think you want to be a new buyer at discount prices, not a holder of discounted inventory bought at higher prices. New buyers should consider that the discounts may be even better going forward - wait for the holiday sales.

[mak]

I have desert property in Arizona too, it is at a SIGNIFICANT discount to:
purchase price (66% discount)
last 20 years comps (maybe 20% off of 20 years ago price even now)
every other conceivable valuation metric

Look at the discount! Come, buy, buy! Think of the bargain you are getting!

[HomerJ]

New buyers should consider that the discounts may be even better going forward - wait for the holiday sales.

New buyers should consider that we have NO idea which way the market is going to go, so waiting for better discounts could be a mistake as well.

Take the guesswork out of investing. Quit trying to predict the future. Rebalance within predetermined bands and you're making your decisions based on has already happened instead of hoping your guesses for the future turn out to be correct.

[newport1]

September confirms bear market:



From: J.D. Steinhilber, October 06, 2011

I believe many of the indices are up > 8% since the date of these data.

[HomerJ]

Quit trying to predict the future. Rebalance within predetermined bands and you're making your decisions based on has already happened instead of hoping your guesses for the future turn out to be correct.

Doesn't the outcome of those decisions depend on the future? If the market trends then rebalancing would lose you money.

Not in the long run. Rebalancing forces you to sell your winners and buy your losers... Buy low and sell high I believe is the term.

I hope you don't drive your car with your eyes fixated on the rear view mirror.

When the front windshield is covered with black paint, not much use looking forward either.

[Noobvestor]

I can't help it ... I look at this as a list of discounts. Glad I hold significant international and emerging.

Noob - I hope you've been buying right. I think you want to be a new buyer at discount prices, not a holder of discounted inventory bought at higher prices. New buyers should consider that the discounts may be even better going forward - wait for the holiday sales.

What I mean is: I'm glad my portfolio has tilts that have some of these more-volatile, now-suffering assets, so that what I'm buying is on steeper sale for the long run I am holding it for. To be fair, yes, that means my YTD returns are actually rather down compared to someone holding only US equities. I'll happily keep buying as things go down, too, so bring on the holiday discounts Sorry, I realize it's not as exciting for those in retirement, but I sincerely hope that all such folks are heavy on bonds and thus doing alright with this equity drop (since TIPS and Treasuries are up).

[Lbill]

GET READY FOR THE ZAG

Market has been up for several days and all the "good news" about Europe saving itself is out now. So, I figure that we're getting pretty close to the "zag" that follows the "zig". I'm expecting that will be coming along promptly, accompanied by more "bad news" about Europe, the U.S. debt crisis, and so forth. Better than a carnival ride, isn't it?

[neverknow]

Better than a carnival ride, isn't it?

That is what this thread is too me.
Lbill, I always hope to see your picture of the bear, when this thread pops up. Where's the bear?
neverknow

[grayfox]

Well stocks is up again today. So I sold some VEU at 42.14 that I bought on 06-Oct at 38.24. 10% gain in six days. That's more than I hoped to make in a year.

This is the second time I did that with VEU since the beginning of August. Also did the same with VTI and VDC. I keep trying to add to my stock allocation, but as soon as I buy stock, it jumps up and I feel compelled to take the quick profit. If it goes down, I'll buy it back.

VEU http://stockcharts.com/h-sc/ui?s=VEU&p= ... 2951537751

Right now I have 11% stock in ira, but most of it is in Wellesley which doesn't move much.

[FabLab]

... I keep trying to add to my stock allocation, but as soon as I buy stock, it jumps up and I feel compelled to take the quick profit. If it goes down, I'll buy it back.

Sounds like a high-quality problem. Given the affect you seem have on the market, as a public service announcement, perhaps you could post your intended buys just before you place them

Cheers,
Ron

[HomerJ]

Well stocks is up again today. So I sold some VEU at 42.14 that I bought on 06-Oct at 38.24. 10% gain in six days. That's more than I hoped to make in a year.

This is the second time I did that with VEU since the beginning of August. Also did the same with VTI and VDC. I keep trying to add to my stock allocation, but as soon as I buy stock, it jumps up and I feel compelled to take the quick profit. If it goes down, I'll buy it back.

VEU http://stockcharts.com/h-sc/ui?s=VEU&p= ... 2951537751

Right now I have 11% stock in ira, but most of it is in Wellesley which doesn't move much.

You can't possibly have made money. I can pick some date in the past that has the exact same price as today and prove that the market has returned 0% for x number of months/years.

[HomerJ]

Don't worry, Lbill will be back as soon as the market drops 200-300 points... But keep in mind, he'll ignore the 1000 point run-up since he started this thread.

[JordanIB]

Don't worry, Lbill will be back as soon as the market drops 200-300 points... But keep in mind, he'll ignore the 1000 point run-up since he started this thread.

I say let sleeping dogs lie while U.S. stock are in free-rise.

[HomerJ]

Don't worry, Lbill will be back as soon as the market drops 200-300 points... But keep in mind, he'll ignore the 1000 point run-up since he started this thread.

I say let sleeping dogs lie while U.S. stock are in free-rise.

Yeah, I'm probably jinxing us...

2 months ago quite a few people in this thread were sure a stock crash was coming... But we're up 10% since then... The market may indeed crash 50% or more again very soon, or it may double over the next 3 years or maybe even both.

We just don't know...

We all need to recognize that crashes happen and stocks are risky, so set your AA accordingly. But stay the course. Don't try to predict the market. Don't freak out when it drops.

[newport1]

Where are the US Stocks are in uncontrolled ascent threads?

[Jay69]

Where are the US Stocks are in uncontrolled ascent threads?

May be you should make one, that way when I login to Bogleheads I can tell what the market is doing by looking at what topic is at the top:)

[baw703916]

As of today, the S&P Index fund's return YTD is positive.

So does that mean it's safe to get back in the market, since now one is doing it at a higher price than back in January?

Brad

[plnelson]

So does that mean it's safe to get back in the market, since now one is doing it at a higher price than back in January?

No, it was safe a few days ago. It 's too late now

[umfundi]

Where are the US Stocks are in uncontrolled ascent threads?

Reminds me, back in the 90's, when Audi was accused of uncontrolled acceleration. Someone asked:

"Can I apply this technology to my diesel Chevette?"

Keith

[Jay69]

Markets not open yet, I'm going out on limb here, my guess for today as best said by Bruce Springsteen, I'm going down, down, down.

Thought I would be the first to bing this thread back to the top before another one starts:)

Good day All

Jay

[Lbill]

Trend follower alert cancelled due to headfake. Back below the 200 day - it was nice while it lasted.

[Jay69]

I will say the markets are down but not as bad as I would have thought they would have been from my simple overlook.

According to the news outlets one would think we are entering a new ice age by tonight!

[HomerJ]

Trend follower alert cancelled due to headfake. Back below the 200 day - it was nice while it lasted.

Just curious then, all the people who bought when the S&P 500 went above the 200 day average a few days ago, now have to sell right?

So this is an example where the vaunted 200 day moving average system costs its followers money, right?

This question isn't directed at Lbill... I'm just curious in general.

[nisiprius]

Trend follower alert cancelled due to headfake. Back below the 200 day - it was nice while it lasted.

Just curious then, all the people who bought when the S&P 500 went above the 200 day average a few days ago, now have to sell right?

So this is an example where the vaunted 200 day moving average system costs its followers money, right?

This question isn't directed at Lbill... I'm just curious in general.

When once I dipped gently into some of the websites that espouse moving average market timing, I gathered that this is known as "whipsawing" and is a familiar problem... and that real moving-average market timers don't use simple systems. The 200 day average is always combined with several other moving averages in some sophisticated way, and whenever the method misbehaves in some unpleasant way they add or change a rule, in hopes of eventually coming up with the perfect recipe that will turn on a dime--at the right time, and hopefully in the right direction--yet never whipsaw.

[Munir]

Here we go again. If Greece sneezes, I lose tens of thousnds of dollars (even though I'm only 30% equities). It really is a global economy.
Should we ask Rick Ferri for another coin flip?

[Jay69]

Here we go again. If Greece sneezes, I lose tens of thousnds of dollars (even though I'm only 30% equities). It really is a global economy.
Should we ask Rick Ferri for another coin flip?

Thats funny, I was thinking of doing that in his Oct coin flip thread this AM I just left well enough alone, we spend to much time with just this one thread anyway!

[Jay69]

ok, after 8-9 days we can move this to the top again!

I almost forgot where to find the thread.

[dave66]

I don't even have to pull up Google Financial to know how things are doing in the morning... When I see this thread at the top, I already know. lol

[Jay69]

I still think we need a good "The market is UP thread"

[Munir]

Oi Oi !!! Yesterday it was Greece, today it's Italy, tomorrow Spain?

Seriously, we need another coin flip by Rick.