Dow 30,000 S&P 3000, Nasdaq 10,000

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squirm
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Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Mon Jan 15, 2018 2:31 pm

Around here is where I think the bull market ends, Similar to Dow 10,000 Nasdaq 5000 in 2000.

RRAAYY3
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by RRAAYY3 » Mon Jan 15, 2018 2:37 pm

I'll take it !

[Any further elaboration as to why?]

squirm
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Mon Jan 15, 2018 2:43 pm

Sure, these are nice round numbers, and multiples from 2000 where the S&P topped near 1500 and again in 2007. Maybe extend past 3000 to get some more buyers just like early 2000. This also might get AAPL at a trillion market cap and everyone on CNBC will be cheering. Evening news will have extended coverage of Dow 30,000 etc. Everyone buys the dips. Everyone becomes an expert at stock picking. Then the real hard selling starts.
Last edited by squirm on Mon Jan 15, 2018 2:51 pm, edited 3 times in total.

RRAAYY3
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by RRAAYY3 » Mon Jan 15, 2018 2:44 pm

im shifting my gears to INT'L for the time being ... ready to pounce on the next US correction though !

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by mickeyd » Mon Jan 15, 2018 2:54 pm

I follow the S&P500. Can you shoot me the number that I will need to look for in order to know when to sell most of my equity assets?
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by z3r0c00l » Mon Jan 15, 2018 3:02 pm

These numbers are not in proportion to each other though, one talks about a mere 16% increase, the other a 38% increase. The Dow will be much higher, most likely, if Nasdaq hits 10,000. I could reasonably see Dow 30,000 coming this year followed by the next bear market in 2019. That would be a good end to a lovely run.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by runner3081 » Mon Jan 15, 2018 4:39 pm

Who knows... who cares?

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Stormbringer » Mon Jan 15, 2018 5:36 pm

S&P 3000 is a chip shot from here. I've seen estimated 2018 earnings in the ballpark of $135 for the index. Slap a 23 p/e ratio on that and you get S&P 3100. Put a little multiple expansion on it and you can to 3500 pretty quick. Interest rates and inflation are still low. We have global synchronized economic growth with few signs of recession. You might be surprised how high it can go before it comes back down.

Greenspan warned of irrational exuberance in 1996 and market kept going up for over three years.
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Mon Jan 15, 2018 5:47 pm

mickeyd wrote:
Mon Jan 15, 2018 2:54 pm
I follow the S&P500. Can you shoot me the number that I will need to look for in order to know when to sell most of my equity assets?
When the price of the last closing day of the month is below its 7 month moving average (very close to what I do).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by AndrewXnn » Mon Jan 15, 2018 6:02 pm

The Dow last closed at 25,806.19, the S&P at 2786.24 and the NASDAQ at 7261.06.

Over the long haul the indices move in rough proportion to each other.

Dow at 30,000 implies S&P at 3239 and the NASDAQ at 8442

S&P at 3000 implies Dow at 27,783 and NASDAQ at 7818

NASDAQ at 10,000 implies Dow at 35536 and S&P at 3837.

So, we will probably first see the S&P at 3,000, then the Dow at 30,000 followed by the NASDAQ at 10,000

S&P at 3,000 is an 8% rise.
Dow at 30,000 is a 16% rise.
NASDAQ at 10,000 is a 38% rise.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by midareff » Mon Jan 15, 2018 6:05 pm

RRAAYY3 wrote:
Mon Jan 15, 2018 2:37 pm
I'll take it !

[Any further elaboration as to why?]
Gladly, and carefully rebalance.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by pespo88 » Mon Jan 15, 2018 6:22 pm

I do believe, however, that we will start to see a quicker expansion in the Nasdaq and Dow as we start witnessing the machine learning market come into play. It would be smart to start looking into areas of investment regarding AI because we have yet to establish the total market capability of this new "sector". Most likely, these new companies will either be acquired by the top 20 (DOW), or listed on the Nasdaq, and we all know that the dumb money loves to speculate, which could push us past 10,000 on the Nasdaq more quickly than we think.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Mon Jan 15, 2018 8:46 pm

Hopefully we'll get that last parabolic blow off top in the Nasdaq just like it did from Sept 1999 to April 2000.
Last edited by squirm on Mon Jan 15, 2018 8:52 pm, edited 1 time in total.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Mon Jan 15, 2018 8:51 pm

pespo88 wrote:
Mon Jan 15, 2018 6:22 pm
I do believe, however, that we will start to see a quicker expansion in the Nasdaq and Dow as we start witnessing the machine learning market come into play. It would be smart to start looking into areas of investment regarding AI because we have yet to establish the total market capability of this new "sector". Most likely, these new companies will either be acquired by the top 20 (DOW), or listed on the Nasdaq, and we all know that the dumb money loves to speculate, which could push us past 10,000 on the Nasdaq more quickly than we think.
Yes, that would be that last phase of speculation (see my note above). It will be interesting to see how it performs from here on. The faster it rises the more fear of being left out (back then it was the four horsemen, now they call it fang stocks - same thing, just different time). The last of the bears get slaughtered and are mocked.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by whodidntante » Mon Jan 15, 2018 8:56 pm

Remember kids, the stock market only goes up.

squirm
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Mon Jan 15, 2018 9:27 pm

whodidntante wrote:
Mon Jan 15, 2018 8:56 pm
Remember kids, the stock market only goes up.
But this time it's different.

/s

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by broslami » Tue Jan 16, 2018 1:52 am

The bull market won't end on a number. It will likely end on one of the following scenarios:

#1 - Black Swan event like Kim Jong Un testing a nuclear warhead and it accidentally falls on Japan
#2 - Democrats gain control of the house in 2018 AND initiate impeachment proceedings
#3 - Fed raises interest rates too quickly and stocks start to look unattractive compared to risk-free assets

My guess is that if it happens in 2018 #2 is the catalyst that will do this market in.
Last edited by broslami on Tue Jan 16, 2018 1:56 am, edited 1 time in total.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by FIREchief » Tue Jan 16, 2018 1:56 am

willthrill81 wrote:
Mon Jan 15, 2018 5:47 pm
mickeyd wrote:
Mon Jan 15, 2018 2:54 pm
I follow the S&P500. Can you shoot me the number that I will need to look for in order to know when to sell most of my equity assets?
When the price of the last closing day of the month is below its 7 month moving average (very close to what I do).
So, sell low???
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by EyeYield » Tue Jan 16, 2018 2:05 am

I'm so glad I got my Doctorate in Financial Astrology (DFA) and don't have to guess about future numbers; it's all known. :twisted:
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by tennisplyr » Tue Jan 16, 2018 7:59 am

whodidntante wrote:
Mon Jan 15, 2018 8:56 pm
Remember kids, the stock market only goes up.
Except for when it goes down.
Those who move forward with a happy spirit will find that things always work out.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by aqan » Tue Jan 16, 2018 8:02 am

squirm wrote:
Mon Jan 15, 2018 2:31 pm
Around here is where I think the bull market ends, Similar to Dow 10,000 Nasdaq 5000 in 2000.
Lets see how many more people think that. Remember, market always does opposite of the most common consensus.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by investingdad » Tue Jan 16, 2018 8:13 am

All I know is this...i wish I could take the stupidly high gains I've seen in my portfolio off table and then put them back on the table the day after the market finally corrects.

But our investment ratio is about where I want it so that probably isn't smart.

I try to remind myself that doing nothing but nothing (except steady buying) got us here over the last 20 years, so maybe it pays to stand by that strategy and not try to get cute.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by annielouise » Tue Jan 16, 2018 8:18 am

broslami wrote:
Tue Jan 16, 2018 1:52 am
The bull market won't end on a number. It will likely end on one of the following scenarios:

#1 - Black Swan event like Kim Jong Un testing a nuclear warhead and it accidentally falls on Japan
#2 - Democrats gain control of the house in 2018 AND initiate impeachment proceedings
#3 - Fed raises interest rates too quickly and stocks start to look unattractive compared to risk-free assets

My guess is that if it happens in 2018 #2 is the catalyst that will do this market in.
This is an odd group of 3 to select. I can think of many other possibilities and it will probably be something completely else. If anybody could actually predict the future, they would currently be sitting on the beach of their own island sipping a delicious drink!

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 11:27 am

FIREchief wrote:
Tue Jan 16, 2018 1:56 am
willthrill81 wrote:
Mon Jan 15, 2018 5:47 pm
mickeyd wrote:
Mon Jan 15, 2018 2:54 pm
I follow the S&P500. Can you shoot me the number that I will need to look for in order to know when to sell most of my equity assets?
When the price of the last closing day of the month is below its 7 month moving average (very close to what I do).
So, sell low???
If you prefer, you could sell now. I just follow the trend.

For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by mickeyd » Tue Jan 16, 2018 1:46 pm

Remember, market always does opposite of the most common consensus.
But, but, we're all smarter than that...aren't we?
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

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FIREchief
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by FIREchief » Tue Jan 16, 2018 3:39 pm

willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
Interesting. How did you determine the following to be the correct values?

Time frame = "nearly" the last 50 years
Moving Average = 200 days

Did you perform a senstivity analysis, checking the value on the outcomes by changing the time frame to 30, 40, 50, 60, 70 years? How about varying the moving average to 100, 150, 250 and 300 days? Do all of those yield similar outcomes?

Also, in the scenarios you listed, how persistent has the 2% with std. dev. of 22% been? Does that reflect the predicted returns for the next one year, five years, ten years?

Finally, has anybody proven that a normal distribution is really applicable to stock market returns?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Tue Jan 16, 2018 3:52 pm

willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
I wish I had your confidence in predicting the market future.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 4:48 pm

FIREchief wrote:
Tue Jan 16, 2018 3:39 pm
willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
Interesting. How did you determine the following to be the correct values?

Time frame = "nearly" the last 50 years
Moving Average = 200 days

Did you perform a senstivity analysis, checking the value on the outcomes by changing the time frame to 30, 40, 50, 60, 70 years? How about varying the moving average to 100, 150, 250 and 300 days? Do all of those yield similar outcomes?

Also, in the scenarios you listed, how persistent has the 2% with std. dev. of 22% been? Does that reflect the predicted returns for the next one year, five years, ten years?

Finally, has anybody proven that a normal distribution is really applicable to stock market returns?
Actually, the data that I was thinking of go back to 1961. This chart was created in 2014, so that's 53 years of data.

Image

Others, such as Meb Faber, have done sensitivity analysis and found that, when used for trend following purposes, a moving average of anywhere from 50 days to 300 days tends to yield similar results in terms of returns over the long-term. Obviously, shorter periods result in more trades than in longer periods.

The data do not have to be normally distributed for this analysis to be accurate.

I have no idea what the market will do going forward, but I'm not willing to bet that it will look dramatically different from the past. Human behavior is the primary driver at work, and that doesn't really change much.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 4:57 pm

Rowan Oak wrote:
Tue Jan 16, 2018 3:52 pm
willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
I wish I had your confidence in predicting the market future.
I don't attempt to predict the future of the market. This is something that baffles many people, but trend following does not necessarily try to predict the future at all.

For instance, let's assume that we have a coin that is weighted to come up heads 60% of the time. When I flip it the next time, which will come up? Trying to say would be a future prediction. So would you refuse to place a bet that heads would come up? Of course not! You would bet on heads every time, knowing that you'll be wrong about 40% of the time. Over the course of many flips, the odds are very high that you will come out a big winner.

See the table I posted above. When stocks are in a downward trend, the historical return has plummeted and the volatility has gone up substantially. It might go up, but it's almost as likely to go down, and I don't care to own an extremely volatile asset with a negative real return (a 2% nominal return was a negative real return over this period). Bonds will do nicely to hold during this time frame for me. I'm not trying to predict what stocks will do; I'm simply basing my decision on what is likely to happen going forward over the long-run, to the extent that the future looks like the past.

Will this turn on its head in the future? Anything is possible, but it seems extremely unlikely to me. YMMV.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Rowan Oak
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Tue Jan 16, 2018 5:27 pm

willthrill81 wrote:
Tue Jan 16, 2018 4:57 pm
Rowan Oak wrote:
Tue Jan 16, 2018 3:52 pm
willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
I wish I had your confidence in predicting the market future.
I don't attempt to predict the future of the market. This is something that baffles many people, but trend following does not necessarily try to predict the future at all.

For instance, let's assume that we have a coin that is weighted to come up heads 60% of the time. When I flip it the next time, which will come up? Trying to say would be a future prediction. So would you refuse to place a bet that heads would come up? Of course not! You would bet on heads every time, knowing that you'll be wrong about 40% of the time. Over the course of many flips, the odds are very high that you will come out a big winner.

See the table I posted above. When stocks are in a downward trend, the historical return has plummeted and the volatility has gone up substantially. It might go up, but it's almost as likely to go down, and I don't care to own an extremely volatile asset with a negative real return (a 2% nominal return was a negative real return over this period). Bonds will do nicely to hold during this time frame for me. I'm not trying to predict what stocks will do; I'm simply basing my decision on what is likely to happen going forward over the long-run, to the extent that the future looks like the past.

Will this turn on its head in the future? Anything is possible, but it seems extremely unlikely to me. YMMV.
Do you find that this relates to what Jack Bogle has said about "Reversion to the Mean"?

The Telltale Chart
https://www.vanguard.com/bogle_site/sp20020626.html
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 5:31 pm

Rowan Oak wrote:
Tue Jan 16, 2018 5:27 pm
willthrill81 wrote:
Tue Jan 16, 2018 4:57 pm
Rowan Oak wrote:
Tue Jan 16, 2018 3:52 pm
willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
I wish I had your confidence in predicting the market future.
I don't attempt to predict the future of the market. This is something that baffles many people, but trend following does not necessarily try to predict the future at all.

For instance, let's assume that we have a coin that is weighted to come up heads 60% of the time. When I flip it the next time, which will come up? Trying to say would be a future prediction. So would you refuse to place a bet that heads would come up? Of course not! You would bet on heads every time, knowing that you'll be wrong about 40% of the time. Over the course of many flips, the odds are very high that you will come out a big winner.

See the table I posted above. When stocks are in a downward trend, the historical return has plummeted and the volatility has gone up substantially. It might go up, but it's almost as likely to go down, and I don't care to own an extremely volatile asset with a negative real return (a 2% nominal return was a negative real return over this period). Bonds will do nicely to hold during this time frame for me. I'm not trying to predict what stocks will do; I'm simply basing my decision on what is likely to happen going forward over the long-run, to the extent that the future looks like the past.

Will this turn on its head in the future? Anything is possible, but it seems extremely unlikely to me. YMMV.
Do you find that this relates to what Jack Bogle has said about "Reversion to the Mean"?

The Telltale Chart
https://www.vanguard.com/bogle_site/sp20020626.html
No, I don't. Perhaps you could elaborate on the specifics?

Mathematically, it would be very...interesting indeed to see how stocks have a higher return when they are trading below their 200 DMA, for instance, than when they are above their 200 DMA going forward, if that's what you're implying.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Rowan Oak
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Tue Jan 16, 2018 6:26 pm

willthrill81 wrote:
Tue Jan 16, 2018 5:31 pm
Rowan Oak wrote:
Tue Jan 16, 2018 5:27 pm
willthrill81 wrote:
Tue Jan 16, 2018 4:57 pm
Rowan Oak wrote:
Tue Jan 16, 2018 3:52 pm
willthrill81 wrote:
Tue Jan 16, 2018 11:27 am
For nearly the last 50 years, when the S&P 500 has been below its 200 DMA (~10 month MA), its return has been 2.0% with a std. dev. of 22%. I don't care to own an asset with that much volatility and that little return.
I wish I had your confidence in predicting the market future.
I don't attempt to predict the future of the market. This is something that baffles many people, but trend following does not necessarily try to predict the future at all.

For instance, let's assume that we have a coin that is weighted to come up heads 60% of the time. When I flip it the next time, which will come up? Trying to say would be a future prediction. So would you refuse to place a bet that heads would come up? Of course not! You would bet on heads every time, knowing that you'll be wrong about 40% of the time. Over the course of many flips, the odds are very high that you will come out a big winner.

See the table I posted above. When stocks are in a downward trend, the historical return has plummeted and the volatility has gone up substantially. It might go up, but it's almost as likely to go down, and I don't care to own an extremely volatile asset with a negative real return (a 2% nominal return was a negative real return over this period). Bonds will do nicely to hold during this time frame for me. I'm not trying to predict what stocks will do; I'm simply basing my decision on what is likely to happen going forward over the long-run, to the extent that the future looks like the past.

Will this turn on its head in the future? Anything is possible, but it seems extremely unlikely to me. YMMV.
Do you find that this relates to what Jack Bogle has said about "Reversion to the Mean"?

The Telltale Chart
https://www.vanguard.com/bogle_site/sp20020626.html
No, I don't. Perhaps you could elaborate on the specifics?

Mathematically, it would be very...interesting indeed to see how stocks have a higher return when they are trading below their 200 DMA, for instance, than when they are above their 200 DMA going forward, if that's what you're implying.
Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.

I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.

As Bogle says in the above referenced speech:
I believe that the market portfolio is the most sensible decision. It takes the need for judgement out of your decision making; it reduces cost; it increases tax-efficiency; it avoids the need to pore over past market data to figure out why the data are what they are. Then, if you accept the data, you have to decide whether or not the patterns it has revealed will persist during the span of years remaining on your investment horizon.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 7:39 pm

Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm

Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.
What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm
I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.
I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Rowan Oak
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Tue Jan 16, 2018 8:11 pm

willthrill81 wrote:
Tue Jan 16, 2018 7:39 pm
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm

Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.
What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm
I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.
I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
Just wondering what you look for in the current market environment with valuations what they are. Do you look at data other than the 200 day moving average for deciding when to move to bonds or cash?

I let my asset allocation determine my risk level. A 50% drop would hurt, of course, but I've planned for it. I'll rebalance into the fall while stocks are on sale. What else can you do?
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Tue Jan 16, 2018 8:19 pm

Rowan Oak wrote:
Tue Jan 16, 2018 8:11 pm
willthrill81 wrote:
Tue Jan 16, 2018 7:39 pm
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm

Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.
What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm
I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.
I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
Just wondering what you look for in the current market environment with valuations what they are. Do you look at data other than the 200 day moving average for deciding when to move to bonds or cash?
I use the 7 month moving average, analogous to the 140 day moving average. It reacts more quickly to trend changes than the 200 DMA. That's the only factor that I examine. The market's price is a reflection of the entire market, and complicating the matter with multiple indicators and especially subjectivity is where I think that a lot of people have gone off track.

When I move out of equities, I move into bonds. Historically, this has improved the long-term returns by 1-2% over cash (i.e. T-bills).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Rowan Oak
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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Tue Jan 16, 2018 8:45 pm

willthrill81 wrote:
Tue Jan 16, 2018 8:19 pm
Rowan Oak wrote:
Tue Jan 16, 2018 8:11 pm
willthrill81 wrote:
Tue Jan 16, 2018 7:39 pm
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm

Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.
What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm
I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.
I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
Just wondering what you look for in the current market environment with valuations what they are. Do you look at data other than the 200 day moving average for deciding when to move to bonds or cash?
I use the 7 month moving average, analogous to the 140 day moving average. It reacts more quickly to trend changes than the 200 DMA. That's the only factor that I examine. The market's price is a reflection of the entire market, and complicating the matter with multiple indicators and especially subjectivity is where I think that a lot of people have gone off track.

When I move out of equities, I move into bonds. Historically, this has improved the long-term returns by 1-2% over cash (i.e. T-bills).
Got it. Thanks for the explanation.

I posted this the other day and thought you may find it interesting. It's from an interview Jack Bogle gave in 2014 about what he did in 2000 in the most extreme of circumstances (personally and the market itself). It's the only time I've heard him talk about timing the market himself.

- He was around 70 yrs old at the time;
- his heart was failing;
- equity position 70-80%;
- bonds yielding around 7%;
- stocks yielding 1%;
- stock market closer to 40x earnings than to 30;

Jack Bogle: I think it's impossible in the next decade, and I look at things in decade lengths, that stocks will outperform bonds. So returns on stocks ought to be, you know, pretty close to nominal and the returns on bonds gonna be 7% a year. That's doubling your money in a decade. And then I looked at him and said, "You know, Don, sometimes I sit here and worry why I have any money in stocks whatsoever.

And I was in the process then, and I can't remember the exact timing, but obviously around that time, of reducing my own equity position from about what's normal of about 70-75%. I don't even remember, maybe 80% down to about 25-30%. And I did that.

...everybody said, "you knew what was going to happen", and I suppose you could argue that I did, but that was also, my heart was failing; my life was in danger. I wanted to make sure what kind of estate I had mostly my retirement plan here (Vanguard) was protected for my family so it was a personal financial decision greatly abetted by the fact that it made totally financial and economic sense. How many times in a lifetime does that come along.

https://youtu.be/k6ra5POdsYg
Last edited by Rowan Oak on Sun Jan 28, 2018 9:33 am, edited 1 time in total.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Wed Jan 17, 2018 1:02 am

Rowan Oak wrote:
Tue Jan 16, 2018 8:45 pm
willthrill81 wrote:
Tue Jan 16, 2018 8:19 pm
Rowan Oak wrote:
Tue Jan 16, 2018 8:11 pm
willthrill81 wrote:
Tue Jan 16, 2018 7:39 pm
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm

Yes, I'm curious about what the data says when S&P 500 has been above its 200 daily moving average.
What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.
Rowan Oak wrote:
Tue Jan 16, 2018 6:26 pm
I don't have the stomach to follow trends, etc so I stay with the market portfolio, but I do find the historical data research interesting.
I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
Just wondering what you look for in the current market environment with valuations what they are. Do you look at data other than the 200 day moving average for deciding when to move to bonds or cash?
I use the 7 month moving average, analogous to the 140 day moving average. It reacts more quickly to trend changes than the 200 DMA. That's the only factor that I examine. The market's price is a reflection of the entire market, and complicating the matter with multiple indicators and especially subjectivity is where I think that a lot of people have gone off track.

When I move out of equities, I move into bonds. Historically, this has improved the long-term returns by 1-2% over cash (i.e. T-bills).
Got it. Thanks for the explanation.

I posted this the other day and thought you may find it interesting. It's from an interview Jack Bogle gave in 2014 about what he did in 2000 in the most extreme of circumstances (personally and the market itself). It's the only time I've heard him talk about timing the market himself.

1. He was around 70 yrs old at the time;
2. his heart was failing;
3. equity position 70-80%;
4. bonds yielding around 7%;
5. stocks yielding 1%;
6. stock market closer to 40x earnings than to 30;
7. "I think it's impossible in the next decade, and I look at things in decade lengths, that stocks will outperform bonds. So returns on stocks ought to be, you know, pretty close to nominal and the returns on bonds gonna be 7% a year. That's doubling your money in a decade. And then I looked at him and said, "You know, Don, sometimes I sit here and worry why I have any money in stocks whatsoever".

"And I was in the process then, and I can't remember the exact timing, but obviously around that time, of reducing my own equity position from about what's normal of about 70-75%. I don't even remember, maybe 80% down to about 25-30%. And I did that.

About this decision he goes on to say:
"...everybody said, "you knew what was going to happen", and I suppose you could argue that I did, but that was also, my heart was failing; my life was in danger. I wanted to make sure what kind of estate I had mostly my retirement plan here (Vanguard) was protected for my family so it was a personal financial decision greatly abetted by the fact that it made totally financial and economic sense. How many times in a lifetime does that come along."

https://youtu.be/k6ra5POdsYg
Very interesting.

Believe it or not, I would never try to personally predict which way the market would go in the short-term. I just follow the trends of the market and buy and sell according to simple, objective rules, expecting to approximate the market's returns over the long-run but with less downside risk, which is what this method has historically done.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Rowan Oak
Posts: 126
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Location: Yoknapatawpha

Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by Rowan Oak » Wed Jan 17, 2018 9:06 am

willthrill81 wrote:
Wed Jan 17, 2018 1:02 am
Rowan Oak wrote:
Tue Jan 16, 2018 8:45 pm
willthrill81 wrote:
Tue Jan 16, 2018 8:19 pm
Rowan Oak wrote:
Tue Jan 16, 2018 8:11 pm
willthrill81 wrote:
Tue Jan 16, 2018 7:39 pm


What are you referring to? The S&P 500 has had higher than average returns and lower than average volatility when above the 200 DMA.



I think it takes a lot more stomach to just sit there and watch your equities fall by 50% or more in a rough bear market as in 2008. But if you're able to do so, you'll probably have returns roughly equal to that of trend followers.
Just wondering what you look for in the current market environment with valuations what they are. Do you look at data other than the 200 day moving average for deciding when to move to bonds or cash?
I use the 7 month moving average, analogous to the 140 day moving average. It reacts more quickly to trend changes than the 200 DMA. That's the only factor that I examine. The market's price is a reflection of the entire market, and complicating the matter with multiple indicators and especially subjectivity is where I think that a lot of people have gone off track.

When I move out of equities, I move into bonds. Historically, this has improved the long-term returns by 1-2% over cash (i.e. T-bills).
Got it. Thanks for the explanation.

I posted this the other day and thought you may find it interesting. It's from an interview Jack Bogle gave in 2014 about what he did in 2000 in the most extreme of circumstances (personally and the market itself). It's the only time I've heard him talk about timing the market himself.

1. He was around 70 yrs old at the time;
2. his heart was failing;
3. equity position 70-80%;
4. bonds yielding around 7%;
5. stocks yielding 1%;
6. stock market closer to 40x earnings than to 30;
7. "I think it's impossible in the next decade, and I look at things in decade lengths, that stocks will outperform bonds. So returns on stocks ought to be, you know, pretty close to nominal and the returns on bonds gonna be 7% a year. That's doubling your money in a decade. And then I looked at him and said, "You know, Don, sometimes I sit here and worry why I have any money in stocks whatsoever".

"And I was in the process then, and I can't remember the exact timing, but obviously around that time, of reducing my own equity position from about what's normal of about 70-75%. I don't even remember, maybe 80% down to about 25-30%. And I did that.

About this decision he goes on to say:
"...everybody said, "you knew what was going to happen", and I suppose you could argue that I did, but that was also, my heart was failing; my life was in danger. I wanted to make sure what kind of estate I had mostly my retirement plan here (Vanguard) was protected for my family so it was a personal financial decision greatly abetted by the fact that it made totally financial and economic sense. How many times in a lifetime does that come along."

https://youtu.be/k6ra5POdsYg
Very interesting.

Believe it or not, I would never try to personally predict which way the market would go in the short-term. I just follow the trends of the market and buy and sell according to simple, objective rules, expecting to approximate the market's returns over the long-run but with less downside risk, which is what this method has historically done.
Reminds me of this blog post from Ben Carlson. Also, I recently heard him and Michael Batnick on their podcast discussing the strategy and they said something very similar to you about how in the long run buy and hold would probably win, but how many people can take the 50% or more drop and stay the course.

My Evolution on Asset Allocation
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by squirm » Thu Jan 18, 2018 1:10 am

Permabear Dan Nathan on CNBC gets pummeled on CNBC. We're getting closer.

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Re: Dow 30,000 S&P 3000, Nasdaq 10,000

Post by willthrill81 » Thu Jan 18, 2018 1:42 am

Rowan Oak wrote:
Wed Jan 17, 2018 9:06 am
Reminds me of this blog post from Ben Carlson. Also, I recently heard him and Michael Batnick on their podcast discussing the strategy and they said something very similar to you about how in the long run buy and hold would probably win, but how many people can take the 50% or more drop and stay the course.

My Evolution on Asset Allocation
I entirely agree with Carlson's take. I would add that even if the long-term returns were equivalent for buy-and-hold and trend following, trend following could still be preferable not only due to potentially lower volatility but potentially much lower sequence of returns risk, both in the accumulation and decumulation phases.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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