Quote: (01-26-2019 06:20 AM)Arado Wrote:  

Quote: (01-25-2019 10:53 AM)robreke Wrote:  

^ "The market is fundamentally overvalued. " - Probably so due to the multiple rounds of QE which went into stock buybacks. However, the PE ratio of the S&P 500 is pretty much within historical norms. Granted, it was getting a little high but this latest correction has brought it down. The forward PE ratio is not "bubble territory" or extremely overvalued at this point.

Again, depends on which metric you use. According to the CAPE (Cyclically adjusted price to earnings ratio) or just simply looking at stock market to GDP ratio it is in historically high levels of overvaluation.

Quote:Quote:

I was disagreeing with your claim that if this secular bull market lasts until 2025 then it will be 50% longer than the longest bull market. It will not, it would be about 4 years shorter than the secular bull of the 80s and 90s.

How about I refine it to say that this would be the longest rate hiking cycle? Again, problem is that the Fed doesn't have the same tools to stimulate that they did during the secular bull market period you are referencing.

Quote: (01-25-2019 10:56 PM)Repo Wrote:  

Ok, so I'm far from an expert, but what the fuck is the true value of all the bonds that the Fed is holding? I think that is key here. Because if the Fed tries to reduce its balance sheet, the stock market ranks because it causes a liquidity crisis, and as we know most economists and Moodys are predicting a liquidity crisis to be the cause of the next recession. .. though they think it will be short and severe in nature. Anyway, as long as the Fed keeps their balance sheet stacked, then the losses are unrealized, but there is pressure for them to unload it. What gives first, will the true value of their balance sheet ever be made transparent to the public, or are we just holding off the next crisis as long as we can. Posting while I'm drunk but I think I summed it up about right.

I've posted earlier in the thread that the Fed holdings are 4+ trillion dollars. Total global central bank assets are well over 10 trillion dollars. That's a lot of funny money propping up these markets. This situation is extremely unfair to savers - people that are out of debt and just want their money to outpace inflation are out of options. They are forced to see their life's wealth accumulation gradually whittled away by rising prices, or speculate on index funds that could lose 30+ percent of their value in case Central Banks get cranky.

Yeah, my point was the Fed cant unload these assets either without tanking the economy. So were kind of stuck in a catch 22. Its like people dont realize the "strength" of the current economy is somewhat artificial as its propped up by the Fed continuing to hold these assets. The Fed tried unwinding its balance sheet very slowly and that's what's been causing ripples. We essentially still have not fully written off all the bad bets from the last recession and are trying to spread it out over decades so we can have a good economy.

Quote: (01-17-2019 02:48 PM)Arado Wrote:  

Quote: (01-11-2019 10:03 PM)Kid Twist Wrote:  

I don't think anyone doubts that the asset bubble is common, has been in the making for years, and will burst. But the larger issue is that multiple bubbles are occurring all at the same time AND (perhaps most importantly, and not addresssed in your two links) the state of the global economy, with central banks and equities markets that are BOTH worse than the United States, level out the playing field in two ways: capital flight into the USA, as it is the only place to go, and confidence as a result of the intertwined currency problems that the USA is now creating, by being super strong and further weakening global banking by definition.

What will all of this do? Create a bigger bubble, and longer drawn out cycle. That's what I am seeing and why I think MA's explanation has been best. When precisely this hits, of course no one knows --- but you don't need to know precisely. You need to see the signs to take advantage of the rising bubble, but get exit points and strategy that suit your risk level to not be holding on the crash, obviously. My guess has been that the beginning of confidence loss in pension and debt issues in the USA, coupled with leadership not by Donald Trump, or subversion of him, is when it'll start. The pension crises start 2020 slowly moving up, and I still think DT gets 2021-24, so that's why my prediction remains ~2025, plus or minus a year.

2025 is a LONG time for a bull market to last (50% longer than the longest bull market run), and I don't know if Central Banks can keep printing that long without creating hyperinflation. The amount of debt that keeps accumulating trying to keep this economy running on fumes is getting more and more absurd.

Anyway, why would the US be a better place to put your money? A good chunk of the foreign stock markets are in bear markets, meaning that they are not as overvalued as the US stock market, so when the downturn comes they won't suffer as much, and have higher upside once things reset. There are also many other countries with far lower Debt/GDP ratios than the US, so are at a lower risk of inflating away government debt.

Even this post-Christmas rally has been the result of continuous QE money printing from the ECB and BOJ. The ECB was supposed to stop printing as of the end of 2018, but looks like they've kept the charade up a bit longer. China also just released a ton of money into the system to keep things propped up prior to Chinese New Year. Unfortunately, the Central Banks are loathe to actually clearly let us know what they will do until the last minute, though the Fed is the best at hiding their intentions.

Recessions and major market corrections are necessary and healthy to clear out bad debt and inefficient businesses. Workers who aren't producing need to get laid off and shift into different industries or more efficient businesses. This constant printing just delays the inevitable - Central Banks will eventually have to decide between hyperinflation and a massive crash. It also screws over savers and retirees that need returns on nonvolatile assets that can at least outpace inflation.

Here are the choices:

A) Cash: Safe short term bet with decent 2-2.5% return on treasuries and CDs. If the Fed keeps up QT and doesn't lower rates, then you will at least keep up with inflation as long as the Fed doesn't change policy. If the Fed starts printing or bailing out without sufficient notice (inflation will kick in long before banks offer higher rates), then you could lose to inflation but there should be some advance warning and they are not likely to reverse without a major stock market reversal. The main concern is lost opportunity cost if there is no recession and the asset bubble keeps growing (though whether it can grow past recent highs is debatable). In the long term, ff the recession hits, debt skyrockets, and foreigners stop buying T-bills, then we face our long overdue debt crisis then all bets are off and the dollar becomes worthless, but that's still way off and there will be ample warning. May lose some value to inflation in a protracted trade war even if Fed doesn't capitulate.

B) Stocks: Slightly to ridiculously overpriced depending on which metric you use. Some potential gains if the economy doesn't hit recession and the printing can keep this bubble longer. HUGE downside risk if the money printing stops and asset deflation kicks in. Moderate risk of mediocre or negative real returns if stagflation kicks in. Some short term upside if China trade gets resolved or no more bad news from Europe.

C) Precious metals: No actual returns, have to rely on capital appreciation alone. Gold is relatively underpriced and silver is quite cheap, so likely not much downside risk. Good inflation and stagflation hedge, will probably perform well in a protracted trade war. May lose some value if the printing stops and deflation sets in (people will sell gold to cover margin), but will skyrocket afterwards once the stimulus starts back up again. Lots of conspiracy theories out there that very little actual gold is backing up the paper market, so if serious inflation sets in, you may end up just holding worthless paper. Taking possession of physical gold is a hassle and isn't liquid. Youtube gloom and doom preppers are pushing gold hard, of course through their broker of choice.

D) Real Estate: Somewhat or extremely overpriced depending on the market. Highly illiquid, so if there is a serious crisis then you are stuck with the property, and if the neighborhood you buy in sees unhelpful demographic changes then you are also in trouble. Several locations are seeing real estate prices drop (Seattle, Canada, Australia) while others are seeing a deceleration. Takes a few years for the market to hit bottom. In case of market, will retain value slightly better than stocks.

E) Bonds: Not so sure - better returns than treasuries, but more downside risk since prices will go down if interest rates increase or inflation sets in.

F) Foreign assets: Euro/Yen/RMB assets are all propped up by QE right now so are also subject to the whims of their respective Central Banks. Japan is a strange case with low inflation, falling housing prices and stagnating stock market despite crazy printing, and the Euro area is ripe for another debt crisis, or hyperinflation if the ECB monetizes the debt and keeps printing. China's stock market is in a bear market but their real estate and shadow banking is still ripe for a major downturn, and for now their Central Bank is loosening monetary policy as well so may be able to keep the bubble a bit more - if those bubbles burst, stocks will probably see more downside. If trade gets resolved, Chinese stocks will see huge upside. There are other countries out there that have more fiscal/monetary discipline and lower geopolitical risk - they may be better bets but I need to do more research to figure out where they are and if the respective ETFs are well managed. Many foreign stock indexes are in a bear market, so potentially, more upside and less downside in case recession hits in. However, if the dollar strengthens in the short term due to a recession flight to safety, countries and foreign corporations with dollar denominated debt will be doubly screwed.

Unfortunately, the Central Banks are loathe to actually clearly let us know what they will do in advance. They only publish their balance sheet positions after the fact. The ECB was supposed to stop printing as of the end of 2018, but looks like they've kept the charade up a bit longer.

Can't time the market? That's bs for the average Joe that doesn't realize the degree to which Central Bank printing has kept this market propped up - he's told to put his money in an index fund and forget about volatility while those that know what the Central Banks are up to can plan ahead in advance of the retail investors.

It's not pre-2009 anymore. There is bitcoin now.

Quote: (01-18-2019 03:17 PM)jeffreyjerpp Wrote:  

Quote: (01-11-2019 10:03 PM)Kid Twist Wrote:  

What will all of this do? Create a bigger bubble, and longer drawn out cycle. That's what I am seeing and why I think MA's explanation has been best. When precisely this hits, of course no one knows --- but you don't need to know precisely. You need to see the signs to take advantage of the rising bubble, but get exit points and strategy that suit your risk level to not be holding on the crash, obviously. My guess has been that the beginning of confidence loss in pension and debt issues in the USA, coupled with leadership not by Donald Trump, or subversion of him, is when it'll start. The pension crises start 2020 slowly moving up, and I still think DT gets 2021-24, so that's why my prediction remains ~2025, plus or minus a year.

Martin Armstrong with two very important snippets today.

PAY ATTENTION FORUM MEMBERS:

"Something needs to happen between now and January 2020 that begins to seriously undermine the confidence in government. The Democrats are acting absurd. If Trump says the sky is blue they would say it is black. They must oppose whatever Trump says just to win the White House in 2020. Government will no longer function. The damage the Democrats are doing on all levels being aided by the Neocons who just want war and are not loyal Republicans, is really profound. From here into 2032, do not expect government to function. It has become permanently polarized. This is NECESSARY to aid the shift from Public to Private Confidence going into 2032. The Republicans and Democrats can no longer work together to run government. God help us for whoever follows Trump will be a full fledged pro-government person who will do whatever is necessary against the people. Trump is ONLY the reaction - not a change in trend. Those who hate Trump hate anyone who disagrees with their politics. This hatred is pervasive. In South Carolina, a friend reported that a car in a parking lot with a Trump sticker was shot numerous times as a warning to Trump supporters. The 2020 election is likely to be the most violent in American history. This is all part of the collapse in faith in government unfolding into 2032."

Also....

"There is no reversal in sight and we simply cascade in this death spiral into 2032. Perhaps now we can see that indeed the United States will cease to exist as we know it after 2032. The USA will be prone to separatist movements as well after 2024. That appears to be the target for absolute political disintegration.

The damage the Democrats have caused is truly undermining government. This confrontation as was the one they staged against Kavanaugh, has forever changed how government functions. The Democrats have crossed the line and in the process brought down the entire establishment."

armstrongeconomics.com/international-news/politics/this-is-how-the-usa-will-collapse-congress-is-incapable-to-ruling-the-country/

Martin Armstrong is a straight up huckster. Please don't take his stuff seriously.

He's a doom porn peddler who uses his above average trading skills as proof that he can predict the future.

You can see from my examples in the post on the past page areas where he has been wrong. Notice how he doesn't revisit these or apologize for the bad calls.

The worst part is he has the audacity to charge for his bad calls.

Be smart and avoid him. He's got a narrative to sell.

Quote: (01-25-2019 12:20 AM)robreke Wrote:  

Quote: (01-17-2019 02:48 PM)Arado Wrote:  

2025 is a LONG time for a bull market to last (50% longer than the longest bull market run), and I don't know if Central Banks can keep printing that long without creating hyperinflation.

Depending on one's definition of a bull market this isn't necessarily true. The bull market from 1980 to 2000 was nearly 20 years. Sure, it was punctuated by some CYCLICAL bear markets ( 1987 crash, S&L crisis, 1994 bond crisis, The 1998 "mini-bear" (which by the way, reminds of of this current mini-bear we're experiencing) But, the market was in a long term SECULAR bull market from 1980 until 2000.

Likewise, this secular bull market started in March of 2009. So, 20 years, if we get any sort of a repeat puts us past 2025 until 2029. Just like the secular bull of the 80s and 90s, this secular bull has been punctuated by it's own cyclical (shorter term) bear markets - i.e. the summer of 2015, and what we're going through now.

I agree things are different and the various rounds of QE have, to a large extent, kept this secular bull going, but sometimes these things can go on longer than many folks think is reasonably possible. It's entirely possible we'll see more QE down the line soon or, at the very least, more accommodative interest rate policy by the Fed

I would say this is what often happens, just like a winning team that keeps winning, people say they are "due to lose" but they just keep rocking it out.

I really don't think the economy, at least from an American point of view, will even be an issue. It will be a world economy slowdown, and the confidence problems of currency with the world central banks race to the bottom (again, US best situated). Where the US is susceptible in that confidence game is in their STATE pension crises which are also linked to SSA. I chose 2025 because it's a natural stress point with the possible end of Trump 8 years, boomer stress truly noticeable, and state and local pension crises really in full swing. Maybe the technological deflation guys are right and it'll push through 2029 to 2032, but Armstrong is right in that institutions are losing confidence in every facet of American life. Just looking at Kamala Harris as Barack Obama part 2 makes me laugh that anyone takes the elections/US leadership seriously at all, anymore.


By the way, is there a sacred bull market somewhere?

Quote: (01-27-2019 08:12 PM)Kid Twist Wrote:  

By the way, is there a sacred bull market somewhere?

If anything it would be a sacred bear market, as all those retirees who depend on those pension funds pray to Jesus to save them from a life of cat food.

Quote: (12-27-2018 07:47 PM)SamuelBRoberts Wrote:  

Looking at the charts, there is a bit of a similarity to the 2008 crash here that I don't really like.
If the S&P gets back up to about 2650 I'm going consider the bear scenario voided. For now I'm in wait and see mode.

We're back at this level now. What are your thoughts?

Personally, I find Jeffrey Gundlach pretty persuasive:

Jeffrey Gundlach is still bearish - 2018.12.17

This was right before the dip on Christmas Eve. Yes, I know that this is CNBC, and they are usually a joke. Their antics led him to quit doing interviews on their network. I believe this is his last time on CNBC. He's basically saying that this is a bear market, but is still expecting a rising interest rate environment. His play is capital preservation for the next year or so: buying short term bonds, commodities, etc. Avoiding long positions in S&P 500 and FAANG. Maybe long some international stocks, particularly in Asia. He had some really good calls where he was bearish on Facebook earlier last year, and also when he said that the market would drop once the 30 year treasury hit 3.25%. He really nailed that last one, as the market dropped in that exact manner in early October.

In fact there seems to be a lot of cooldown with the FAANG stocks, especially Facebook and Apple. Facebook is out of space to place ads, and their user growth is tapering off in developed markets. Also, there is an interesting assertion that 50% or greater of Facebook's claimed users may be fake:

Quoth the Raven Podcast - Aaron Greenspan

Google also seems to be running out of places to stuff ads, and their other businesses haven't really taken off much to diversify away from advertising. Buzzfeed and Verizon (Huff Post, Yahoo, etc.) have been laying off employees. These are some of the biggest publishers on the Internet. Although the layoffs are largely due to Google and Facebook taking most of the advertising pie, the pie itself may be getting smaller, or at least its growth is shrinking. Google and Facebook are glorified publishers, after all. We may be hitting the peak with respect to large scale consumer Internet companies, which have largely been built on advertising.

What I find really interesting though is that FAANG has been driving a lot of the price action for the tech sector in general, and the enterprise cloud companies (Salesforce, Workday, etc.), which are high beta stocks, have been hit especially hard on downswings. There are a lot of dogshit consumer tech companies that have done really poorly after IPO (Blue Apron, Snap), while a lot of the recent enterprise IPOs have done pretty well (Anaplan, Elastic). Stanley Druckenmiller is positioning in treasuries, but is also very bullish on cloud stocks in the long term:

Druckenmiller on Economy, Stocks, Bonds, Trump, Fed

I tend to agree with him. I think all tech is likely to get beaten up as FAANG deteriorates, but that there is a long term buying opportunity for cloud stocks. It's too bad because I wish there were a decent cloud ETF to invest in right now. I like the components of this index, but there is no ETF that tracks it yet:

BVP Nasdaq Emerging Cloud Index

Druckenmiller makes the best point, which is that cloud companies inherently provide a cost cutting measure to companies, since they are taking on the burden of maintaining infrastructure, and companies are effectively outsourcing that function by using more cloud services. So, even in a bear market, they will continue to grow, probably slightly faster than other investment alternatives.

I'm not an expert on this stuff by any means, just trying to listen to those with good track records. It would be really great to get your take on things in general.

I'm in a grouchy, negative mood due to Trump and the wall, and honestly right now I'm feeling long canned goods, hunting buckshot, and isolated cabins in the Montana wilderness where I can sit and be grumpy all day. I'm also much more of a crypto person than I am a stocks person, as well, so what I'm giving you isn't the advice of a master trader, just some guy who spends too much time on the internet.

Overall: Now that the immediate death crisis has passed, it's time to start Dollar Cost Averaging into index funds again. Hard to beat doing this especially when you consider the time and stress savings versus picking individual stocks. Even if you're good investor who beats the average, depending on the amount of money you have invested and the amount of research you do, you may find that you've been working for sub-minimum wage. This happened to a lot of crypto people I know, who spent hours a day, and probably took years off their life from stress, freaking out over ultra-high volatility shitcoins and walked away with only a few grand for their troubles.

But the boring, safe method is no fun to talk about at all, so let's talk about some individual stocks!

I am long-term bearish on facebook. Nobody uses it anymore. I've actually used it as a neg on girls in the past. "Wow, you're on Facebook? Only my grandmother uses Facebook these days" or something similar. (If you want to see a real hilarious reaction, try the same thing with Instagram.) They've got some cool companies they own, Oculus, for instance, but the primary product is shit. I would imagine their true active account numbers are only a small fraction of what's being reported. They've already been caught lying about their video numbers, for instance.

Google I am more bullish on, because the advertising industry is simply running of places to put ads elsewhere. Newspapers are dropping left and right. Cable-cutting is rampant and will continue to be so in the future. What does that leave? Billboards? The internet is the only place for advertiser dollars to go, and Google will be sucking most of that money up. I wouldn't read too much into the failures of Buzzfeed and HuffPo. Google's advantage is that it profits from wherever internet traffic goes, and it's not tied to a single site. The internet will continue to get bigger, and I expect google will, too. Their P/E ratio's a touch high, though, so it may be slightly overinflated at the moment, but I imagine the company will continue to grow long-term.

Cloud stuff is great. The days of running in-house servers are prettymuch gone, even for expensive stuff like AI. A lot of Machine Learning companies, for instance, are going to require huge amounts of processing power in the coming decade, and they'll be looking to cloud services to help them with it. I'm not familiar enough with that market to know who's good and who's bad, or even if all the business is gonna get sucked up by GOOG (Who has a very nice cloud ML platform that I think is kind of an industry standard) or AWS, but you're right to assume that it's a technology that's going to get more popular.

Quote: (01-28-2019 12:13 AM)SamuelBRoberts Wrote:  

I am long-term bearish on facebook. Nobody uses it anymore. I've actually used it as a neg on girls in the past. "Wow, you're on Facebook? Only my grandmother uses Facebook these days" or something similar. (If you want to see a real hilarious reaction, try the same thing with Instagram.)

One thing about Facebook usage is that it's partly generational. Younger people may not have much use for it, because they're already in class together all the time. When people get older and lose contact with old friends, they tend to gravitate towards Facebook because it's essentially like a utility, like a phone book. I still see this core value as being very strong, but the utility is shifting to things like Facebook Messenger and Whatsapp, which are applications that people are using more and are supplanting Facebook usage to some degree. A big problem is that the new platforms don't really offer the same ad space. Facebook's bread and butter is still the news feed on the main Facebook site. That space keeps on getting more and more clogged. New users are growing on their other platforms, but not on the big moneymaker.

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Google I am more bullish on, because the advertising industry is simply running of places to put ads elsewhere. Newspapers are dropping left and right. Cable-cutting is rampant and will continue to be so in the future. What does that leave? Billboards? The internet is the only place for advertiser dollars to go, and Google will be sucking most of that money up.

Agree that they have a dominant market position. Google has a very similar problem to Facebook, in that their revenue is generated disproportionately by one product, which used to be called Adwords. These are ads almost exclusively on the Google search engine. I say "used to be called" because Google is now lumping in Adwords with everything else and rebranding it as "Google Ads". This is a classic Google move to mix gold with shit so that it's difficult to determine true value.
Google has its hand in all digital advertising pies, but is not nearly as dominant outside search, in things like display advertising for example. In other words, the Google story has always involved finding more creative ways to squeeze their golden goose. Google is kind of like an Internet real estate play, in that way. The number of their partner sites grows, but the number of people searching big money keywords on their owned and operated sites doesn't necessarily grow in proportion (about 4% of total searches on Google are commercial). The volume of these specific keywords may be Google's limiting factor. Hard to tell because they apparently don't break out advertising revenue by different types.

Quote:Quote:

I wouldn't read too much into the failures of Buzzfeed and HuffPo.

These are also Internet real estate plays. Verizon bought AOL and Yahoo in large part because of the Internet properties they held. Those properties decayed in value faster than they were expecting. The content was shit, and Google is surely responsible for their demise in large part, but it's also possible that Internet traffic has been grossly overvalued for quite a while, and is getting repriced. Similar repricings also happened after the dot com bust, and close to the 2008 recession, maybe a bit before. Such a repricing would also hit Google, although they may rebound faster since they are the most trusted for providing traffic free of the most blatant kinds of fraud.

Quote:Quote:

Cloud stuff is great. The days of running in-house servers are prettymuch gone, even for expensive stuff like AI. A lot of Machine Learning companies, for instance, are going to require huge amounts of processing power in the coming decade, and they'll be looking to cloud services to help them with it. I'm not familiar enough with that market to know who's good and who's bad, or even if all the business is gonna get sucked up by GOOG (Who has a very nice cloud ML platform that I think is kind of an industry standard) or AWS, but you're right to assume that it's a technology that's going to get more popular.

The companies with the main cloud platforms (Amazon, Microsoft, Google) will crush so many smaller cloud companies I think it will be crazy. Cloud companies will need a differentiated and/or sticky product to survive.

Google is in a tough spot with cloud because Amazon got such a head start with AWS. Microsoft also has their enterprise channels with all their existing products, and they can just push Azure through that. Google has to totally reorient itself to do enterprise sales, and I'm not sure how well that's going to work. Their cloud organization has been very chaotic with leadership changes at the top. It's also a weird separate entity internally. Their ML stuff seems like best in class, but I wouldn't be surprised if Amazon and Microsoft end up owning the underlying platform for cloud computing in general. And that would put Google in a very bad position.

For all of FAANG, I'm really only bullish on Amazon, and that's mainly because of how foundational AWS will be to so many businesses. I'm bullish on Microsoft too, for similar reasons.

Thanks for giving me your take on things. After five years of 100% US Equity, I put a big chunk of my portfolio in short term fixed income, but am continuing to dollar cost average into S&P 500.

Another interesting thing that Gundlach said was that crypto prices have been a barometer for risk appetite, and have served as a leading indicator for stock prices to some degree. And down crypto goes again...

Speaking of crypto going down... it can be hard to make money shorting on the way down, since the crypto market is manipulated, not to mention counterparty risk.

But the market still has some hope for security tokens and by extension Overstock (OSTK), which is attempting to convert to a pure play crypto company.

I suppose you could buy some options on OSTK if you wanted take a position on the crypto market. OSTK appears to be correlated to crypto prices, and at least you would be playing in a regulated market. You can watch an interview with the CEO and decide which side of that trade you'd rather be on:

Patrick Byrne Overstock CEO Interview

Quote: (12-20-2018 02:22 PM)The Beast1 Wrote:  

Surprised I haven't seen anything about this.

The stock markets are getting hammered. I'm getting dangerously close to my threshold of pulling out of the market.

Since the December lows, and all the doom and gloomers started getting excited the S&P 500 has risen 14%. Do not let normal volatility shake you out of your investments.

Quote: (01-30-2019 04:50 PM)BB1 Wrote:  

Quote: (12-20-2018 02:22 PM)The Beast1 Wrote:  

Surprised I haven't seen anything about this.

The stock markets are getting hammered. I'm getting dangerously close to my threshold of pulling out of the market.

Since the December lows, and all the doom and gloomers started getting excited the S&P 500 has risen 14%. Do not let normal volatility shake you out of your investments.

Thankfully, I haven't!

I did take an opportunity to reallocate stuff and got a bit burned. Still throwing money back in.

It's one of those, "Lawl I don't care!"

Update:

A lot of stocks forming bases. some are breaking out. This is more of a trading than investing environment at this point. My indicators are still on a "sell" signal despite this rally.

Even though I called it on another thread ( 2017 stock market thread I believe) we have rallied right into the zone I called recently and beyond. Today the S&P and Nasdaq closed virtually right at the 200 Day moving average (still trending down). I am expecting a good chance we will soon see the market roll over again now that we're bumping against the resistance of the Moving Average (MA)

I wouldn't be surprised if we rolled over and eventually re test the recent lows or go a little lower over the course of the next few weeks or so. Having said that, it is possible to continue to rally from here but I'm putting more weight on a stall/continuing correction happening soon.

We’re mildly overbought on RSI indicator. As I mentioned, now that we're at the 200 DMA, there's a good change we'll see profit taking in the market at this point

I still think this correction is similar to the 1998 one, where the market rallies up from a correction(as it is now), goes to the 200 DMA and the rolls over and get new lows forming a W bottom. Another possibility (if the market is stronger) is that we just consolidate up here for some time, near the 200 DMA before moving higher.

Economic indicators are indicating a slowdown (cooling off). I’d still hold off and not get too aggressive according to my long term signal (neutral which calls for around a 50% invested 50 % cash).

You get the biggest up days and biggest rallies in bear markets, kind of like we’re getting now. You get the biggest percentage of stocks that are up 3% or more in one day during BEAR markets, not bull markets. This, of course means, there's more volatility during bear markets than bulls. Makes sense.

During bulls, you tend to get a slow steady, more even grind upward as opposed to lots of huge up days. It seems counterintuitive but that’s how it is.

The things that are going to cause issues for the market are Fed and interest rate policies. Fed officials are considering ending the balance sheet reductions through bond sales. So, they’ve changed their language since December when they were more hawkish.

Bottom line - I still think it's a cyclical bear within a secular bull. Profit taking and a possible retest of the lows is very possible over the next weeks or month or so. Short term - 50% or less invested and very selective about buying individual stocks. Due to the expectation of the market moving lower short term, I'm more likely to do trading and not "investing" at this point. Long term, however - Bullish

Quote: (01-30-2019 09:05 PM)robreke Wrote:  

Bottom line - I still think it's a cyclical bear within a secular bull. Profit taking and a possible retest of the lows is very possible over the next weeks or month or so. Short term - 50% or less invested and very selective about buying individual stocks. Due to the expectation of the market moving lower short term, I'm more likely to do trading and not "investing" at this point. Long term, however - Bullish

To clarify, your long term bullish stance is predicated on the Fed restarting QE, correct?

Yesterday there was a significant rally when the Fed indicated that they'll be "patient" on rate hikes and are willing to adjust the balance sheet drawdown. More capitulation to the markets. I really wish I bought more gold when it was lower.

Quote: (01-30-2019 09:05 PM)robreke Wrote:  

Update:

Bottom line - I still think it's a cyclical bear within a secular bull. Profit taking and a possible retest of the lows is very possible over the next weeks or month or so. Short term - 50% or less invested and very selective about buying individual stocks. Due to the expectation of the market moving lower short term, I'm more likely to do trading and not "investing" at this point. Long term, however - Bullish

I'm moving out of stocks too. I've been a Random Walk down wall street guy for 8 years, adding quarterly and almost never selling. I like to add / sell methodically over time to keep the stress low and reduce market timing risk.


I've rebalanced up to about 35% cash. Since August I've sold one of the following per month, each representing about 5 % of my portfolio. The Christmas drop scared me, I was feeling regret for not selling when I am concerned Long Term. To me, I'm suspicious of this market so don't want to over invest. The 5 positions I unloaded were overall decent winners. Gotta take profits.

Still, if there was another drop like Christmas, I might be tempted to dip in and try to catch a bounce, that is if I can have enough cash on hand.

Looking at selling 1/2 another position next month.

Trying to sell off my US dividend stocks. As a Canadian the dividends are not as tax efficient and I prefer US as my cash store of value.

Quote: (01-31-2019 12:05 AM)Arado Wrote:  

To clarify, your long term bullish stance is predicated on the Fed restarting QE, correct?

I think that will probably be part of what fuels it but I wouldn't say a resumption of the uptrend, once it starts, is depedent on QE starting.

We'll probably eventually get some news like the resolution of the China trade deal or some such, which will clear us for a new, long term rally. More dovish Fed speak along with, probably, QE at some point, should add fuel to the fire.

I'm still feeling great about my prediction of easy 2 years moving upwards toward 30,000, and likely this bull going through Trump's 2nd term, 2024-25. It is THEN when I will consider gold, commodities, food/grains. Unless I see major ISM movement again for January (downward pressure) or pension crises wildfire starting, which I predict begins in 2020, mid to late.

Quote: (01-31-2019 09:46 PM)Kid Twist Wrote:  

I'm still feeling great about my prediction of easy 2 years moving upwards toward 30,000, and likely this bull going through Trump's 2nd term, 2024-25. It is THEN when I will consider gold, commodities, food/grains. Unless I see major ISM movement again for January (downward pressure) or pension crises wildfire starting, which I predict begins in 2020, mid to late.

If you are making a prediction like this, you need to also show how the Fed and other global central banks will facilitate this market action. Otherwise, you are pushing up against a historically high CAPE ratio and what Trump correctly said was a bubble during the campaign.

Quote: (01-31-2019 08:55 PM)robreke Wrote:  

Quote: (01-31-2019 12:05 AM)Arado Wrote:  

To clarify, your long term bullish stance is predicated on the Fed restarting QE, correct?

I think that will probably be part of what fuels it but I wouldn't say a resumption of the uptrend, once it starts, is dependent on QE starting.

We'll probably eventually get some news like the resolution of the China trade deal or some such, which will clear us for a new, long term rally. More dovish Fed speak along with, probably, QE at some point, should add fuel to the fire.

No the uptrend is very dependent on QE restarting and posters on this thread need to be VERY clear about Central Bank policy when they make predictions about the market. As I already posted earlier in this thread, the entire last ten years of the bull market has mainly been attributed to Central Bank unprecedented money printing. You can't make predictions about market actions unless you can say what the Fed is doing to cause it. Maybe you guys are getting tired of me beating a dead horse on the Fed, but just look at how closely Powell's remarks are followed and dissected. The Fed matters, big time.

I mainly held risky stocks, mainly marijuana, but dumped them all today, right before Canopy Growth Corp had a $4 dump. I was up about 80% before the Christmas trouble, then down to about 40%. Roughly the same has happened a few times. So I thought it was time to get out with good profits.

As for the Christmas mayhem, one possible reading of this, and a sensible strategy IMO, is The Fed wanted to take something out of the tech bubble to try and redirect investments to more economically useful pastures. I thought they might think that if they can let some of the bubbles down gently, it wouldn't cause too much trouble and the economy can continue with little change.

As for the crash, I think this year could be OK and maybe next, but it will probably happen in or by 2020. With major economies verging (Germany) or going (Italy) into recession, debts are going to go bad in a bad environment with increasing political instability and a breakdown in international relations.

No idea which debt will go bad first, but the biggest risk IMO is non-USD USD denominated bonds. There's $11 trillion of them; with $1.1 trillion due this year; and increasing each year. The arm of The Fed is long, but not enough to try and paper over USD bonds in China. There are many countries like China, Russia and Turkey that are on bad terms that could hider intervention into an international debt crisis.

I think the central banks have one more bail out in them, for a crash occurring in about 2020. So long as they can paper over enough bad debts without things spiraling out of control there will be an even faker recovery than the Obama recovery followed by events which will require a complete system reset around 2030.

One of the biggest issues in Japan, which spends 25% of its government budget on debt service. That's on the way to 100% by 2042:



And by 2030 there will probably be a few countries in Europe that are servicing debt with 20% of the government budget, on top of decaying: real wages, welfare systems, hope, civil society, political parties etc., 3rd-world immigration and so on.

On stocks, someone posted MongDB in the main stock thread. I didn't know this was a stock, but it looks to be a good one. Mongo is largely superior to other database systems, many of which are produced by Oracle Oracle has a 200B market cap, while Mongo is at 5.

With such software, despite being better, it takes a long time to get adopted due to older nerds upgrading their skills and learning new things, but more importantly, its costly (in particular for large companies) to migrate. I'd like to switch to Mongo, but it doesn't make financial sense to do so as it would take 3-6 months. But new projects will increasingly use Mongo and Oracle DB systems will be dumped. It's inevitable, they are fundamentally different and would require starting from scratch to incorporate some of Mongo's pluses.

So when there is a crash, Mongo is at the top of my buy and hold list. It is the best prospect I am aware of for a 10-20X increase.

Quote: (02-05-2019 02:00 AM)gework Wrote:  

As for the Christmas mayhem, one possible reading of this, and a sensible strategy IMO, is The Fed wanted to take something out of the tech bubble to try and redirect investments to more economically useful pastures. I thought they might think that if they can let some of the bubbles down gently, it wouldn't cause too much trouble and the economy can continue with little change.

As for the crash, I think this year could be OK and maybe next, but it will probably happen in or by 2020. With major economies verging (Germany) or going (Italy) into recession, debts are going to go bad in a bad environment with increasing political instability and a breakdown in international relations.

No idea which debt will go bad first, but the biggest risk IMO is non-USD USD denominated bonds. There's $11 trillion of them; with $1.1 trillion due this year; and increasing each year. The arm of The Fed is long, but not enough to try and paper over USD bonds in China. There are many countries like China, Russia and Turkey that are on bad terms that could hider intervention into an international debt crisis.

I think the central banks have one more bail out in them, for a crash occurring in about 2020. So long as they can paper over enough bad debts without things spiraling out of control there will be an even faker recovery than the Obama recovery followed by events which will require a complete system reset around 2030.

One of the biggest issues in Japan, which spends 25% of its government budget on debt service. That's on the way to 100% by 2042:

And by 2030 there will probably be a few countries in Europe that are servicing debt with 20% of the government budget, on top of decaying: real wages, welfare systems, hope, civil society, political parties etc., 3rd-world immigration and so on.

Seems like fair analysis, though engineering a soft landing is quite difficult after several years of QE and rates at 0% - the asset bubble is too inflated. The only question is at what point will the government printing to keep the debt cycle going lead to stagflation?

This youtuber is usually pretty bullish but even he admits that things look likely to go down, but he cautions against panic selling since the government will step in with QE to re stimulate things again. The only question is - will QE still be effective if the government already has 4 trillion on their balance sheet? Given high populist sentiment now, will people accept it? Will it lead to significant inflation?

Some really good analysis in this thread.

One thing I remind myself of when reading this forum is that this space tends to be bearish by default. We've had the longest bull market in history and you'd think it was a bear market when reading posts here. Now before you jump on me, I agree that a lot of the recovery has been fuelled by cheap debt and various artificial factors. I think we are headed toward a recession sooner rather than later.

When you think about it, though, investing is almost always an exercise in optimism. As always the challenge is to find the bright spots going forward. So don't just get scared and sell all your stocks just because you feel spooked out.

The convergence of theories or positions I've been supporting for the last 6 months or so came together in the latest realvision spot with Brent Johnson, called the Milkshake Theory. Much to Beast's chagrin, he says exactly what Armstrong and I have (with a few others) said regarding the flight to US equities for now, but they'll go much higher (Sjuggerud's "melt up"). The dollar will also go much higher, and get much stronger. This will be the cause of the coming big one, when it happens 1 or 2 big dips or crashes from now (that'll be the "collapse"). In the meanwhile, yes, volatility will be great but the US market will keep increasing, but people will be scared. I look to go towards safety in a few years with gold and food commodities, but money is there to be made with the USD and its markets at least over the next 2-3.

I will put it out there that I am shorting the Euro vs. the US Dollar and I can do this quite handily utilizing ETFs. The Euro has been ticking but they've been holding it off for a while, it's the perfect time to get in to see it deteriorate much faster with Germany and Italy going down as above, among other major political problems internally and with Brexit, along with the US economy and dollar getting stronger and not giving a SHIT about what happens around the world (Zeihan intel point of view).

The Fed is starting to realize that the economy is likely slowing and a recession is on the horizon, hence their increased patience with interest rate hikes and offloading the balance sheet.

Powell testified before Congress recently.

Quote:Quote:

Federal Reserve Chairman Jerome Powell on Tuesday said the economy has been sending “conflicting signals” that justify a “patient approach” on future changes to interest rates.

“While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said in testimony prepared for delivery to the Senate Banking Committee.

The Fed chairman did not give a ringing endorsement of the economic outlook, saying only that in January “my colleagues and I generally expected” the economy to expand at a solid pace in 2019.

“In the last couple of months, some data have softened but still point to spending gains this quarter,” he noted.

Not trying to be a hater but it seems like to me even despite all the seemingly “smart” analysis in the recent posts, most people just can’t predict the market with any semblance of accuracy.

There were a lot of posts recently talking about the market crashing and if people truly could predict what would happen, they would have made a ton of gains over the past 2 months after the dip the market went through.

Quote: (02-26-2019 04:10 PM)BetaNoMore Wrote:  

Not trying to be a hater but it seems like to me even despite all the seemingly “smart” analysis in the recent posts, most people just can’t predict the market with any semblance of accuracy.

There were a lot of posts recently talking about the market crashing and if people truly could predict what would happen, they would have made a ton of gains over the past 2 months after the dip the market went through.

Have you actually read the thread? My main point has been that Central Banks have been doing a ton of printing to pump the markets (ECB, BOJ, and markets are now pricing in a Fed cut this year) so we can't actually predict much. It just seems really risky to dump your life savings into an index fund this late in the business cycle - in case the Central Banks want to tighten policy then there will be a major fall.