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Mark Bern, CFA  

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  • How Low Can This Market Go? [View article]
    Namron - Please don't confuse my statements to mean that I believe they could "manage" the economy from inside the beltway. I think, as you say, the Fed does the best it can to hold things together against terrible odds since Washington is not doing anything to help fiscally. And I think that the Fed is running out of options to keep us on track. But where my uncertainty comes from is that I don't know how much longer the Fed can keep it together. I get a sense that many investors believe the Fed can still be effective with QE4 and I also know that perception plays a big roll in investment decision-making. Thus, whether what the Fed does or does not do, at least for the short term, and whether or not it is effective does not really matter. Initially, perception will drive investment decisions until the date begins to prove the perception wrong. So, that is the hard part. And I know that nobody is going to be able to figure that one with certainty very far in advance, so I'm not going to try.
    Aug 27, 2015. 07:17 PM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Tampat,

    I have been considering the same thing! So, my answer must be yes. But be sure you really, really like the ETF! I might even consider more than one support level to allow myself to average down, just in case.

    For those who like trading in and out, not for myself, it seems like a relative low risk trade. When the ETF gets mispriced temporarily it will always come back to its internal value once the market settles down. I don't think many ETFs went down on Monday and stayed there all day long. Right about now, on this bounce, one would be felling pretty good for having bought on the cheap.

    That is the thing to remember. There will often be more volatility in a bear market, especially at the beginning. If you look back to 2007-08 before the market fell apart completely, we had huge swings up and down. Same thing in late 1999 to early 2000.

    This isn't me recommending anything. But some folks like to trade so the best you'll get from me on the subject is a comment, not an article.
    Aug 27, 2015. 07:09 PM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    SHoffm - Thanks for relating the concurring experience. And thank you for sharing the article with others. If you have not yet read my latest piece on XOM you may want to give it a perusal. http://bit.ly/1MRxLMM
    Aug 27, 2015. 06:47 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Interest move on the part of China. Thanks for the link, D-inv.
    Aug 27, 2015. 11:25 AM | 3 Likes Like |Link to Comment
  • The Time To Hedge Is Now! 2 New Candidates To Add Before It's Too Late [View article]
    DAMSF - Thanks! I think there is more slowing of demand in the US economy than is being captured in the data reported. There are holes beginning to form in more areas than just energy and materials. The Dow Jones Transportation Index (DJT) has been trending down since early in the year. That is not a good sign for economic growth. There is weakness showing in more retailers than usual, too.

    I think that profit margins have peaked for this cycle and are beginning to get squeezed in many different industries for different reasons, but demand underlies most problems. Just a sense that I am picking up that makes me more nervous than usual. Always cautious, but not quite paranoid!
    Aug 27, 2015. 11:20 AM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    tampat - If the powers that be begin to think that they cannot win the election they may want to saddle the other party with a no win economic environment to try to dig out of. You are right, though, that as long as they believe that they have a chance to win they won't let things slide. But, then again, it may not be within their control if a currency war ramps up globally without us.
    Aug 27, 2015. 11:09 AM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Regarding what happened Monday and how it got so low so fast, I have a theory and it also includes ETFs. First, it is important to note that trading was halted momentarily in a lot of stocks on Monday. It is an automated system employed by the NYSE to keep things from getting out of hand. The stock is halted for a few minutes to let traders breath and clear their heads. This happened all over the board from my reading, maybe over 1,000 times total just on Monday.

    Where ETFs come in is that they trade based upon the internal value, or the aggregated value of all the underlying stocks that are held by the ETF. When trading is halted for one of the stocks held by and ETF there is no way to determine the actual value of the ETF. When more than one of the stocks held by the ETF are halted it gets even more dicey.

    The bid and ask prices for an ETF are set by market makers. When they don't know with certainty what the internal value is they tend to guess low on the bid and higher on the ask. Since the market makers are not in the business to lose money, but rather to facilitate liquidity, I suspect that they set the ask price high enough that they knew they would be safe and likewise the bid price where they would not lose money.

    From that perspective it makes perfect sense that the market makers would pick support levels to set their bid prices for safety. It may have had nothing whatsoever to do with the internal value of the ETF, but it made sense from the point of view of the market maker not wanting to get caught buying too high when the halts ended. The problem intensified on Monday and the bigs got exaggerated to the low side because so many stocks were halted at different times. It may have become impossible to calculate the internal value of the ETF for many minutes at a time as one stock got halted and then another and another as the first one started trading again, but then more got halted and so on.

    Just a thought to consider.
    Aug 27, 2015. 11:06 AM | 1 Like Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Look beautiful, DG! I'm jealous! Have a great time.
    Aug 27, 2015. 12:17 AM | 4 Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    I am exhausted from answering questions and comments on an article I posted yesterday. 259 comments so far and they just keep coming. Anyway, one of the comments suggested that the NY Fed is a major buyer of equities when the market falls. The said it uses GS to make purchases and that the buys are issued as stock buy backs to cover the trail. That would make sense when so much buying is concentrated in a small number of large caps some days. I have no way of confirming, though.

    Has anyone heard or read anything about this sort of activity? I have sent a PM to ask the one who commented what the source of that remark was but have not heard back yet.
    Aug 27, 2015. 12:13 AM | 4 Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Namron - Very good advice. Thank you including your thoughts here.
    Aug 27, 2015. 12:06 AM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Mathieu - India can't drive global growth yet, but it could in the future. When depends mostly on the quality and rate of reforms.
    Aug 27, 2015. 12:01 AM | 1 Like Like |Link to Comment
  • How Low Can This Market Go? [View article]
    copywryter - You're making sense, although I think China is in worse shape that you do, but that's not a big deal. Opinions are just that. And disagreeing is fine, too. That is what can happen when people differ in opinion.

    I commend you on your philosophy of not panicking. It will, in fact get better. The best time to panic was indeed earlier. If sweating the losses at this stage a person should be asking if the stock market is the right place for so much of their savings.
    Aug 26, 2015. 11:56 PM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Whether it is the central banks or corporations, stock buy back have been the only buyers for weeks. Take a look at the link about BoA Merril Lynch in the article and scroll down to the chart of net buying by client type. All types of clients have been net sellers of stocks except corporate buy backs. That chart is an eye opener!
    Aug 26, 2015. 11:50 PM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Franklin - Don't forget the need to learn a whole new set of accounting principals. That is very important when investing overseas, too.
    Aug 26, 2015. 11:47 PM | Likes Like |Link to Comment
  • How Low Can This Market Go? [View article]
    Sleepless - Yes, China is in a great position if demand for its products increases because it has all the tools in place: infrastructure, factories, labor, resources, financing availability. But demand is weak and without robust demand the growth in China does not rise. The key is demand. It is weak and likely to fall in many parts of the world.
    Aug 26, 2015. 11:45 PM | Likes Like |Link to Comment
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