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Land of Milk and Honey
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Individual investor. Generally using index Mutual Funds or ETFs. Trying to diversify more (foreign in particular). Pick up tips & concepts, & learn more. I'm at alpha to keep a finger on the current moods & predictions... and so I notice up coming big financial news events before... More
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #22 186 comments
    May 1, 2014 9:19 PM

    I've set up this blog ...as a community place to share our investing ideas. Hopefully so we all gain more ALPHA!! It's a great way for my contacts to talk to each other at the same time, not just to me :).

    .

    All topics welcome. Investing, stocks, bonds, commodities, economy, politics about economy, and social (so we know who we're talking with). Please invite other investors! Stop by once in a while, or hang out all the time. Please post your questions, make a joke, or share your insights with us!!

    .

    My money has done well since I started this blog... so I'm hoping it adds value for everyone!

    .

    Only rules of the road are not to insult others, so state your view but don't call others names or put them down. Every view is valuable, if only to convince you, you are right!

    .

    This is Chapter #22. As the instablog gets long, I'll create a new blog & post a link at the end of the comments. Here's a link to the prior, #21: seekingalpha.com/instablog/11150861-land...

    .

    Links

    Regular poster Fear & Greed has instablogs outlining his ideas which are great! -- also SA articles!:

    seekingalpha.com/user/706857/instablog

    Regular poster User7 has instablogs with a specialty in CEFs & loves when ideas are shared!: seekingalpha.com/user/7415181/instablog

    Interesting Times has a fun Portfolio Challenge:
    seekingalpha.com/instablog/5038891-inter...-8

    Also his regular instablog: seekingalpha.com/instablog/5038891-inter...-50 It's more oriented to precious metals, & economic concerns (worries) than mine.

    As for the regular posters, you'll get to know us, if you hang around!!.

    Disclosure: I am long SPY, IWM, DIA, QQQ, LINE, CVX.

    Additional disclosure: ...and more... ask me if you're curious!

Back To Land of Milk and Honey's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (186)
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  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - Traditionally I think of a starter question here...

     

    So back to what to invest in... Materials I hear are a big lagging. What are favorites & strong long term investments in materials?
    1 May, 09:22 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    L - I can't speak for anyone else, but I don't consider material stocks candidates for a long term investment; they are among the most, if not the most cyclical of all the sectors. Cyclical sectors I consider trades. They may be trades that last a year or two, but I would never hold them for a full cycle.
    2 May, 09:04 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » DD

     

    Well there's something I didn't know. Though it makes perfect sense - it's the inputs materials to other cyclic sectors.

     

    While I need some long term in my portfolio.... we can share on & explore Materials...

     

    What's anyone holding in there? Or held and have an opinion on? Or an overview of how the sector's been doing?

     

    ...or pick another sector or subsector with more potential!
    2 May, 10:05 AM Reply Like
  • Eudaimonia
    , contributor
    Comments (528) | Send Message
     
    I agree with DD.
    2 May, 10:11 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    L,

     

    Have had (FCX) for a while -- has a 3.6% yield and last year added a special $1 dividend

     

    copper mining is their main focus - and they branched out into the oil space when they bought Plains exploration in '13

     

    I added (VALE) after it was mentioned here numerous times as a turnaround play in Brazil..

     

    Have owned (UAN) a fertilizer MLP for 2 years -- currently pays 8% dist.
    2 May, 10:20 AM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    L:

     

    I have (FCX) but I don't disagree with DD.

     

    I think people here were saying (TCK) and maybe I heard someone say (VALE) a while back.

     

    I think energy sector may still have potential and maybe FG has some names there that still have upside. I think he has said (RIG) and (CVX) and maybe (COP), but I'll wait for him to weigh in. I still wouldn't mind getting on that train (assuming it has room to run).
    2 May, 10:23 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: For those who do not wish to pick individual securities, Fidelity offers commission free a relatively low cost ETF: iShares MSCI Global Metals & Mining Producers ETF (PICK)

     

    The expense ratio is .39%, with 246 holdings:

     

    Sponsor's webpage
    http://bit.ly/1iLfzkA

     

    I would note that these companies have been hit by China's slowdown in infrastructure spending. The current policy appears to favor increases in consumer spending rather than building huge cities with no inhabitants.

     

    See CBS Special on China Real Estate:
    http://cbsn.ws/1iLfzkI

     

    Vanguard also has a low cost ETF that can be bought commission free by its brokerage customers, and TDAmeritrade currently offers the Vanguard ETFs commission free.

     

    VAW: Expense ratio .14%
    http://bit.ly/1iLfKwu

     

    That one excludes foreign companies like Vale and BHP which are heavily weighted in PICK and has consequently done much better over the past year, up 24.38% and +2.68% year to date vs. PICK at 7.66% for one year and -2.7 year to date.
    2 May, 10:34 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Broken,

     

    I do believe (RIG) has upside from here -- every "dog" has its day and this dog pays 5% and there is a good chance the div will go from $2.24 to $3 this year.. It has been a disappointing situation for me - but the div has helped ease the pain --

     

    DDiva added (ESV) recently at and that price its very inexpensive - solid yield .

     

    I wrote an article on (CAM) and i believe that has further upside -- but no div there..
    http://seekingalpha.co...

     

    (CVX) & is a div aristocrat i've owned for a while - its at the top end of it's range & I would wait for a pullback

     

    I added (XOM) last year when it was sold down to the low 80's -- so at the moment those are my 2 big oils names .
    These two have been the beneficiaries of the money flow to the large cap quality names from the growth sector.

     

    Best of Luck

     

    2 May, 10:47 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » SG

     

    Thanks SG!

     

    (VAW) looks promising with holdings in forest, paper, chemicals and metals.

     

    Would you say it's a good respresentative of the materials sector? I found the consumer discretionary and consumer staples held a mix that didn't represent well for me to buy. I don't know the materials companies. So do you find it's a good mix?

     

    From what I can see (PICK) is metals concentrated. So it's a little different ballpark.

     

    While it sounds better to go with (VAW) since it's done well... the flip is it'd be better to get into (PICK) since it's underperformed by comparison.

     

    Or would individual picking give a much better representation & opportunity?

     

    I'd prefer US companies to avoid foreign policy impacts, and exchange rates. To go with foreign, while I don't normally look at managed funds, it'd seem helpful for such a mix of issues that could come up.

     

    Since materials may be lagging because China decided to stop building the "ghost towns", it then doesn't sound like a resurgence is likely. That's to say it's down for more permanent reasons since it was up for a specific unique reason that's ended.

     

    To my mind a good plan for longer term is to look at the subsectors - fertilizer, paper, metals... and buy the solid companies in each as they become undervalued for external reasons. That plan could take many years to implement while waiting through business cycles. Are there any subsector's currently ripe for this?

     

    So that goes back to the ETF idea.

     

    Any more thoughts on this?
    2 May, 04:52 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    Someone has suggested to me:

     

    Rare Earths: Best N.American opportunity = CCJ Rare Earth ETF: (REMX) appears to be bottoming.

     

    Rare Earths are a Chinese economy proxy.... both are recovering and will do fine in '14.
    Here is an article with some fundamental info; you can disregard the short-long trade strategy: http://seekingalpha.co...
    2 May, 05:10 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: I do not own any sector ETF covering just the "materials" sector. When you start trying to play the base metals, the bull cycles are generally short and the bear cycles are longer than any other sector. Base metals and their byproducts would include steel and iron ore, copper, nickel, aluminum and alumina, tin, zinc, molybdenum, etc.

     

    Many of the companies producing those base metals are now in bear markets, including Vale, BHP, and Rio Tinto. I do not have any reason to call an end to that bear cycle. The China story appears to be negative for them.

     

    Vale topped out at $44 in 2008 and went briefly over $36 in 2011. Vale closed today at $13.57. I have the stock only in my "lottery ticket" monitor list. I have exited a position profitably on two occasions before the shares fell further, with the first exit at $34.6 back in April 2011. These names have to be traded and timing can be critical.

     

    A typical problem in EM nations happened to Vale when Brazil retroactively changed the tax law to include profits from foreign units. Vale settled the dispute for $10B and the matter is still being litigated but I am not following the matter. It falls within the broad category of what is called "country risk"

     

    http://reut.rs/1rYUdrz

     

    Others problems show up from time to time that present huge hurdles, such as what happened with Vale's potash project in Argentina and the problems with another one in Brazil:

     

    Rio Colorado potash mining project in Argentina
    http://reut.rs/1rYUevt

     

    Potash Project in Brazil's northeastern state of Sergipe
    http://reut.rs/1rYUevx

     

    BHP topped out at over $101 in 2011 and closed today at $68.89.

     

    I will buy individual stocks in this sector as Lottery Tickets, where I limit my exposure to just $300. I do own just 70 shares of Alumina (AWCMY) in that basket which has done well since my purchase at $3.44 and a 30 share position in Thompson Creek (TC) which is in the red.

     

    I will also own some gold miners in the LT basket.

     

    PICK is thinly traded with a wide bid/ask spread. I would go with VAW over PICK. I would not be adverse to buying 50 shares of PICK on a downdraft in my Fidelity account, where I can buy it commission free. I will need a wash out before considering it however. The price did trade below $17 back in July 2013.

     

    I would classify a 50 purchase of PICK under my Flyer's Basket risk category, which permits an investment of $500-$1,000. I view the lottery ticket and Flyer's basket strategies as a more lucrative alternative than playing Blackjack at a casino for a $100 a hand. I will not devote any significant money to those types of investments.

     

    My last post had updates for my Lottery Ticket, Regional Bank and REIT basket strategies:

     

    Update for Regional Bank, REIT and Lottery Ticket Basket Strategies/Bought: 50 RSO at $5.56 and 150 RSHYY at $1.536/Sold RSH and LF for Losses/FISI, FNB, MBVT, HBAN, WTBA, CBU, WASH, TRST, CCNE, CZNC

     

    http://bit.ly/1rYUevy

     

    Rather than just emphasizing just the mining sector, VAW includes other companies. The top 3 components are DD, MON, and Dow, whereas PICK has BHP and Vale.

     

    If I was going to pick an ETF in this space, I would go with a broader "natural resource" ETF that would include oil and natural gas stocks, fertilizer and chemical companies, etc.

     

    I have a small 50 share position in the ETF HAP, whose top 10 positions include XOM, CVX, and BP, along with MON, POT, BHP and ADM. Almost 50% of the weighting is in U.S. companies.

     

    http://bit.ly/1rYUevC
    2 May, 07:21 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - SG

     

    So materials is mostly about "extraction" of them from the ground. That's a risk, timing, lots of factors like g'vt policies. I'm not looking to add lottery type purchases in this area at the moment.

     

    Are there strong companies in the sector more downstream and not metals, such as paper, forest, fertilizer, chemical that you think are worth keeping eye on? (I'll look too in that HAP ETF for company ideas.) FG mentioned a couple, that I'll look at.

     

    I'd prefer to do energy separately if I could, even buy individual there.

     

    So what do you think about (VAW) at this time as a growth or "dividend with steady value" opportunity? It definitely seems a better fit for my portfolio; US, more diverse products.
    3 May, 12:12 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: This will be my usual long winded response in need of serious editing.

     

    Most of the stocks owned by VAW would be highly cyclical and will do worse during a recession than those companies whose fortunes are less tied to the business cycle.

     

    During the Near Depression period, PEP only briefly fell below $50, whereas DD, which closed at $66.85 yesterday, cratered to $16+ back in March 2009. I bought some DD shares at $16.68, as described in a 3/7/09 post.

     

    So, I would not describe those companies as having a "steady value" or as providing a reliable dividend stream. I would not want to own most of the companies held in VAW during an economic downturn. If we can avoid a recession for another three or four years, and the growth starts to pick up later this year in a synchronized global recovery, then those cyclical stocks still have room to the upside. I am just highlighting that there is also a lot of room to the downside too.

     

    Fertilizer companies need a properly functioning cartel to do well. There is simply too much supply available. When the cartel breaks down, and one or more participants decide to grab market share at a lower price, then all the companies suffer but the buyers of the product are happy campers. You may want to google the terms cartel and potash to see the problem. When a cartel is needed to control supply and price, that is not a good long term sign since cheating by cartel members and the eventual breakdown of the cartel are usually rational concerns.

     

    Needless to say, a U.S. company can not be a member of a price/supply setting cartel unless it wanted to subject itself to treble damages under Section 1 of the Sherman Act from customers, and criminal prosecutions.

     

    Last July, there was a breakdown in the potash cartel caused by Russia's Uralkali quitting its partnership with Belarusian Potash that set off concerns about a price war in potash. You could go to a 1 year chart of a potash company, like POT, and see the results.

     

    Due to concerns about over supply, which is a prevailing one for any material, I elected to categorize SQM as a Lottery Ticket and bought only 15 shares at $27.74. That strategy allows me to invest only $300 plus any prior realized gains from the stock which I had for SQM.

     

    Scroll to
    C. Bought 15 SQM at $27.74
    http://bit.ly/1moBsKw

     

    At least with SQM, there are other products besides potash, with the most important being lithium carbonate and iodine.

     

    Applications of Lithium
    http://bit.ly/1moBr9D

     

    Applications of Iodine
    http://bit.ly/1moBr9F

     

    Recently, I noticed that COP was selling off, and I used the opportunity to buy 100 shares. I now have a $1,000+ unrealized gain in the shares bought earlier this year. That is basically the same approach that F & G used for Exxon.

     

    Given my views of the market, I am primarily an opportunistic buyer of a limited number of securities. I view the market as being at the top of my fair value range, which is more generous than Jeremy Grantham who views the market as 65% overvalued.

     

    http://bit.ly/ReB5bA

     

    I am also concerned that the market is having a lot of difficulty moving up after crossing into the 1880-1890 range (S & P 500)

     

    I am going to look into F & G's ESV and RIG mentions. RIG is based in Switzerland now, so I suspect its dividend would be subject to the Swiss 15% withholding tax which is collected for my NVS dividend, while ESV is a U.K. corporation.

     

    I believe that there is no tax withholding by the U.K. which is one reason why I could own UL (based in the UK) rather than UN (based in Amsterdam) in an IRA.

     

    I would note several issues with rig owners.

     

    There is a tendency for rig operators to build more rigs than the market needs which causes prices to periodically plummet.

     

    A number of ultra deep water rigs will become available later this year and the day rates for those rigs have been stagnant at around $600,000 for a couple of years already.

     

    The Brazilian company Petrobas has capped the number of floating rigs it will use this year at 42 and will be replacing a number of rigs over the next several years with those built in Brazil. Transocean has a relatively small exposure to Brazil.

     

    But, once rigs are available in an oversupplied market for whatever reason, prices for use of rigs outside Brazilian waters could come down due to increased competition from rigs made idle by Brazil's decision as well as newly built rigs.

     

    At most, I will buy 50 shares of one or the other given my evaluation of the risks.
    3 May, 10:48 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    SG,

     

    Your commentary is excellent, well researched and appreciated. I'm sure your long experience is most valuable here.

     

    Regards M
    3 May, 10:55 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » SG

     

    "long winding", <rubbing hands together excitedly> oooh, lots of good info to dig into :)

     

    ... now I finally understand the "excited" Potash breaking news commentaries from last summer. Seemed like a lot of excitement for a chemical, lol.

     

    I'll put (VAW) on my list to look at when the market starts heating up again.

     

    On rare metals - it's not base metals. What attracted me was in Electric Vehicle meetings there was always talk of rare chemicals central to various batteries and alternative fuel efforts. Also that there was a problem with them being dug mostly in China. So if that ETF is bottoming out... it might be a good chance to get into a sector that will come into vogue in a big way??

     

    I'm going to skip buying lottery tickets until I've bought more long term or solid buys and gotten better at it. ... I'll just read the lottery info to learn!

     

    That excess rigs explanation is the first I've heard of why the deep sea drillers are "unloved." They pay a dividend, but it could be a while till they recover. Maybe again a market I should avoid jumping into? Then again several good investors from Bret Johnson to Fear & DD have dug into them... Is 50 shares a small buy because of risks, or a regular size buy?

     

    The energy service sector of (HAL) and (PDS) has been on fire. Does it look like it has room to grow? I'll wait for a pull back in (COP) and the like. I have (CVX) which is my only holding that's done very well.

     

    With their earnings miss the other day...they didn't sell off, but I'm wondering if they will start to under perform or drop in the next quarter from it, compared to the subsector others.
    4 May, 10:22 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    LOMAH:

     

    The ETF you mentioned included (TC) which SG mentioned. (TC) from my understanding has nothing to do with rare earths - it's molybdenum, copper, gold, etc., similar to (FCX) but smaller and more US/Canada-based. In fact, I think both companies have operations near Mt. Milligan (?).

     

    Now, the ETF is called not Rare Earth ETF but Rare Earth/Strategic Metal ETF, so I guess we can cut it a little slack. But molybdenum is not even that strategic of a metal in my opinion. It's used mostly for structural steel (infrastructure play) and perhaps in autos.

     

    Also, you said you did not want foreign companies but that ETF holds many so that's something to think about.

     

    I hear you on the rare earths being mainly produced in China (Inner Mongolia area) but don't be mislead by the 'rare' verbiage, they're not *super* rare. Also, it is a bit of a lottery ticket play if you're counting on China to cut off supply unless you have more information that gives you confidence on that part.

     

    As for 'strategic' metals and such, that is an interesting topic and I'd be interested to learn more. I have heard things about lithium (for the electric car batteries) and rare earths (for all the reasons you mention). However, you can get a PDF from the USGS on metal prices (up through 1998) and I've dabbled in reading that to get a sort of overview. My takeaway is that metals are volatile and wacky because governments and militaries will have a big impact on the demand but also because scientists will develop new and different substances and alloys which can sometimes totally alter the fate of a particular metal. So, even though lithium batteries are all the rage now, what if someone builds a better mousetrap? Ditto for the other metals, strategic, rare, or otherwise.

     

    That's my humble take. I'm not a geologist or metals person so if you have better information by all means. But you seem to be inclined to longer term investing ideas. Hopefully the more knowledgeable folks here can shed light on the whole thing.
    4 May, 10:41 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    LOMAH:

     

    Here is the PDF I referred to (actually this appears to be a newer version updated through 2010):

     

    http://on.doi.gov/1iOxNrw
    4 May, 10:44 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » BC

     

    Good insights... well at least from where I sit :). Okay, so this is back to the idea of metals and things that go bump in the night.

     

    While it could be a profitable area because it needs reading, and study so one could find the proverbial undervalued stock based on less than common knowledge... it'd work and I have a long list of things to learn before I dig in there. It'd be interesting though - it goes onto my growing do-list. Also I'll listen carefully if I get back to the EV meetings. It was more than lithium, so maybe something of worthwhile... At the time I wasn't looking at stocks, but these guys could well be invested to ask too...
    4 May, 10:53 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: The ETF is called Rare Earth/Strategic Metals ETF (REMX) and it is a widow maker, down 19.51% over 1 year through 3/31/14 and -28.23 over 3 years.

     

    http://bit.ly/1mtoEmr

     

    I am not familiar with the companies owned by that ETF, and wonder how many are profitable and actually have a mine in operation rather than in someone's dream. For some reason I was reminded of a Mark Twain saying, " a gold mine is a hole in the ground owned by a liar"

     

    I will stick to lithium miners. Another lithium company with substance, other than SQM, is Rockwood Holdings (http://bit.ly/v23WDw), but I view that stock to be too expensive now. I considered buying some shares when it was at $45 back in 2012, but let it pass for reasons that I do not recall, otherwise known here at HQ as a senior. moment.
    4 May, 11:18 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    SG:

     

    I am intrigued by that Rockwood Holdings company (not going to run out and buy shares but will look into it more). Thanks for sharing!
    4 May, 11:47 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » SG

     

    I didn't catch that (SQM) is lithium only. I'll look at it some more, for a swing trade, intermediate possibility.

     

    In a few seconds, it appears you've cut to the chase on that rare earth ETF. I'll skip buying a widow maker. Thanks :). Cute Mark Twain sayings... may not be the best sales literature for a mine...
    5 May, 12:07 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » To newcomer's we've moved onto chapter 23, come and join us:
    http://seekingalpha.co...

     

    This chapter 22 has a lot about where the market is going... and how to tell...
    5 May, 11:36 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    I would have considered the job numbers good, except there was zero wage growth.
    2 May, 09:08 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » DD

     

    Interesting observation. Salaries seem to be a significant factor in limiting growth right now, compared to the last few years.
    4 May, 10:23 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    dd:

     

    The average person has been trained by the mass media to think that the economy's success revolves first and foremost around the measurement and dissection of employment numbers. In fact, changes in employment at the margin have little net economic effect, as compared to the spending behavior of the vast masses already employed or possessing wealth.

     

    As markets trend toward full employment, and we start to see wage escalation, that's not an event to be celebrated by investors. It's a signal that wages demands will place pressure on profit margins, while at the same time generating general inflationary pressures in the economy, stimulating the real commencement of the cycle of interest-rate increases.

     

    The welfare of labor and of investors are often not aligned. Be cautious about celebrating employment growth, if it gets too exuberant or near historic "full-employment" levels, and be ready to take defensive actions, in particular, if such growth starts rolling into wage escalation.
    4 May, 10:54 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Reaction is key. So far Long bonds still holding like a rock.
    2 May, 09:14 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Bonds / Yen / Gold soaring, and I am holding my Momo shorts and long bonds exposure
    2 May, 10:43 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    I don't worry why the bonds do what they do.

     

    German people (I'm about 80% Swiss & German, so I do have a tiny bit of credibility here) are traditionally big savers. Don't like debt. The German gov't is so much more stable than ours. So is the Swiss gov't.

     

    Doesn't hurt to invest in bonds, especially if you think that's the safest place to be.

     

    The market will do what the market will do. Long term, I don't worry.

     

    If you are worried, then take the actions that will stop your worrying.

     

    You can see a big difference between the trader mentality and the long term investor mentality. I'm not betting in a casino, that's not how I view investing at all. Market swings are to be expected, and taken advantage of.

     

    I like safe, quality companies that pay dividends. I even like bonds. And some cash. Buffett didn't make his billions in one year or even in 20 years. He rarely sells. Over many decades, his investments have paid off. Even thru the last financial crisis, he didn't sell and neither did I. However I did continue to invest, which helped a lot.
    2 May, 10:54 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    BSF;

     

    I'm not betting in a casino, either. It's my business, the business of assessing and trading risk.

     

    Many different strategies as an investor.

     

    Bonds are not a gamble to me at this point, from my experience.
    2 May, 11:09 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    Regarded Solutions here on SA is doing an experiment with some interesting results. Shows how buying ETFs vs. actual stocks compares.

     

    http://seekingalpha.co...
    2 May, 10:57 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    Here's why gold is going up & the market is jumpy

     

    http://cnb.cx/1jofJ6o

     

    Nothing to do with the jobs report, the economy, etc.
    2 May, 11:07 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Blue,,

     

    yep agreed..

     

    we're back to the Ukraine --

     

    This to shall pass
    2 May, 11:42 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - EM is up and market isn't particularly down, so doubt Ukraine is effecting it much.
    2 May, 11:47 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    This has little to do with the Ukraine; the strength in bonds and weakness in hi Beta stocks. Nothing.

     

    Ukraine does not affect the earnings outlook for most of the (SPX) or (QQQ).

     

    (RSX) is down all of 22 cents.

     

    Obviously JMO
    2 May, 11:50 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Any risk off movement into long treasuries will be magnified by the FED's substantial ownership of the available supply.

     

    I would not be shorting TLT, the ETF for the 20+ year treasury bonds, when the FED owns over 50% of the treasuries maturing between 8/15/26 and 5/15/42 with one exception, a bond maturing in 2031.

     

    Click Tab "T-Notes and Bonds"
    http://nyfed.org/12yg38A

     

    The existence of treasury bond ETFs magnifies that price distortion given the limited supply available to purchase. TLT has traded almost 7M shares today and there are other long bond ETF products available for the herd to buy.

     

    I would agree with Blue Sky and Fear that today's rise in bond prices is due to the Ukraine crisis heating up and the increasing prospects of a Russian invasion of Eastern Ukraine, where its special forces (the heavily armed and obviously trained men wearing masks) are already operating.

     

    There was a similar flair up that most people have already forgotten in a limited war fought by Georgia and Russia over two Georgian provinces (South Ossetia and Abkhazia) that have the misfortune now of being governed by Vlad and his gang.

     

    Putin took control of two enclaves that had been part of Georgia in a previous military intervention. The NYT published an interesting story recently about what has happened to those poor souls in South Ossetia now under the thumb of Vlad and his Apparatchiks. Unemployment has risen and prices are high. Russian elites loyal to Vlad control the economy and drive around in big "glossy black cars" over unpaved roads. Russia of course did not keep its financial aid promises to the citizens of those two enclaves, and most of the small amount of aid actually given by the Russians was stolen by the boys.

     

    http://nyti.ms/1jomSn6
    2 May, 12:06 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    South,

     

    excellent analysis of the situation, and the prior commentary re; Ukraine and the markets highlights the typical knee jerk reaction that makes for a trading day --

     

    Gold is the ultimate fear trade

     

    It will be interesting to see how the herd handles the headlines into the close......as it may give some clues as to the underlying currents in the markets..
    2 May, 12:19 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Retirees typically don't add money to their 401 k's , they aren't working and have no income other than their savings & soc sec.

     

    A retiree surely has more money in equities today , since their holding in equities in 2008 are now approx 200% greater at this point in time .

     

    Hence the money they have invested in the market IS greater -- than in 2008 - so, no argument there ..
    2 May, 06:35 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Surveys results can be interpreted in many ways

     

    here's a recent Gallup Poll -

     

    http://bit.ly/SkqRrl

     

    Each can decide whether this is meaningful to their strategy going forward ..
    3 May, 10:25 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    I've asked L to delete my entire commentary.

     

    I'm not interested in unproductive debates. Good night all.
    2 May, 07:42 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3582) | Send Message
     
    Have a good night. And have a good weekend.

     

    As one of my idols once said, "No matter where you go, there you are."
    2 May, 07:55 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    Macro, sorry if my views were offensive. Just my thoughts.

     

    I'm not much of a short term trader, or swing trader. I guess if you are doing short term trades, then what the market is doing hour by hour is very important.

     

    You make money with your method, that's all that matters. I respect what you do.

     

    However, I look at the long term. There's nothing I can do about what is causing the market, bonds, or political events that occur. So I don't let it bother me. Actually, I like down days. That's when the bargains turn up.

     

    Although our approaches to investing are vastly different, your posts are appreciated.
    2 May, 09:32 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    BSF, you are not the issue at all. Healthy debate on style, strategy, ideas is fine with me. Your thoughts are not offensive, and I respect your style and goals, even if my style and timeframe, are quite different.

     

    Btw I am not as hour by hour as it seems.

     

    Core basis is long energy as per my instablog -- Nat Gas -- long TLT -- short momentum / social media names. Trade around but the core themes remain. Anyway--

     

    The issue arises for me , when another poster, because of personal engrained bias in their outlook, are looking for ways to discredit my posted observations without actually addressing the logic of what was presented, through deliberately misquoting my commentary and taking my words out of context.

     

    This is productive neither for the purpose of blog, and more importantly for my time and energy as a professional investor.

     

     I am regretfully unable, and unwilling, to appease the bias of an "anonymous" message board commenter, who cannot respond with logic to reasoned commentary.

     

    Therefore, I decided to have the entire commentary based on the Wall Street Journal Article, which the other poster could not be bothered to even read, simply deleted, rather than argue about what it means.

     

    Best wishes BSF and all.

     

    L I'd appreciate if you would leave this in place.
    2 May, 09:52 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    M, your posts are valid.

     

    Whenever I see a post back to one of mine that I don't like, I just ignore it.

     

    After selling real estate for a decade, I had to develop a thick skin. But it is nice not to have to deal with real estate anymore. Working with the general public is always a challenge. Some days, if I had said what was really on my mind, I'm sure I would have lost the client.

     

    I've always been fascinated that there are so many ways to make money off of the market. Options, buy & hold, etc. no one single method.

     

    The article I posted by Sorkin is in line with your views, I think about the bond market.
    2 May, 10:07 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    BSF, I respect that.

     

    I was both in sales for a decade, then a floor trader -- thick skin.

     

    Its more a function of energy, when there is little interest in a balanced intellectual discussion --- should just ignore it.

     

    I respect the commentary from yourself, SG, And others.
    2 May, 10:38 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    Thanks M. Actually I got into real estate when my son was little, so I could work around his schedule.

     

    Hardest job I ever had. Not a good fit for me, as I tell the truth or at least give an honest opinion. Spent more time talking people with bad credit histories & no savings not to buy. Due to my honesty, actually built up a large client basis. Many people didn't want me to leave real estate as they only trusted me to handle their business.

     

    I'm just too old & too cantankerous to do real estate any more. Every time I thought I'd seen the absolute worst, something even worse would happen. But then, there'd always be that one client that I really wanted to help, and so I did.

     

    Trust me, the realtors know where all the bodies are buried. Especially in NJ!
    2 May, 10:48 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3582) | Send Message
     
    "Whenever I see a post back to one of mine that I don't like, I just ignore it."

     

    That.

     

    That is the key to successfully navigating internet-based exchanges, particularly if you tend to be more "sensitive".

     

    Myself, I don't care. I'd be just as happy to textually "duke it out".
    2 May, 11:09 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » JBT

     

    Lol
    5 May, 12:11 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    We need some sort of solution here. Some behind the scenes talk going on & taking a break.
    ... maybe a different forum for trading ideas...

     

    Jump in if you have a thought!
    2 May, 09:16 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3582) | Send Message
     
    Nothing is ever what it seems to be, but everything is exactly what it is.
    2 May, 09:19 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    L:

     

    http://bit.ly/1pYXNo5
    2 May, 10:09 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » BC

     

    LOL!!! So which is it here 1,2,3,4, or 5?

     

    Should this be required reading?
    2 May, 10:33 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    I guess I just had in mind the one about not fearing conflict, but maybe others apply too!

     

    I always want to read from bulls and bears and value both perspectives. I do tire of stale and flawed arguments, but I don't have that problem with any of the people here (on this blog). :)
    2 May, 11:01 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    I Like the link -- excellent observation ---

     

    I've used the phrase "fair and balanced " on other articles here on SA

     

    All can then decide for themselves -- if it applies to their
    strategy or not ..

     

    :)
    3 May, 09:04 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    I like Andrew Ross Sorkin. Here's his thoughts on what will cause the next crisis....the comments after his article are good too. It's all about too much debt.

     

    http://cnb.cx/1pYVYr6
    2 May, 09:59 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Just for the record, in the last couple of days I exited long positions in (HLF) after assessing the risk after earnings,

     

    (AAPL) today (risk reduction) ,

     

    And (MBT) -- for now. I believe the odds of a Russian "invasion" of some sort -- have risen. I will revisit (MBT), and (AAPL) as well.
    2 May, 10:10 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    M, I noticed more volatility in (MBT) and (RSX). Sad that the conflict in Ukraine is escalating. Hope it ends soon, but Putin seems to be the reincarnation of Satan.

     

    Did you see the news about the documentary Ackman produced about Herbalife?

     

    http://cnb.cx/1pYZguq
    2 May, 10:19 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    M:

     

    I have also exited AAPL. It's not a directional call, just it had reached my price target and I wanted to free up the money for other stuff. Damodaran had valued AAPL at around 600 or thereabouts and I think psychologically a lot of people will, like me, bail out around that psychologically round number.

     

    If you check out Miller's scutify page he says RSX was identified by his trading algorithm as a buy but that he overrode the algorithm in favor of discretion. JasonC also seems to think Russia is more serious than usual. I'm personally a bit less worried about Russia because I'm just so tired of hearing constant geopolitical problems and all the head fakes from these sorts of things. That said I may pass on buying RSX too because I'm not going to go against Miller and JasonC (or the White House Press Secretary for that matter who said he would be short Russian equities!!).
    2 May, 11:10 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    BSF -- no, I'll look at it. I exited because they are buying back a lot of stock, cut the dividend, and I'm getting a touch worried about their financials. It's just too binary now for me.

     

    Fwiw I'm thinking of setting up my own instablog.
    2 May, 10:25 PM Reply Like
  • Broken Clock
    , contributor
    Comments (126) | Send Message
     
    This is a viewpoint that maybe could use more debate:

     

    http://seekingalpha.co...

     

    If you don't care to read it, the synopsis is that the weak growth is good for stocks AND bonds. It doesn't have to be an either/or. Also, bad for commodities. Note that it does fall under the 'bad news is good news' category, but it's hard to see anything wrong in his analysis. Thoughts?
    2 May, 11:26 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    seems to make sense, slow growth will keep stocks & bonds in vogue but not overvalued

     

    better than going to high too fast & then crashing.
    2 May, 11:40 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    I've read the same concept, with a layout of how growth patterns effect each.
    2 May, 11:42 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Broken

     

    Muddling along like the economy has done so far during this recovery , is not as bad as its made out to be --

     

    Leaping to 4-5% growth has all sorts of "overheating " implications -

     

    At the end of last year i called it the "sweet spot" for the market ---- the slow growth economy and other factors, that are contributing to the bull market story.

     

    http://seekingalpha.co...
    3 May, 09:15 AM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    BC - I agree slow growth is good for stocks and bonds because the Fed doesn't tighten, but the author seems to imply that recessions are also good for stocks - which I don't agree with.

     

    And slow growth is good up to a point. If slow growth begins to manifest itself in very low corporate profit growth it leads to recessions if the real cost of capital exceeds the profit growth (based on the work of economist Knut Wicksell). So far corporations have been able to eke out enough profits that it is positive for stocks. But if profits slow materially (wage pressures, higher raw costs) that can't be passed on because growth is slow and competition high, that's bearish for stocks.
    4 May, 10:26 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    I have decided to let the blog run itself. Everyone here is an adult who's co-worked in jobs.

     

    The members can set the tone they want to deal with. I'm not going to delete comments so be sure it's something you want to live with. (Especially if someone comments after; then it's a comment tree.) If something is offensive and you want other's support say so. I'm not going to play monitor. If it means the blog goes away because people can't co-exist, I'll be sad, but I'll live with it. If there's a problem, the group can venture into finding a solution... If you want to vent to me, I'll be here. It's a bold move, but I trust people here can enjoy each other and the blog together. Read the comments that interest you. Ignore the ones that don't.

     

    Something out of the blue.
    ...Also I've gotten the impression that a couple people don't respect me. If you don't respect me - then go elsewhere. (This is not about Fear or Macro, who've actually been very interesting to PM with.)

     

    I tried to let a few people know some personal events in my life, so they'd have an idea of why I don't always follow up on something... or am distracted...or made some choice. I made an important difference in the world in the last year with some very tough decisions & what people tell me was a lot of courage. I'm not going to spend more of my time on trivia here. It's not healthy for me, nor contributing to my bottom line. It's not healthy for anyone else either!

     

    I've come to really appreciate and like people on this blog. Part of this is from BC's book suggestion .... it's time to trust the adults here to make it work. !!

     

    Lomah
    2 May, 11:45 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    L,
    Thanks for your work and patience here :)

     

    Lots of talk lately on seasonal "cycles' "patterns"

     

    My .02 on the markets at the moment ..

     

    http://seekingalpha.co...
    3 May, 11:09 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » Thanks FG!
    5 May, 12:22 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://seekingalpha.co...
    3 May, 09:22 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Forgot to add to this. The second BAC breaks 15, I will add to my already market weight short.

     

    This is a weak bank, IMO, and the sharks will soon go after it.

     

    The TLT rallying is also, not likely to help their spreads, as a likely curve flattening is starting.

     

    My $0.02.
    3 May, 01:24 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://bit.ly/1mowEF0

     

    Interesting article, about Keystone. I am Canadian, and I love flying my airplane in the US -- I've flown in at close to half the US states -- the service is great for pilots.

     

    People are warm and friendly. I sure don't get the govt on this, and neither do our leadership.

     

    Much as many average Americans think of Canada as a satellite state of the US, like puerto Rico, or think we all live in igloos with Mounties riding around of horses, we certainly are not. We will sell the oil to china, as we have our own sovereign interests.
    3 May, 10:17 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » M

     

    My niece was so nervous flying to visit me when she was younger by herself -- till the first time she looked out the window. She was so excited when she got off the plane.

     

    That Canada is a satellite sounds more like a Canadian myth than an American thought. I think of it as a little more European classic, without the "cloisuring" that EU countries have (if that makes any sense.) Different than the US, and a counting as a big country unto it's own right. I can't think of anyone who'd call it a satellite. I've been to Toronto, Quebec, Prince Edwards Island, and so on. So I've seen the lack of igloos, lol.
    5 May, 12:32 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    I wrote this summary over a month ago. Neither the reasonings, nor my positioning, have overall changed, although I have traded around the positons. I have though, made some nice money just following the reasoning below. I have more conviction now, than when I wrote this:
     
    My Reasons to be defensive / market indicators of defensiveness:
     
    1. Long bonds breakout above resistance / rising ratio vs junk bonds.
     
    2. XLY (consumer discretionary) turning sharply lower vs XLP ( consumer staples)
     
    3. (IWM) falling outright and especially VS (SPX)
     
    4. Poor IPO performance/ poor quality IPO's and secondaries.
     
    5. Extended S&P 500 churning. Generally large, volatile sideways movements after a large advance; resolve to the downside.
     
    6. Poor leadership from the Financials and Retail. (XLF) (XRT)
     
    7. Extreme sentiment and complacency. Low levels of fear / anxiety. Bullish arrogance.
     
    8. High levels of insider selling / secondaries.
     
    9. Absolutely horrible "junk bond" debt covenants. Issuance of these "covenant lite" loans -- has spiked to the highest level in history.
     
    10. Record low available cash to S&P 500 market cap ratio.
     
    So far the market has rotated while the former leaders have cracked. However; of all the reasons above the persistant strength in the long bond is most telling. It is certainly forecasting corrective activity; and quite possibly a future recession. With the current fiscal policy and the Fed pulling back, such an event cannot be discounted.
     
    I would be watching for a close below SPX 1840 to confirm corrective activity. I am positioned as follows: Short (IWM) via futures and options; Long (TLT) via futures and options; short various high - PE stocks that change frequently. Long (MBT) (AGNC).
     
    Currently as of Thursday's close, very small short and long stock positions. Until / if 1840 is breached. Then shorts will be increased.
    27 Mar, 06:37 PMReply! Report AbuseLike1
    3 May, 11:18 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://bloom.bg/1fxm6oM

     

    This would be a contrary indicator to some. I suggest reading the whole article in context.
    3 May, 11:46 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Macro: I view IWM to be overvalued. As a long only investor, who bought TWM a couple of times in 2008, my response is to take profits.

     

    I sold earlier this year my highest cost shares in the micro cap CEF RMT, which had generated a 21.63% annualized total return for the past five years through yesterday, and eliminated the CEF RVT. My current exposure is very light.

     

    I do own in a trust account the T. Rowe Price Small Cap Stock fund, OTCFX, which has done well and have taken some chips off the table.

     

    The guy who manages that fund, Greg McCrickard, knows what he is doing and has been managing that five star rated fund since 1992.

     

    Morningstar:
    http://bit.ly/1moNTGf

     

    The five year annualized total return is 22.96% which is to say the least a reason for future caution.

     

    The fund is closed to new investors. A lot of money has moved into small cap funds which is one source for the current overvaluation. When will that flow reverse?

     

    You may be interested in reading his comments about valuation contained in the recent Annual Report, with his comments dated 1/13/14. The most pertinent part is at p. 9-10:

     

    http://trowe.com/1moNRye

     

    He urged investors to consider lowing their allocation to small caps at page 10.

     

    It is hard to say when the forces underlying the surge in valuations will abate. One involves "scarcity" and the other is herd movement which causes abnormal demand. The same observations could be made about long term treasury prices in my opinion. It is only a question of when rational market forces cause a different price.

     

    McCrickard seems to believe that the small caps will simply experience a long period of underperformance rather than a drastic reversion to mean valuations. Hard to say what will happen or when it will happen. Two years is my rule of thumb for a maximum period of irrational stock pricing.
    3 May, 12:06 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    I have quite a bit of (IWM). Both of you are seeing it as overvalued, expecting more decline? It's down 7% now from it's top (not from where I bought it.)
    5 May, 12:35 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    My advice is to get out of IWM. It could easily drop another 10, 15, 20% in any corrective period.

     

    I would put in a hard stop below the suppport at 110.

     

    My frank advice.
    5 May, 07:23 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://seekingalpha.co...

     

    SG,

     

    One of the interesting studies of market psychology are outlined by the excellent linked article.

     

    Interesting also, as in most cautious articles I read about today's market environment, the bulls respond not directly to the observations in the article, but that as those bearish at any cherry picked time in past history were wrong, all current tactical bears are wrong today.
    3 May, 12:30 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Interesting article but I don't agree with his view of the credit spreads. If the 10-2 year spread was where he said it should be, I'd be very bearish to the market since it would imply short term rates were higher and there were inflationary pressures that would limit corporate profits.
    4 May, 10:34 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    SG,

     

    To add to the above. As nothing is ever new in the stock market, per Jesse Livermore, when the bulls trying to talk up my shorts like (YELP) by quoting terms like "user engagement" "unique visitors" "sales growth" "expansion into china" "ebita" (earnings excluding key metrics), all while avoiding, or outright dismissing, that inconvenient but all important GAPP earnings number -- real hard dollars -- it's like waving a red flag.

     

    And we are seeing all of this all over again, like in 2000.

     

    The broader SPX risk, that no one wants to talk about, is a giant pile of agressive growth and hedge funds, are piled into these momentum names on the long side, leveraged up huge.

     

    All is fine while they are going up, but these names have turned, and the funds are getting killed, and they can't get out. If any of these guys get in trouble --- and a few always do -- forced selling comes into the broader market, because they can't get out of the small, illiquid names.
    3 May, 12:52 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - M

     

    So that's how the sell off in risk moves into main traditional names.

     

    Doesn't seem remotely as extreme as 2000. I remember it being crazy. Only a handful of stocks now, and they do make some money. Maybe similar, but if milder, then the results should be milder too...
    5 May, 12:41 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://on.ft.com/1fYBIw0

     

    Read this about hedge fund concentrations:
    3 May, 01:11 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    I've been quite sick for weeks with a serious sinus infection, so about all I'm up for is reading and writing thoughts. Sorry if it's too much -- just food for thought.

     

    A little perspective from me on shorting, / and or reducing risk:

     

    I've been trading so long, I see things extremely dispassionately. I don't care "too much". I don't trade stocks and indexes, it's all a risk trade to me -- follow?

     

    So we need to remove all the "rah ran" sports cheering analogies from investing.

     

    Let me explain. Long -- is not morally or intellectually superior, or more patriotic, that not being long, or short. Those are dangerous thoughts, at the wrong time.

     

    If I short ( or exit long ) a stock, I am not a "hater" "unbeliever" "naysayer" "disloyal" or any other label. Nor I am I, when I am long a "teslarian" "Iomegan" "aaplelite". These are not sports teams.

     

    Shorting is Not , most of all "Anti - American" -- the most ridiculous thing you hear occasionally.

     

    I don't "love " any stock. I love my family and friends. I am unemotional about any one, stock or position. There are, in my book, no "good stocks" unless they go up, and no "good shorts" unless they go down. No loyalty.

     

    I am neither a "gold bug" or a "gold hater" either.

     

    Hope this helps someone!
    3 May, 02:23 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3582) | Send Message
     
    I don't love stocks, either. I do try to pick stocks I can have a long term relationship with, though.
    3 May, 06:06 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » M

     

    It's a hard concept to grasp that making money on the way down is just as real as on the way up with a stock. And it's a good point that it limits investors.

     

    I suspect the negative view is from when shorts target a vulnerable small cap, and take it out of business. Or that buying into a stock gives it capital to grow (keeps that cap afloat), which is good for the company. Vs. shorting which is a short term making money against someone else, so a different game. But they are all a valid ways to play.

     

    The one limit I see to shorting that I've added to my concepts.. is that if something turns against you, a long position in a decent stock can be held until reversal much easier than any short position can be held forever. So I'd rather make a short term trade bet that bets on growth, rather than on a short, unless I'm very, very confident in that short move or my ability to get out timely.
    5 May, 12:50 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Remember all a key point.

     

    Wall street, and most advisors, are a giant avertising agency. They will never tell you to outright sell at an appropriate time, because their primary goal are as asset gatherers, not delivering superior performance.

     

    It's an inherent conflict of interest in the broader industry, because if they tell you to sell, they risk losing assets and fees.

     

    Their interests are in direct conflict with their clients, as a general observation, and so anything they say is clouded, and should be given zero credibility.
    3 May, 07:25 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    So much to read and answer to... but it's gotten to late. See you all tomorrow!
    4 May, 12:45 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Per Thomson Reuter’s “This Week in Earnings”

     

    the forward 4-quarter estimate for the SP 500 actually increased this week to $123.19, up from last week’s $122.77.

     

    The p.e ratio on the forward estimate is now 15.3(x), and the PEG ratio as of Friday, May 2nd, 2014 is 1.86(x).

     

    The earnings yield on the SP 500 is 6.55%.

     

    Most importantly, the year-over-year (y/y) growth rate is 8.21%, which exceeds the previous highs of 8.02% in late December ’13, and is now the highest y/y growth rate since January, 2012.

     

    "Everyone should form their own conclusions as to whether this is meaningful"
    4 May, 09:40 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Pop quiz ,

     

    We all know the market is a 9 month (avg) discounting mechanism.

     

    Do we assume then, that in any kind of potential corrective period,

     

    A) the market or the components would correct first,

     

    b) earnings estimates for the future period would come down first, before the market moved at all.

     

    Consider this.
    4 May, 10:01 AM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    M- since late 2011 the one year forward earnings estimates have done nothing but come down, yet the market rallied anyway on multiple expansion.

     

    But to answer your question, odds are the earnings estimates will come down after the market falls because they are typically behind the curve.
    4 May, 01:28 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    The market, of course, would attempt to anticipate future earnings. Then, it would try to price itself accordingly.

     

    Presently, the market is trading at 18.7 times trailing twelve-month earnings. http://www.multpl.com
    4 May, 01:42 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Tack: You will get different numbers depending on the source.

     

    The WSJ, using data from Birinyi Associates, has the TTM P/E for the S & P 500 at 17.6 as of last Friday down from 18.45 a year ago, with a forward P/E of 15.71:

     

    http://on.wsj.com/HY9z7t

     

    The WSJ has this caveat:

     

    "P/E data based on as-reported earnings; estimate data based on operating earnings"

     

    Doug Short has a 17.8 TTM P/E based on "as reported" earnings using the S & P data:

     

    http://bit.ly/JNT7Io

     

    The S & P 100 has a TTM of 16.97 and P/Sales of 1.87 as of 3/31/14:

     

    file:///Users/edwardha...

     

    I do not have the current Thomson Reuters numbers but this is a link to their 4/25/14 numbers:

     

    see page 6
    http://bit.ly/10QAsU5
    4 May, 02:00 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    S:

     

    http://bit.ly/10LOlmd

     

    Th earnings table shown uses "S&P 500 Earnings Per Share. 12-month real earnings per share — inflation adjusted, constant March 2014 dollars."

     

    The data is from S&P, itself.
    4 May, 07:37 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    You both tell me the market is toppy and are cautious about buying at the moment. And both believe in a longer term bull still in place.

     

    So I can't tell what's different in your outlooks.

     

    I asked earlier so how is it that the market is predictive, when indivdiual people aren't. I assume the answer is that in aggregate future earnings expectations come down, so the market stalls on going up.

     

    ...though I'm a good enough test taker to know the popquiz answer is hinting at A. But how would they correct first, based on what?

     

    Mostly though, I don't care that much.

     

    I'm interested in what are solid companies to explore. Whether the high yields are a good play right now to get dividend while the market trades in a range with ranges very possiblity rising in the next few years. Whether there's any innovative companies, including mid or small cap, that are good for the long range future. And what would be a good buy in point for a watch list on them. (This last after more russell 2000 correction, is in my view the next best place to get into... so a good place to get prepared. SG's take is it could be a couple years of undervalued, seems right, but pick the right companies and they could be good buys sooner...)

     

    Personally I still think Whitewave is exciting on that front but currently way over valued, but if it ever comes into range - it could be an exciting growth 10 year story. (GILD)s been mentioned, but anything else?

     

    Anyone else have anything on their watch list?
    4 May, 10:18 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    This trading range and toppy is so boring! Can't just get excited about and buy whatever is out there!

     

    Also any topics long term investors would like to bring up that would help them or they know would help newbies at this time?
    4 May, 10:21 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    L,

     

    i would like to respond to your question rather than have anyone else reply for me ------if i May ,

     

    My strategy and theory on the markets are based on more than two facts. The two mentioned sure seem to be relevant now -
    the other info is in my blog as it always has been.

     

    http://bit.ly/1kQlubB

     

    As for individual stocks (LAZ) at just broke out to a new high ..

     

    http://bit.ly/1mrKy9z

     

    a name like (GILD) isn't done yet either , and there are more - (MU) made a new closing high on FRI. 5/2 -- Is it done ? - u decide,, I was told it was done @ 22 ..

     

    sorry to keep posting the links to these situations , i know its boring and repetitive---

     

    i just find it easier to do that than type a paragraph every time someone questions and then decides to answer regarding my position and strategy ....

     

    Everyone should form their own conclusions as to whether this is meaningful

     

    and as always anyone can accept or reject my opinions ..
    4 May, 11:30 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: I am currently mostly in a hold mode but will make opportunistic individual selections as noted elsewhere in my comments here.

     

    I am going to look into ESV some more later today, and may buy 50 shares. My risk analyses has caused me to limit my exposure to less than $3,000. I would prefer an entry point in the $45-$47 range.

     

    Some of my regional banks have fallen back into my fair value range. I mentioned earlier buying back TRMK after selling shares last year at over $26.

     

    I bought last Thursday NBTB in a trust account when it slid to $22.15. I already own shares in my personal account.

     

    The E.P.S. forecast for NBTB is $1.68 in 2014 and $1.81 in 2015, or a forward P/E of 12.57 and a TTM P/E of 13.93. The quarterly dividend is currently $.21 per share or a 3.79% dividend yield at a total cost per share of $22.15. I will do all of those calculation and many more before entering an order.

     

    The dividend was not cut during the recent Near Depression, which is positive for a bank, but it was not raised either between the 2007 second quarter and the 2013 third quarter.

     

    http://bit.ly/1ngqTL0

     

    Hopefully, the bank has embarked on a steady and slow period of annual dividend raises starting late last year.

     

    I doubt that the forward earnings estimates include a gain from its venture capital subsidiary:

     

    "On April 17, 2014, NBT Capital Corp., a wholly-owned subsidiary of NBT, sold its 20% ownership interest in Springstone Financial, LLC, which NBT originally acquired in exchange for a $3 million investment, to LendingClub Corporation as part of LendingClub’s acquisition of all of the outstanding equity in Springstone. LendingClub paid the selling equityholders a total purchase price equal to $140 million in cash and preferred stock. Springstone provides affordable financing options for consumers seeking to finance private education and elective medical procedures through a network of over 14,000 schools and healthcare providers. In connection with the acquisition, NBT Bank and Springstone entered into an amended and restated program agreement pursuant to which NBT Bank will continue to participate in lending activities with respect to Springstone’s financing operations. “The management of Springstone developed a very successful business, and we are pleased to have played a role in it,” said NBT President and CEO Martin Dietrich. “We look forward to the opportunity to continue our relationship with Springstone as they grow with LendingClub Corporation and are engaged in discussions to further develop collaborative opportunities with LendingClub.” NBT is exploring balance sheet strategies for optimal use of the proceeds from this transaction."

     

    http://1.usa.gov/1ngqR5T

     

    That is a significant gain for a relatively small bank.

     

    When I select regional banks to purchase, and I may generally own anywhere from 30 to 50, I focus on metrics that show prudence, since I like banks run by prudent people rather than Masters of Disaster who will blow their employer up with one scheme or another to enrich themselves.

     

    You can see that kind of data in low non-performing loans to total loans and in charge-offs to total loans, along with other metrics.

     

    Q/E 3/31/14
    Total Nonperforming Loans to Total Loans: .99%
    Total Nonperforming Assets to Total Assets .73%
    Net Charge-Offs to Average Loans Annualized: .27%
    Core Return on Average Tangible Common Equity: 14.48%

     

    4 May, 12:54 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    SG

     

    "Masters of Disaster who will blow their employer up with one scheme or another"

     

    Love it -- sounds like (BAC).
    4 May, 01:01 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Macro: BAC was doing okay, compared to most other large financial institutions, during the recent Near Depression until Ken Lewis decided to acquire Countrywide. It is that acquisition that is causing most of the headaches.

     

    Sample Article on Problem from WSJ in 2011:
    http://on.wsj.com/1ms1D3a

     

    The NYT series called "The Reckoning" explores how the Masters of Disaster at Merrill Lynch, Citigroup, Lehman, AIG, Fannie and Freddie, etc just about sunk the world's financial system. If you have not read that series yet, I would recommend it:

     

    http://nyti.ms/UUxqJW

     

    AIG:
    http://nyti.ms/1ms1D3d

     

    Citigroup:
    http://nyti.ms/1ms1AEq

     

    Merrill Lynch:
    http://nyti.ms/1ms1AEw

     

    WaMu:
    http://nyti.ms/1ms1AEx
    4 May, 01:36 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Lomah - Like SG I'm mostly on hold, but I can tell you what open orders I have in below the market.

     

    These are to add to positions in CVS, SO and BCE. Also to start new positions in BA, SBUX, QCOM, UPS. Most of the orders, however, are at least 3-5%, some more, below the current market prices.
    4 May, 01:38 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    SG

     

    Thanks -- I haven't, and will.

     

    I did enjoy the books "too big to fail" and "the big short", on this topic.

     

    My issue with BAC is a loss of management credibility.

     

    It's inexcusable at this stage for management to blame revisions today on the countrywide acquisition. Those write offs are supposed to be far in the past.

     

    The bulls calling this a buying opportunity -- are assuming absolutely no further issues. This is not an assumption I would make with my money or anyone else's.

     

    The CEO should resign immediately, he is responsible.
    4 May, 02:03 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - FG

     

    I'm thinking cautious on buying into stocks that are reaching new highs. Wish I'd bought them a few weeks ago! Would consider on a pullback day. Also if the market was bulling not sideways-ing, I'd jump in.
    5 May, 12:55 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    This is a comment to myself so I can find this to come back to to read! And comment on (okay, ask questions on.)
    5 May, 12:57 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    That matches to my impression of what everyone is doing (everyone here who's experienced) with adding of long & core positions. ...waiting for decent prices.

     

    Thanks for the specifics...!
    5 May, 12:58 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - M

     

    I do believe there's an expression invented just for your expection:
    Waiting for the other shoe to drop.

     

    Even in a short time I've noticed when a shoe drops, there's usually another thud before the stock hits bottom. Sometimes not, but usually. And a little waiting till it has a "real panic" feeling, is a better entry point than after the first drop.

     

    Also this is more than incidental side effect of doing business. This was BAC knowing the rules and ignoring them.

     

    ...keeps popping into my head, when I shopped for mortgages around '10, I left (BAC) shaking my head that upper level management had to be very corrupt. I don't remember exactly what sparked that. I left thinking oh well probably every big bank is like that. But it was the only one that did things that made me "see" it was there. I took them off even my "consider" list.

     

    If anyone's mortgage shopping the real bottom of the barrel was Everbank (Homestead or something). They tried hard to undersell to get my business. On searching, they frequently don't cash checks then claim you didn't pay, to collect late fees. A friend, who's a therapist surprised me when she said she'd had more than one client experience even more than that. How many clients can she have total to hear multiple stories?
    5 May, 01:09 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    L,

     

    Understood - and once again u have to decide if the stock u select is a "trade" for you or a longer term holding .
    5 May, 08:54 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    L,

     

    Digging for "good" companies at the moment is the last thing I'm thinking about right now, because I am a "top down" investor.

     

    To me, first you lead with where you are in the risk appetite cycle, seasonal cycle, business cycle, then progress to the right sector, then individual issues.

     

    Bottom up investors dig for undervalued companies first.

     

    Different process, and both have their virtues.

     

    To answer my question, the markets move first ahead of news because of insider and smart money buying or selling.

     

    Notice JPM puked into the close, then warned afterward on trading revenues?

     

    That a co-incidence?

     

    Our outlooks are completely different. His is focused on 2 things -- a Dow theory buy signal, and the fact hedge funds are short the russell as an obviously contrary indicator, that we should consider buying.

     

    I am completely defensive right now, short, and will increase my bank shorts tommorrow for sure.
    4 May, 10:43 AM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    A little scary, but I wish the "private client" data had a longer history. And can anyone figure out why the Institutional clients have been big net sellers? Has BAML lost that much business or ? Note that the flow of funds from Institutional clients is almost the exact opposite of the private client group. Thoughts? From Cam Hui.

     

    http://bit.ly/1fI4ExN
    4 May, 10:52 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    I'll answer with a question.

     

    Does anyone actually believe, that the conclusion of a huge QE program this year, will have absolutely zero effect on risk appetites, PE multiples, ect, simply because the SPX has held up to this point just fine?

     

    Cause I don't. I also believe there is a little bit of a lag time between policy change and reaction.

     

    Even if one believes there is no effect, what is the rush to risk capital during this taper period, until substantial time has passed to measure the effects?

     

    I don't see the risk / reward as favourable, at all at the moment, all things considered.
    4 May, 11:05 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    First, yes, I believe that taper is having and will have no effect on much of anything. They're half way there, and one can't even tell anything much has occurred, except that the preceding rate phobia has been shown to be misplaced (which, also, is no surprise, at least to me), so it's not really that surprising that we've seen a rebound in bonds, which were sold off on fear, not fundamentals.

     

    Also, this much better explains the bond moves, of late, than some new early warning sign that the smart money is getting ahead of some impending imminent recession, as the gloomers never-unimaginative minds conjure up immediately. Such an explanation is also more consistent with the equity rotation we have seen away from wildly-valued go-go techs and toward energy, commodities and the emerging markets. Those three areas are about the last places you'd expect anyone to run in a deflationary recession.

     

    Regarding a rush to do this or that, or looking for the risk/reward at "the moment," one needs to step back from the charts and examine the trends in place for five years, not what's happened in a couple months.

     

    http://yhoo.it/1mrHWZh;c=

     

    In essence, there's nothing much new evident in the behavior of the markets, a long, slow, consistent slog upwards, which, after the EU and muni-bond tempests of 2011, has shown almost no variation in pattern. There are no significant breaks in slope, either to the upside or downside, which would suggest a possible acceleration in a new direction.

     

    For what it's worth, given this pattern and what we know currently about how the overall economy is performing, it seems to me unwise to bet either on boom times or collapses. Much better to play a slow, steady hand.
    4 May, 11:23 AM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Tack - I agree with you that it's unwise to expect either boom times or a collapse. But the Fed is still buying a significant amount of bonds, and it's too soon to tell what will happen when that dwindles to zero.

     

    Note that both the heavy public buying and the p/e of the S&P shot upwards significantly beginning around the time QE3 was announced. Was that merely a coincidence?
    4 May, 11:38 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    dd:

     

    Remember the old adage, "buy the rumor, sell the news?" And, Andy Warhol's "fifteen minutes of fame?"

     

    Well, the answer is sort of a combination of both. The whole QE story -- both up and down -- had its share of typical panicky rumor-based reactions, and, now, that's it's all been hashed to death and the last stages of the wind down are well under way, I don't think the market's reacting to that "wolf" any more. Nor should it, because QE was massively misunderstood, it being neither a major direct support of the economy nor its cessation having any significant effect, therefore, on the economy, nor on bank reserves, which remain far in excess, even with another dime of QE.
    4 May, 11:50 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    The end of tapering is not that important long term. Inflation and inflation expectations remain benign for stocks and are far more important for stock investors. I am not making any changes in my asset allocations based on the end of QE which I view as a positive event.

     

    Once the FED ends tapering this year and starts raising the federal funds rate very slowly in the 2015 second half, inflation and inflation expectation will return as the main criteria used by investors for setting interest rates.

     

    For as long as the inflation forecast over the next 10 years hovers close to an average annual 2% rate, which has been the market's forecast for awhile embodied in the 10 year break-even spread for the 10 year TIP, stocks will remain attractive compared to bonds for a considerable time.

     

    Future earnings and dividends will continue to be discounted to present value using the low treasury discount mechanism and the ERP will remain in favor of stocks.

     

    NY FED Publication May 2013:
    Are Stocks Cheap? A Review of the Evidence
    http://nyfed.org/1fIiXm4

     

    Taper or Not, Stocks and Bonds Could Gain
    http://bit.ly/1eTrL8j

     

    The current ERP is 5.12% as if 5/1/14 according to Aswath Damodaran

     

    http://bit.ly/w4jRpw~adamodar/

     

    I am first a top down investor. The most important question for me is whether conditions support a long term bull or bear market. When I first started to invest back in the late 1960s, it was clear that problematic inflation was causing a long term secular bear market in both bonds and stocks. It was also clear to me at least that inflation had been squashed by Volcker's FED, so I started to buy stocks again in the 1982 summer after a four year hiatus.

     

    The market started a bull run in August 1982 when inflation was still hot, interest rates were high with the 30 year mortgage rate averaging 16% that year, and the nation was in a recession. There was only one correction before October 1987:

     

    Figure 4:
    http://bit.ly/1rpnonq

     

    In a long term bull market, I resort to a buy and hold strategy, keeping my overall stock allocation relatively high for me and constant, though I will engage in large sector rotations based on valuations. I am not going to even bother trying to time 10% to 20% corrections by moving my overall stock allocation down significantly. I view such efforts as being most likely counter-productive in a long term secular bull market. Even if I got it mostly right on the sell side, I could easily be caught flat-footed bringing my allocation back to the normal range.

     

    On an individual securities level, I may end up selling some individual securities based on valuation excesses, and that could easily happen just before one of those corrections leaving me somewhat protected from the downturn. I sold a number of regional bank stocks last year based on valuation.

     

    A long term secular bear market, such as the one experienced between 1966-1982, requires a more hyperactive trading strategy to keep one's head above water.

     

    So, I am not worried at all about the taper or the end of ZIRP. I also see a number of positives flowing from rates that are higher than now though still abnormally low by historic standards, particularly as that scenario relates to increases in disposable income for savers who currently have $7.2+ trillion in savings accounts alone earning zilch.

     

    See Summary of 2009 Study:
    "The projected annual impact of this loss of interest income on just $9.9 trillion of rate-sensitive assets translates into $256 billion of lost consumption, a 1.75 percent loss of GDP, and about 2.4 million fewer jobs."

     

    http://bit.ly/YF81Ij

     

    My concern now is finding stocks that meet my valuation criteria for a new purchase. After a 180% run in the S & P 500, there are fewer of those available and I have become quite selective in what I will buy now.

     

    I did buy several REIT common stocks late last year that had fallen significantly in value (e.g. "O" at $36.96 and OHI at $29.85, both in December 2013). When PEP, COP and NVS dipped this year, I bought at $78.25, $63.68, $76.92 respectively. So I am more selective in what I am buying, and I have used the rise recently to sell what I wanted to get rid of anyway including several underperforming stock CEFs.

     

    I would be more comfortable to see more confirmations of a secular bull story over the next two years and for the market to end flat in 2014. Price corrections in clearly overvalued names needs to continue.

     

    I would agree with TACK that money is rotating out of clearly excessively valued stocks into EM stocks and large cap stocks in developed markets, excluding several of the large internet and social media stocks in the Nasdaq 100.
    4 May, 12:14 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    South
    your comment

     

    "I would agree with TACK that money is rotating out of clearly excessively valued stocks into EM stocks and large cap stocks in developed markets, excluding several of the large internet and social media stocks in the Nasdaq 100"

     

    And i will add that what is transpiring there is a "healthy" sign both in the intermediate and for the LT.
    4 May, 12:19 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    I noticed that the link to Aswath Damodarn's current and historic ERP calculations does not work and can not be made to work.

     

    It can be found with a google search "ERP Damodarn" and it will be the first entry.

     

    Yardeni has some helpful charts on valuation metrics:

     

    http://bit.ly/1mrZULk
    4 May, 01:24 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Yes, I'm quite familiar with that saying. I also know that the p/e is already quite high in historical terms, so the odds favor it coming down anyway rather than it moving higher.
    4 May, 01:41 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Southgent-

     

    In Barron's this week Forsyth's column featured the thoughts of David Levy who correctly predicted the last downturn and is saying the Fed won't be able to raise rates for much longer than the market now thinks because of the excessive level of global debt. It seems he and Gross (Achoo! linked several days ago) are of like minds.

     

    I can't link it since you need a subscription, but I'll copy the important section.

     

    "While the global economy can continue to hold up in 2014, he says in an interview, the global situation never has been as frightening. Given emerging markets' greater importance to the rest of the world and the U.S. economy, the Fed can't raise interest rates for years.

     

    This call is as out of step with the consensus as the Levys' forecast in the mid-2000s of a recession that would force the Fed to slash rates to modern lows and keep them there for years. Their bet on a collapse in interest rates resulted in 500%-plus returns for investors in a hedge fund they formed back then, he points out.

     

    Balance sheets, not earnings statements, are the key, according to David. Balance sheets were expanded to finance the growth in global capacity; now, that's reached a limit. Slowing exports mean shrinking income to service the debt.

     

    Bond yields will fall, regardless of the decline of central-bank purchases, and the Fed will have no choice but to leave short-term rates near zero, he concludes. Even so, monetary policy can't fix the problem of bloated balance sheets, warns Levy. It is a sharp counterpoint to the bullish consensus."

     

    Any comments?
    4 May, 02:25 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    DD: Barron's will always roll out the perma bears without giving full disclosure about their performance records or prior wrong way calls.

     

    The stock market started a 180+% surge on 3/10/09.

     

    Let's go back to the Barron's issue for that prior weekend. I am referring to the one dated 3/9/09:

     

    http://bit.ly/1msijrn

     

    One ghoul, featured in Abelson's column, was Wrong Way David Rosenberg who predicted in April 2009 that it "would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time."

     

    http://read.bi/1msilj1

     

    Abelson's column 3/9/09 column: "bottom fishers beware"
    http://bit.ly/1msijHD

     

    Rosenberg was wrongly bearish for virtually the entire move since March 2009. Abelson was bullish for about 15 minutes in 1982, maybe for less than 15 minutes.

     

    So who else was featured in that 3/9/2009 issue to support the ongoing Barron's thesis that stocks were for losers-none other than David Levy:

     

    "No Doom, Just Gloom"
    http://bit.ly/1msijHH

     

    I do not pay any attention to him.

     

    See also:
    http://bit.ly/1msijHJ
    "At some point, we'll see the 10-year Treasury yielding well under 1%, much as we have seen in Japan."

     

    October 2012:
    http://bit.ly/1msijHN

     

    If I followed him, I would have been invested only in long term treasuries since March 2009.

     

    Barron's will also bring out Hussman and Jeremy Grantham whose long term performance are not very good. Hussman's performance is a disaster.By missing most of the bull moves, and going down in years like 2012 and 2013, Hussman's investors would need a huge stock crash to have any chance of breaking even with the ETF SPY.

     

    While Grantham is a better money manager, Grantham is way over rated by investors in my opinion, and both do a disservice and harm to investors by scaring them out of major bull moves. I give neither of them any credit whatsoever for recognizing that stocks were overvalued in 1999, which is usually mentioned by Barron's when rolling out their latest opinions that stocks are 65% or more overvalued at present.

     

    And, while I have not studied it for Grantham, any fool could use the low cost Vanguard ETFs for the total stock market and the total bond market, using a 60/40 split, rebalance once a year on 12/31, and probably do much better than Grantham over any long period of time and certainly a lot better than these other fools.

     

    One balanced fund managed by GMO which can be bought by retail investors is the Wells Fargo Advantage Asset Alloc R (EAXFX)

     

    Most brokers probably charge a transaction fee:

     

    http://bit.ly/1msijHP

     

    Fidelity has the five year annualized return at 11.52% and 5.84% for 10 years.

     

    http://bit.ly/1msilzk

     

    http://bit.ly/1msilzm

     

    That fund is rated three stars by Morningstar.

     

    The "dumb" balanced Vanguard Star fund has a 5 year annualized return of 15.4% and a ten year return of 7.11% annualized.

     

    The even dumber Vanguard Balanced Index fund, VBINX, has better numbers that the GMO managed balanced fund.

     

    http://bit.ly/1msilzo

     

    I am not impressed with Grantham's "brilliance". He is a mediocre money manager in my opinion.
    4 May, 03:32 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Hmmmm. SG

     

    And Seth Klarman, who is quite cautious right now?
    4 May, 04:05 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Southgent - Obviously there are many people who are wrong at any given time. Personally I've left many negative comments about both Grantham and Hussman when their names appeared in a Barron's story.

     

    What I was asking you to comment was not of Barron's in general, but of the idea that because of excessive global debt - which has grown substantially since 2008 in most areas of the world, particularly the emerging market, the Fed will not have the room to raise rates without creating havoc.

     

    Perhaps this is why yields are falling on the long bonds as the market anticipates more deflation when the Fed withdraws its asset purchases.
    4 May, 04:24 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Macro:

     

    I am cautious too, but I have rode the bull over the past five years, making a major reallocation back into stocks coinciding with that March 9, 2009 Barron's issue.

     

    These investment "legends" and forecasting "gurus" that I cited will either stubbornly refuse to ride a stock market bull at all or only for a brief period. They will then receive accolades from Barron's about correctly forecasting a bear market after stocks reached asinine and clearly unjustifiable levels back 1999; with no mention at all about their pathetic or mediocre investment results, or their wrong way forecasts.

     

    Hussman, who was cited favorably by Grantham in his recent news letter, is probably the worst money manager still in business:

     

    Hussman Strategic Growth (HSGFX) Returns:
    http://on-msn.com/1g7A8b8

     

    Disgusting is not a strong enough statement about his record.

     

    My point about Grantham is that an average investor could do better than his "intelligent" asset management by owning two low cost index funds and rebalancing once a year to maintain a 60/40 split.

     

    I publish my performance numbers in the blog, calculated by Fidelity, and I am just an individual investor making do without any MIT pets, research analysts, or access to "high quality" institutional type research.

     

    I have a relatively constant 20% allocation to cash, earnings zilch, and to bonds and bond like investments:

     

    Portfolio Management Goals-Snapshots of Performance Numbers

     

    http://bit.ly/1tjvWhn

     

    I would not give a dime of my money to most of these guys who are fawned over by the press, particularly the perma bears by Barron's.
    4 May, 04:36 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    SG,

     

    Sure, there's lots of perpetual attention seekers, that are almost perpetually wrong.

     

    There are also a very few worth listening to every word they say, and at or near the top of anyone's list should be Seth Klarman, who is as far from an attention seeker as there is. Just one of the best out there, in my view.

     

    His current caution, and high cash allocation though, has actually been openly ridiculed right here on SA, (not by you), in spite of one the best records running billions of dollars, by anyone anywhere.

     

    I do find this extremely amusing, coming from SA "pretenders". Personally, I'm not qualified to carry Seth Klarmans briefcase.
    4 May, 05:05 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M (and anybody else):

     

    Every time I see some pundit's name mentioned in SA, in a never-ending battle of names, as to whom one should follow, I am reminded of what must certainly be one of the greatest television response advertisements of all time, which expresses my view on this perfectly.

     

    In the late seventies, when the growing motorcycle business became a competitive hot bed, Honda, developed and ran repeatedly, ad nauseum, various ads with a catchy, if annoying, musical ditty, that included the line "Follow the leader. Ride on a Honda."

     

    After many weeks, or a couple months, of this, one night I am watching some sports event, which breaks to a commercial. There's no music, no nothing except a road in a vast desert with the sounds a a high-performance motorcycle revving through it's gears, its distant headlight coming gradually closer. Then, suddenly is blisters pas the stationary camera so fast that one cannot make out anything about the product, and we just hear its sound die off in the characteristic falling-off Doppler Effect. Then, finally, superimposed on the screen in bold letters, it says only four words:

     

    "Kawasaki. Don't Follow Anyone."

     

    Almost immediately, the Honda commercials and slogan vanished. (I still consider it one of the best killer ads of all time, if not the best.)

     

    That's what I think about which pundit to follow.
    4 May, 06:42 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    DD: When I read statements from Levy, I see someone who is pandering to a particular investor subset, mostly the same folks who cite Grantham, Hussman and Peter Schiff as being irrefutable proof of some point or another justifying their unwillingness to take risk.

     

    The opinions being expressed by that tribe are predictable and frequently contradicted by the weight of the evidence. Like many investors, they confuse their immutable opinions as facts and will not consider any relevant and material data that contradicts their opinion.

     

    It is just ridiculous in my opinion to claim that a modest increase in the federal funds rate from zero to 1%, possibly over a year's time frame, will have any adverse impact on anybody other than those making out like bandits borrowing short term and buying longer dated bonds.

     

    The inflation rate is so low, and projected to remain benign for so long, that intermediate and long term rates can only go so high when the market returns to normalized rates. Even a 4% 10 year treasury rate has not been problematic for the stock market in the past. The bull run between 1991 to 2011 occurred with the 10 year at much higher levels, range bound mostly between 5% to 7.5%:

     

    http://bit.ly/WGQM6i

     

    The move in 2004-2007 occurred with the 10 year at 4% to 5%, and the move between 1982-1987 happened when rates were very high.

     

    Emerging market countries have debt to GDP ratios lower than most developed countries.

     

    see chart at page 38:
    http://bit.ly/WhENhA

     

    EM external debt to GDP is generally lower today than in 1996, a year before the Asian Contagion:

     

    http://bit.ly/1ifQfTS

     

    T. Rowe Price:
    http://trowe.com/1ifQ7Ut

     

    There was some turmoil in EM bonds and stocks last year, but those events have occurred regularly for decades and the last bout was mild in comparison to many others.

     

    I would note that EM bonds were the best performing bond category in of the six years between 2004-2012.

     

    Chart at page 29:

     

    http://bit.ly/WhENhA

     

    As to why bond yields are low now in the U.S. the main reason is a combination of QE and the FED hogging 50% of more of most intermediate and longer term securities.

     

    The NY FED has the data of how much the FED owns of each issue, and that data highlights basic supply/demand pricing principals.

     

    The FED has engineered abnormally high prices and low yields:

     

    Click T Notes and Bond Tab:
    http://nyfed.org/12yg38A

     

    We do not have a normal bond market. Other rates are benchmarked off comparable maturity treasuries.

     

    Even when QE ends, the FED will still be distorting intermediate and longer term rates down by holding onto those securities and only gradually whittling them down.

     

    Eventually, and it is really impossible to say when, the lack of FED buying and new issues to retire maturing debt will start the process toward rate normalization, i.e. interest rates set by normal market forces rather than by massive intervention by the FED.

     

    As to Levy's other points, they are just asinine, as I would expect from him.

     

    American corporations are sitting on record amounts of cash, and have underinvested in new plant. Those are facts.

     

    Corporate Cash
    http://bit.ly/1ifQ7UD

     

    Corporate Investment in Plant/Equipment:
    see generally:

     

    Recent Barron's Article:
    http://bit.ly/1gwa0ty

     

    Warren Buffet commentary at page 5
    http://bit.ly/1iw7Qch

     

    Publicly traded corporations have refinanced a ton of debt at abnormally low rates and their lower debt service costs have contributed to higher profit margins.

     

    Impact on Profit Margins:
    http://read.bi/1ifQ7UG

     

    The main problem worldwide is that demand has been muted due to the catastrophic Near Depression. It is really not about an oversupply of capacity problem.

     

    American consumers in the aggregate have already successfully reduced their debt service payments to disposable income to the lowest level since 1980. Middle class emerging market consumers are likewise in as good or better shape, having yet to discover the credit card. My concern going forward for the next five to ten years is that central banks and investors are underestimating now the potential for worldwide demand outgrowing plant, creating inflationary pressures, rather than deflationary ones.

     

    We shall soon enough about whether Levy has got his interest rate prediction right. Let's just say that I would not be surprised to see a FF rate of 1% as of 12/31/15.
    4 May, 06:43 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Tack,

     

    Thats awesome, and exactly how I trade.
    4 May, 07:36 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    South

     

    I don't know of anyone that is not cautious after a 180% gain - totally normal ,

     

    Anyone following the Hussman, et al crowd, has committed financial suicide - period. , they simply wont catch up ---
    and that goes for any pundit that has been out of the market in 2013 .... thinking we hit "THE TOP" ....
    BUT they will be the FIRST to come back and tell us all how they were correct if we get a 15- 20% sell off ..

     

    Comical..
    4 May, 07:55 PM Reply Like
  • astarr66
    , contributor
    Comments (189) | Send Message
     
    Tack: Classic! Also, I do enjoy your prose.
    5 May, 01:19 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Tack,

     

    Your comments are reasonable, except I believe it's too early to definately measure the effects on QE withdrawal on "risk appetites".

     

    Note I am not referencing " interest rates", the "economy" "earnings" "crash" etc. Only -- the degree of "animal spirits" -- "risk appetites" -- which directly translate to PE ratios.

     

    I see the selling in the momo's -- as a possible early sign of "risk off"

     

    Risk is of some "multiple" compression happening.

     

    Energy is a classic "late cycle" sector -- this does not embolden me on the long side.

     

    Hence, even for the long term, long only investor, I see no downside or " risk of missing out" to being patient during this season.

     

    Depends what you are buying. Perhaps your preferred issues will do quite well -- during this kind of season.
    4 May, 11:33 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    Multiple compression is occurring, for sure, if only because the markets have been consolidating horizontally, while profits continue to march higher. All of this augers well for the future outlook, versus a situation where markets were advancing exuberantly, but profits weren't keeping up.

     

    This kind of market is a yield-oriented value investor's sweet spot. The market keeps increasing the value equation each day it refuses to move higher, and the slow pace of changes keeps interest rates moderate, which makes yield issue high performers. So far, this year, I am happy to say that I am far ahead of the SPX.

     

    I'll be more than happy if the market stays in its persistent, cautious, doubtful, but gradually-rising, pattern. More horizontal churning just generates more value.
    4 May, 11:57 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    T,

     

    " All of this augers well for the future outlook, versus a situation where markets were advancing exuberantly, but profits weren't keeping up"

     

    Right -- like 2013, then?

     

    I'm often confused, but I don't think SPX eps were up anywhere near 30% in 2013.
    4 May, 12:19 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    Exactly.

     

    That's why the first four months of 2014 have been a welcome sign for sane value investors, such as myself, as opposed to more runaway silliness with certain social and bio techs and general indices getting ahead of themselves. This consolidating period in the markets, all the while the economy keeps producing and profits expanding, is exactly the tonic we need to stay on course and not generate budding euphoria.

     

    Instead, we get the usual claims that the stall shows that we're at a top and we should prepare for new downsides. The wall of worry is happily intact.

     

    P.S. Not directed toward you, but some people don't seem to understand that the markets "correct" merely by going nowhere, while profits advance and everyone stands around debating the next big dip.
    4 May, 12:26 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    T,

     

    I understand and agree a sideways correction is entirely feasible, in the largest and defensive issues.

     

    I have no strong opinion on the SPX, for the intermediate term. Long term, I think we move higher.

     

    However the momo sector / IWM has been good to me on the downside. I think -- not predicting! -- a 20% correction in the IWM / QQQ is entirely reasonable, and this would (likely) attract a more assertive bid from me.

     

    Tack, for my style, I want to see some fear, anxiety, higher VIX -- this sets up a better buying opportunity -- to me.
    4 May, 12:36 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Tack,

     

    Through a mix of long and short trades, I'm up 20% YTD.
    My yield issues I have, haven't hurt any.
    I know I'm not too bright, but I'm not complaining.
    4 May, 12:03 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    Regarding Berkshire Hathaway stock. They reported late Friday and missed earnings, although revenues did go up 3.6% and book value by 2.6% this quarter. Odds are it will under perform the S&P for at least a short while since it made a huge move over the past couple months and is up against what should be strong weekly resistance relative to the S&P. The first area of support should be the 10 week moving average, about $125 next week or the 50 dma between $123-124 (there's a gap at $123.77). I'll play it by ear where I'll add, but given the lack of near term catalysts I won't be in much of a hurry since it's already my largest position by far. However, if I can sell a bit not much lower than Fridays close I may do so - I can't tell how I'll feel in the morning.

     

    How it trades will depend upon economic data and how the S&P performs; of course the better the economic data, the better the market and brkb should perform and visa versa.

     

    For what it's worth, the Morningstar analyst maintains his "fair value" estimate of BRKB @ $150 - having raised it from $143 in late April and still expects double digit book value growth this year and next.

     

    The relative charts:
    Daily http://bit.ly/1fIiSyV

     

    Weekly http://bit.ly/1fIiUXr

     

    I had hoped earnings would be good enough to push the ratio out or the triangle formation to the upside on the weekly chart, but it looks like the stock will spend some more time in the range.
    4 May, 12:14 PM Reply Like
  • User 7415181
    , contributor
    Comments (562) | Send Message
     
    I'm partial to this article:

     

    http://seekingalpha.co...
    4 May, 05:27 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    thank you User, that is one of the best articles I've ever read on SA.

     

    I believe in buying quality companies, at a good price - and then holding them until it doesn't make sense to hold anymore. That means if the dividend is cut....an early warning that the company is having problems.

     

    Let time in the market take your investments to new highs, without over worrying about the future. The best companies will recover, as we have seen time and time again.

     

    Here is an article by David Van Knapp, to help identify quality companies

     

    http://seekingalpha.co...
    4 May, 06:16 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    the comment section after this article was very good too.

     

    having a few speculative plays in your portfolio doesn't hurt either, as one commentator posted.
    4 May, 06:17 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    User, from my own experience sometimes I've sold perfectly good stocks because some bad news or other came out.

     

    I have learned that tuning out the latest market news can be a real positive.

     

    This is an article that we should all read again on "bad news days." Really puts investing into perspective.
    4 May, 06:21 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    I liked it as well but disagreed with some parts, particularly:

     

    "What is not important is spending a lot of time looking for evidence that the current state of the company is about to turn imminently or identifying "catalysts" that could initiate that turnaround."

     

    Early in my stock investing career I was pure value and ignored the technicals. The trouble is you can often sit on a losing position - watching it continue to fall for awhile - before the market wakes up and realizes what a gem it is. I don't know about you, but the hardest thing for me in this market is continuing to lose money and not know why. I would often get frustrated and get out just before a turn - and then be so disgusted and get back in. My bad - but I think that's just human nature.

     

    That's why I often only put on a tiny position, or wait for the technicals to confirm a turnaround or a catalyst before getting into a stock. It's all very well and good to be high minded and eschew everything except "value" but there are two things wrong with that. For one, you may be wrong, and the other - like I did awhile back - get frustrated and get out.

     

    I find that particularly true of tech stocks and trendy things like apparel. For defensive dgi stocks with good balance sheets I don't mind sitting on a loss because I know those will eventually come back.
    4 May, 06:23 PM Reply Like
  • User 7415181
    , contributor
    Comments (562) | Send Message
     
    Hello to both of you again,

     

    I just came across that article today. I think I invest quite a bit differently than both of you. Probably a simplified mix of Tack and Extremebanker would best describe it. And I add in other elements as I go along. I'm still learning and hopefully will still be until I die.

     

    "User, from my own experience sometimes I've sold perfectly good stocks because some bad news or other came out."

     

    Me as well. Although I focus more on funds and preferreds. I want my income up front and now. And sometimes I need to raise some cash for life's unexpected turns. I'm actually thinking about buying back into a cef I sold off a month ago for a profit.

     

    "I have learned that tuning out the latest market news can be a real positive."

     

    Cut off cable four years ago to save some money. I don't miss it. Most of my news comes off the internet now. It still may be too much.

     

    "Early in my stock investing career I was pure value and ignored the technicals."

     

    Yes ma'am. I think I was that way with my individual picks over the last couple of years or so. I've started to use my limited understanding of TA in selection for cefs and such recently. I'll see how it goes.

     

    BSF,

     

    I believe in our last exchange I made a facetious comment regarding spending my money on guns instead of the mortgage payment. That was more in reference to a co-worker's son who actually did that. Now he is back living with his mother.

     

    But it got me to thinking about you and your son and you not allowing him to have guns whilst under your roof. I think guns are just fine when used responsibly. This is what you should get him to tide him over until he moves out:

     

    http://bit.ly/1g1iN3H

     

    Hey, it's a gun. What's he got to complain about?

     

    :)
    4 May, 07:30 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - BSF, User7

     

    It's pink. Does that mean it's a girl gun?

     

    Lots of good thoughts to read in your exchange :). So TA does add to fundamental in your experience...
    5 May, 01:15 AM Reply Like
  • User 7415181
    , contributor
    Comments (562) | Send Message
     
    LMH,

     

    Even better. It's a little girl's gun. If I had a kid that was expressing interest in firearms, I would get them something along those lines. Quick and easy way to tell if they're more interested in learning how to shoot or if it's the macho thing.

     

    I'm very new to TA, so don't have much experience. Actually, that's not quite correct - I'm familiar with moving averages but have not used them with the cefs I invest in. I'm trying an experiment by looking for a 50/200 day crossover to the upside on the nav of a fund I'm thinking of buying into. And then hoping to see that the market price is lagging that.
    5 May, 07:28 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    You are right DD, buying more of a questionable company when it goes lower can be extremely dangerous. You have to find the new companies with the best potential, like (AAPL). Today, IMO (SWKS) (SCTY) (TSLA) (SSYS) (FB) and some others do have good business prospects. So I'm willing to invest a small amount in them, to see where they go.

     

    Over the next 10 years, some of these companies will be huge winners.

     

    I loved the comments - some pointed out that when (AAPL) was at a high PE ratio & a price under $50, many passed on it.

     

    When a really great company goes out of favor, or has some earnings & goes down in price, that's a gift. I'm thinking about (PG) (JNJ) etc.

     

    When you look at last year, there were several companies that did have a tough year. (MCD) (KO) (IBM) (BA) and some others. I kept buying, and now am slowly seeing them come back. (KO) will get it right eventually. The distribution system Coke has, and it's brand recognition are world class. Buffet isn't selling, and neither am I.

     

    There are some companies that never seem to have a bad streak, like (MMM). I bought it last December & it just keeps going higher.

     

    All of these companies, the quality ones, I am happy to buy whenever there is a dip. They are the foundation of my portfolio.

     

    This is why I always keep some cash on hand, ready for anything. Usually about 10% sometimes higher.

     

    A few months ago, (LO) had a lot of chatter about regulations, etc. I bought it cheap last summer, when talk about menthol cigs getting regulated lowered the price. A few weeks ago it was the negative talk about e-cigs that caused a dip. Wow what a mistake. (LO) went $10 higher right after I got out.

     

    So I try to focus on the long term, try to remember "this too shall pass." Looking at the historical charts of the great companies helps too. Long term, over many decades, holding is the best way to make money. Sure has worked for Buffett, and my Dad. He passed away in 1990, but the investments he made all the way back in the 1970s are still increasing in value & paying dividends to my 89 year old mom. Imagine, she hasn't sold anything, just withdraws the dividends. Truly amazing.
    5 May, 08:24 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    lol User, even if it was pink he'd still want it : )
    5 May, 08:27 AM Reply Like
  • User 7415181
    , contributor
    Comments (562) | Send Message
     
    BSF,

     

    Ah! Then maybe that should be a signal for you to get it for him with the condition that he attends a firearms safety class with it. If he's willing to go through that with a youth-rifle-in-pink, then perhaps he would be responsible enough to have a firearm.

     

    Just a suggestion as I remember what I was like in my late teens and early twenties and how much common sense I had.

     

    "All mankind's troubles are caused by one thing, which is their inability to sit quietly in a room."

     

    Doesn't apply to just investing. Very important with firearms. And probably other endeavors I'm not thinking of off hand.

     

    :)
    5 May, 01:00 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    Lively discussion on earnings

     

    an observation

     

    this was posted back on Jan 25, 2014 from the Thompson reuters press release

     

    Per ThomsonReuters, the “forward 4-quarter” estimate for the SP 500 ended the week at $120.32, down $0.28 from last week’s $120.60.

     

    The p.e ratio on the forward estimate is now 15.2(x). The PEG ratio is now 2.35(x), still at the high end for the past 12 – 13 months.

     

    The SP 500 earnings yield rose this past week to 6.72% from last week’s 6.56%, understandable given the drop in the SP 500.

     

    The y/y growth rate on the forward estimate is 6.33%, down slightly from last week’s 6.45%.

     

    This morning i posted the new report calling for $123 .

     

    can we see a downward revision from these numbers , of course ,

     

    However , I'm not expecting corp america to take a tremendous hit to earnings between now & the end of the year ...

     

    The forward PE is under 16 ..... and the crowd that doubted and called the $110 estimate for 2013 as being a "pipe dream" were incorrect--- as the actual was $109 & change ...

     

    Everyone should form their own conclusions as to whether this is meaningful
    4 May, 07:13 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    F & G: Do you know offhand whether Thomson Reuters is using "operating earnings" in its forward number. Several services will use the "as reported" number when looking at the trailing 12 month P/E but the forward number will be using operating earnings which will be a higher number than as reported GAAP numbers.

     

    Over the years, a number of companies, including most tech firms, have trained investors to ignore the GAAP numbers. Others will have a series of "one time" charges that seem to occur just about every year that relate to operations, but want investors to focus instead on their "core" operating number.

     

    My tendency is to go with GAAP when looking at an index P/E. On an individual security basis, I will tend to overlook certain one time charges such as the costs of one bank acquiring another.

     

    We do have some new or recently added S & P 500 members, that are skewing the P/E number higher (e.g. Facebook, Amazon, Salesforce, TripAdvisor, Vertex) I wonder what the P/E would look like if I could take all of those companies out and put 5 of the larger components of the S & P 400 in their place, companies with market P/Es? .
    4 May, 07:31 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    South

     

    i believe they do

     

    here is a report from TR on the Dow components

     

    http://on.barrons.com/...

     

    The dow doesn't seem to be too expensive
    4 May, 07:43 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Both the S & P 100 and the DJIA will have a lower TTM P/E and forward P/E than the S & P 500, and both of those "mega" cap indexes will have lower volatility numbers than the S & P 500.

     

    As of 5/2/14:
    VIX 12.91
    VXD: 12.29 DJIA Volatility
    VXO: 11.82 S & P 100

     

    The Russell 2000 and Nasdaq 100 are more volatile.
    RVX: 20.04 Russell 2000 Volatility
    VXN: 17.03 Nasdaq 100 "

     

    Although Amazon is now in the S & P 100, most of the companies have reasonable P/Es given their track records, financial strength, products, overseas opportunities and/or innovations. Their earnings are far more predictable going out four quarters. The large consumer staple companies, for example, give guidance within a few cent range and hit or beat the guidance, or at worst, slightly below.

     

    The DJIA and S & P 100 forward earnings estimates are in my opinion generally reliable estimates. I would not rely on estimates for a number of companies outside those two indexes.

     

    As an aside, Gold's volatility has really simmered down:

     

    http://on.mktw.net/1ms...
    4 May, 08:29 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    http://bit.ly/1mt2W1M

     

    http://bit.ly/1mt2W1P

     

    http://bit.ly/1mt2W1R

     

    A few great thoughts in investing and punditry. I like the second one!
    4 May, 09:07 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    My two favorites, although the second isn't necessarily just for investing:

     

    Don't confuse brains with a bull market.

     

    When everyone is thinking the same way, no one is thinking very hard.
    5 May, 01:26 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    Lots of exchange and thoughts on where the market is going.

     

    From what I can figure, everyone agrees it's in a trading range and SnP has held so far. Also that it could correct by going sideways. Long term is likely bullish.
    ....The discussion is whether it will more likely correct a lot before then. Lots of different indicators to assess on that.

     

    Everyone agrees it's toppy, and for core investments, not the best entry points. There are different strategies to deal with this time period, from high yield value, to shorting momo, to variations in between.
    5 May, 01:22 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » -

     

    I'd like to suggest maybe we can have more than one thread of conversation going.

     

    ....so one on where the market is going.

     

    ....Another on long term buys, even if the entry point isn't now. And other topics (TA, how tos, assessing) that will help buyers learn & enjoy.
    ....Maybe give even our experienced invesstors some new ideas on all of it?

     

    Both are important IMHO. (Not that we haven't been doing this. I'm just saying it outloud. Also now that the market is toppy, it's a little harder to know how to talk about specific stocks & techniques, but we still can to get ready for the market's next move -- either way up or down, it'll be time to buy in...)
    5 May, 01:30 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    L,

     

    Everyone agrees its toppy? I haven't heard anyone (else) say that, talk about reducing risk, getting defensive, raising cash, anything but secular bull markets, buy and hold, and cheap valuations, along with earnings.

     

    Except DD and myself that is.
    5 May, 07:13 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » M

     

    Yep, everyone's said it's overvalued, bloated and saying they are holding off on buying for the most part - Tack, Fear, SG. Tack's seeing a trading range and happy he's in high yield to gain meanwhile (that's his only suggested area to me). SG's not finding much to buy (see his posts above). Fear's happy with a few he's gotten, and watching them hit new highs & thinks those in particular will keep running, but he's not finding a lot to get into, and don't suggest chasing much.

     

    Everyone is saying toppy, but not likely a major top (i.e. crash). But that a correction or time is needed to get P back in line with E. Or E has to come in strong for the next leg up to take off.
    5 May, 09:16 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    LMH: I am not a Nasdaq 100 kind of guy. As a value investor, except for my lottery ticket and flyer's baskets, it would be normal for me to find slim pickings after a 180% move up. The same was true in 1987 and 1997. By 1999, I was gone.

     

    Still, I did have a major rotation into Equity REIT stocks starting last September and have bought selective stocks on an opportunistic basis. My overall stock allocation is remaining relatively constant which would be normal whenever I characterize the market as being in a long term secular bull move.

     

    I recognize that there could be at anytime a 10% to 20% correction and would welcome such an event. It will provide me with more stocks to buy that meet my criteria for purchase.

     

    A number of pundits have predicting market tops throughout this bull move. The market has proved to be resilient and frustrating to them. Many called a top in September 2012 and were left to eat dust as the market rose another 30%. My Vix Asset Allocation Model flashed a green light in September 2012.

     

    I did initiate last Friday, with a minimum $3,000 investment, a position in the Vanguard Global Minimum Volatility Fund Investor Shares (VMVFX) (expense ratio .3%)

     

    http://bit.ly/1g2CPLo

     

    If there is a correction soon, I will just add more money to that fund.

     

    As I have become older, I prefer less volatility. There is also a fair amount of research that highlight the importance of low volatility to long term returns.

     

    "Low Risk Stocks Outperform within All Observable Markets of the World"

     

    Downloadable at
    http://bit.ly/10UlUTl

     

    That thesis is consistent with my VIX Asset Allocation Model that highlights that sustained market up moves exist only in low volatility settings which is what we have now by the way:

     

    http://bit.ly/XIe6mV
    5 May, 10:21 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    South
    you introduced me to your VIX model when we met here on SA a while back ,,

     

    its now part of my "tool box" , & its as simple as they come to help navigate a "directional" change in equities.

     

    As you have noted its not a "short term" timing model

     

    Thanks
    5 May, 10:46 AM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    F & G: All of the sell signals have been good going back to 1987 before there was VIX data. There was volatility data on the S & P 100 back then, symbol ^VXO at YF, and that index is less volatile than the S & P 500. A "Trigger Event" occurred in April 1987, which was followed by a temporary return to below 20, similar to what happened after the August 2007 Trigger Event with a temporary return to below 20 in October 2007.

     

    "Parallels to VXO 1987-1988"
    http://bit.ly/YsauDJ

     

    The VXO hit 150.19 on 10/19/1987. As noted in that post, those extreme volatility events require a long period of recovery. It is just very damaging to the psyche and investor's comfort level with stocks.

     

    The Trigger Event is the sell signal.

     

    As I noted in that old 5/9/2009 post, an extreme catastrophic type event reading in the VIX, going well above 40 on a huge spike upward, takes a long recovery period. The model has a built in protection mechanism that will be slow to flash a green light. The reason is to avoid false entry points when the VIX falls below 20 for only a brief period before spiking back up.

     

    Throughout the 2009-2012 period, I noted that it was positive that the VIX was moving down and toward a Stable Vix Pattern, a continuous movement below 20. Given that protection built into the model, there will be a lag in the green signal after a catastrophic event that causes elevated VIX numbers to remain for a long time.

     

    Once the Stable VIX Pattern is formed, it exists until the next Trigger Event. Historically, that pattern has been associated with strong and durable up moves lasting several years. The longest move started in 1991 and lasted until the October 1997 Trigger Event and the other was about three years ending with the August 2007 Trigger Event. The VIX data starts in 1990 and almost all of the gains since that time have been captured during the Stable Vix Pattern only.
    5 May, 11:09 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    S:

     

    Once one experiences the catastrophic-type VIX event, isn't that the buy signal, right there? It seems to me that waiting for some semblance of stability is exactly what led many investors to sit on their hands in 2009-2012, waiting to be sure the "coast is clear." That's when all the real money is made.

     

    It seems to me, at first glance, that, perhaps, the sell-side signal is more valuable.
    5 May, 11:51 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    S / T;

     

    You've touched on, unintentionally my approach to shorting. I like to short a low Vix; when I feel the market / or index is vulnerable, (like right now) and cover/ long on a high VIX.
    5 May, 11:54 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    When one examines the entire VIX history, it becomes more obvious that any massive upward excursions, above 40, are immediate and virtually risk-free buy signals, as such elevations aren't even sustainable for short periods, much less long ones. Low VIX readings, however, are far harder to time on the sell side, as they can perpetuate for lengthy periods.
    5 May, 12:01 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    You are correct, and a Low VIX cannot be used in isolation.
    5 May, 12:02 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Tack: The sell signal is more valuable. However, the long lag in the green light signal would have proved beneficial in 1999. The Unstable VIX Pattern lasted from October 1997 to late in 2003. It was flashing sell in 1999 if you ignored the Trigger Events in 1997 the Confirmation Event in 1998.

     

    I noted the conflict with the green light signal and other valuation measures in several old posts which is more relevant to the 2009-2012 period.

     

    The fact that the market remained in an Unstable Vix Pattern between August 2007 to September 2012 did not prevent me, nor should it prevent anyone else, from using traditional valuation criteria to make stock selections.

     

    The Trigger Event sell signal does warn the investor that raising cash by selling some stocks would be prudent, but the amount of the reallocation is up to the investor. A typical reallocation for me would be to reduce my stock allocation by 20% for later redeployment which is about what I did in 2007. I might go deeper depending on the circumstances.

     

    5/15/09 Post

     

    "When VIX Model Gives A Signal To Change Asset Allocation-Each Individual Needs to Assess Their Own Situational Risks"

     

    Still, all of the gains in the S & P 500 would be captured, and then some, by selling when the VIX returned to below 20 after a Trigger Event and buying only when a Stable Vix Pattern formed.

     

    1991 Start of Stable Vix Pattern: S & P 500 at 374 (March 1991)

     

    October 1997 Trigger Event

     

    VIX Returns to Below 20 Temporarily February-March 1998-S & P at 1100 Sell

     

    Stable Vix Pattern forms late in 2003: S & P 500 at 1100 Buy

     

    August 2007 Trigger Event

     

    VIX returns to below 20 in October 2007: Sell

     

    S & P 500 at 1560

     

    Late September 2012 Stable Vix Pattern: Buy

     

    S & P 500 at 1445 or so

     

    5 May, 12:27 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Macro: After the August 2007 Trigger Event, I successfully used the double short ETFs from Proshares by timing a sell of SDS or TWM when the VIX spiked toward 30 after moving below 20, which would coincide with the market going down and those ETFs going up in price, and then I would buy the double short when the market rallied and the VIX fell below 20. This is a regular pattern in what I call a Phase 1 Unstable VIX Pattern characterized by a whipsaw action in the VIX, mostly in the 20 to 30 range, with temporary spurts above 30 and below 20. After briefly moving below 20, the VIX would then spike up to 30, then fall back below 20 or so and the hedges could be bought again. That worked until mid-September 2008 when the VIX started to soar and the hedges would have been sold on a spike toward 30.

     

    I have quit using those double and triple short products after noticing their severe tracking problems.

     

    Still, options and other products (shorting a long ETF) could be used in their place. I am not set up to buy options or to short with only cash accounts. However, even if I was set up to buy options and to short long ETFs, my Vix Allocation Model prevents me from doing any hedging when the market is in a Stable VIX Pattern as now.

     

    If I was going to hedge during a Stable Vix Pattern, I would probably limit myself to buying index puts when the volatility numbers were in the 10-15 range, and then I would select indexes viewed as the most overvalued which is what you appear to be doing in part. Or, to protect gains in certain stocks, using a buy-write strategy.

     

    Historically in a Stable Vix Pattern, marked by continuous movement below 20 in the VIX, you can have prolonged moves in the 10-15 area with occasional spurts between 15 to 20.

     

    I also discovered in 2008 that the Russell 2000 was more volatile than the S & P 500 and I received more bang for the buck by buying TWM rather than SDS.

     

    My RVX model caused an exodus from small caps in 2007:

     

    Small Caps and RVX model
    http://bit.ly/1g2UJgQ
    5 May, 12:44 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Tack: A move over 40 in the VIX will be associated with a severe market decline. In that sense, stocks would have become much cheaper. I personally would not recommend jumping into that spike. It would probably be better to wait until the VIX calms down some, and starts a multi-day move back toward the mid-to-high 30s after piercing 50 to the downside.

     

    There is likely to be a huge amount of risk, the usual stomach churning and blood in the streets, when the VIX moves into that catastrophic phase 2 Unstable Vix Pattern.

     

    In the last example, the VIX moved from 34.74 on 9/26/12 to 46.72 the next day. That was a clear warning that something really bad was about to happen. In October 2008, the VIX went into the 60s and as high as 80.06 at the 10/27/08 close. Jump in?? That would have been a okay entry point with the S & P 500 closing at 848.92 and then jumping to 940.51 the next day, but I would suggest that prudence was still in order.

     

    The VIX was not yet showing a concerted attempt to move back down, and the S & P 500 would lose another 21+%, which isn't chicken feed, before hitting bottom.

     

    While I started to buy in March 2009, the better option may have been to wait for the VIX to fall below 40 in early April 2009 and then back up the truck when the S & P 500 pierced its 200 day SMA to the upside which happened around 6/1/09 rather than trying to time the crash with substantial stock purchases during its downward spiral period.

     

    If you bought during the October 1998 spike, you would have done fine until the 50% correction in 2000-2002 which would have taken you back to 800 by July 2002, or about 300 points or so below the March 1998 levels. What I call the Unstable Vix Pattern is a dangerous pattern for most individual investors. It can be a lot of fun for traders, but most individuals would get motion sickness with all of that severe up and down movement going nowhere after several years.
    5 May, 01:55 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    S:

     

    However, if one examines an overlay chart of the SPX and VIX for the entire history of the VIX, that timing lag you mention in the fall of 2008 is the only time the the VIX's zenith and market nadir were offset in any meaningful way. I'd contend that there's no more ability to time on'e's lag into such cases than there is for today's market timers to guess tops.

     

    Not surprisingly, the fact that low VIX's and high markets can be sustained for lengthy, unpredictable periods, trying to time and/or short tops is a far more perilous business than buying hysterical lows. The charts make it glaringly apparent that no hyperbolic VIX's, and accompanying market nadirs, can be sustained very long. As they are very fleeting, trying to guess "even better" entry points is just a perilous for investors, if not more, than trying to time tops.

     

    P.S. Of course, this is all stomach churning aside. That stats merely indicate where to make money, not what sedative may be required.
    5 May, 02:57 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    Tack: I agree that is impossible to predict when the VIX might surge from 13 to 18, so it is really hard to use the VIX as a timing tool for selling stocks or buying hedges, when the VIX is moving continuously below 20.

     

    The really low VIX numbers could continue for a long time, and the spikes to the high teens are generally impossible to predict and will not last for very long. That is why my model prohibits hedging during the stable vix pattern period.

     

    In the catastrophic Unstable VIX Pattern, we are in an entirely different ball game where the pitcher is throwing 100 mile an hour fast balls, alternately targeting your groin and your head.

     

    We do not have VIX data for the 1929-1932 period when the DJIA fell 86.2% before hitting bottom in 1932.

     

    Dough Short Blog:The Four Totally Bad Bears: New Update

     

    http://bit.ly/S3fGSs

     

    While opinions differ, I believe that we came perilously close to another free fall similar to that 1929-1932 event. The world's financial system was on the verge of collapse in the 2008 fall.

     

    Until an investor could see the light at the end of that tunnel, then I would not regard it as prudent to believe that all is well, a depression can be avoided, and it was okay to make a substantial move back into stocks in October-November 2008.

     

    Since I have a steady cash flow into my accounts, I will invest that cash flow no matter what and consequently I was buying in October 2008 to March 2009 using those funds. It was not until March that I saw that light clearly.

     

    To avoid buying into what turns out to be far more than a 50% decline that may take two or three years to unfold completely, some mechanism has to be used for self preservation. I mentioned two above, a return to below 40 in the VIX from the catastrophic high numbers and a piercing of the 200 SMA line to the upside.
    5 May, 03:19 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    I would add one possible overlay on the decision making process. During the VIX spike in September-October 1998, which was a confirmation event in my model, stocks were still overpriced and only became more absurdly priced thereafter until a 50% correction brought prices back to a semblance of rationality. So, a typical valuation model can be used in the decision making process. The S & P 500 at 850 in late 2008 was a far better buy than the S & P 500 at 1000 back in September 1998 when the VIX shot up into the 40s.

     

    It would be a fair assumption to assume that I am familiar with the movement of the SPX and the VIX since 1990.
    5 May, 03:46 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    L,

     

    I take longer term view of the market - for example i don't use S & P 1840 as a "tipping point" in the S & P as has been suggested here..
    That may be fine if one has a short term view of things ..

     

    Therefore i don't get "defensive " at a level that is some 40 points or 2% from where we are now ..
    There seems to be a misunderstanding that LT investors haven't been thru, and can't deal with a 10-15% correction or more.. so 2% isn't on a LT investors radar.
    The same type of thinking leads many to believe the LT bulls will be wiped out if a correction happens ... Its pervasive here on other SA articles and I find it amusing ..

     

    That doesn't mean I'm not cautious -- a few quotes from this past week on my blog ...

     

    "However this doesn't suggest that anyone go "all in". "

     

    "if we do get a sideways market with some volatility, it is a perfect environment for selling short-term calls against some of your holdings.. Another way to profit from the uncertainty out there."

     

    "Individual stock selection is more important than ever in 2014"

     

    "Take what the market is giving you - It's a path not chosen by the crowd."

     

    & I have said repeatedly along the way to new highs - "harvest profits , sell calls against positions that are stretched "

     

    and finally on numerous occasions when we achieved another milestone high :

     

    "Does that mean we bet the farm here and go all in , I suggest over & over if you are going to bet the farm at anytime you better have 2 farms.."

     

    & BTW I have laid out my "tipping " points in the blog.
    An area in the S & P where i get concerned and more defensive ... but its not 2% down from here ...
    Its there and "documented" --

     

    links can be provided if necessary .
    
    5 May, 09:30 AM Reply Like
  • satan2liberals
    , contributor
    Comments (1207) | Send Message
     
    humorous to say the least.
    5 May, 03:33 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4530) | Send Message
     
    From Bespoke :
    1,500 companies that have reported earnings so far this season, 60% have beaten earnings estimates and 56% have beaten revenue estimates.

     

    and a chart by sector

     

    http://bit.ly/1g2AsYW

     

    Everyone should form their own conclusions as to whether this is meaningful
    5 May, 09:59 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Short (GS) 155.50

     

    My perspective; is most so-called long term investors who have piled in the last 9 months; which is a lot of them; can't handle a run of the mill correction; because we haven't seen one in so long. People have been conditioned that markets only go up.

     

    We'll soon see how people react; when pushed a little, I suspect.
    5 May, 10:10 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    This article lays out the foundation of the DGI philosophy.

     

    http://seekingalpha.co...

     

    Last year, I found SA. After reading many articles, it seemed to me that the dividend growth style of investing made the most sense for my goals. Using the dividend aristocrats & David Fish's CCC list, all the stocks that are blue ribbon are pretty much covered. All it takes is some due diligence to decide whether or not the stock is fairly valued before purchasing. Maintain a "wish list" so that you're ready if your stock dips.

     

    Several authors have helped me to be a better stock picker, especially Chuck Carnevale, David Van Knapp & Dave Crosetti. Bob Wells wrote an excellent series about how he set up his retirement portfolio.

     

    Because a company that has paid out dividends & increased them - for 25 years or more - is likely still going to be in business a decade from now, it makes sense to me to invest in that type of company.

     

    To increase dividend income, I've also invested in some Reits, BDCs, etc. Even a bond fund (PTY) which has done very well. A few CEFs too.

     

    In order to take advantage of any future opportunities, I like to have cash, about 10%.

     

    5% is budgeted for speculative plays. They life make fun, some days.

     

    My goal is to live off the dividends generated by my portfolio in retirement.

     

    If the market dips, yahoo. I'll be buying. Meanwhile, as explained in the article, I'm not selling the DGI stocks I have already bought unless the dividend gets cut.

     

    We have a lot of different types of investors here. The key is deciding for yourself what style of investing meets your goals.

     

    And yes, I am a proud "long term investor" that rarely sells.

     

    Didn't sell anything in 2008/2009, but I was a buyer.
    5 May, 11:25 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    BSF;

     

    I agree with and respect your approach, and appreciate your respect for mine. One reason I do find the blog valuable ; is I can experience approaches completely different from mine; which provides a learning opportunity.

     

    When interaction is with mutual respect, this can be valuable to all.
    5 May, 11:50 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    I'm adding to shorts here, (BAC) (GS) (YELP) (AMZN) (IWM) on the morning rally

     

    If I'm wrong; I'm wrong.
    5 May, 11:25 AM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M: I must be selling you my BAC puts. :-)
    5 May, 11:53 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    T; I'm outright short the stock here, but many time frames and ways to skin a cat.
    5 May, 12:04 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    M, I'm glad somebody is making money on the downside : )

     

    I think "buy & hold" runs deep in my DNA. First, my German grandfather (his grandparents settled in Iowa in the 1840s, now that took real grit) started the family drugstore that still has his name & is still in business over 100 years later.

     

    My Swiss grandfather came from a small village in Switzerland. Their house, which has been in the family since the 1500's still is in the family. I got to tour it back in the 90s. Really impressive construction. The whole village was right out of the middle ages.
    5 May, 12:16 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    In theory I like the concept of buy and hold, because in the long run the market always rises.

     

    In practice I find it impossible to stick with the market when I believe the odds are very high it will move lower. Perhaps it comes from trading grains that go down almost as much as move higher. Perhaps it comes from the recognition bear markets can last for years. Or perhaps it's simply that I hate to lose money.

     

    Right now I can make both a bull and a bear case so all I've done is lighten a bit because I think the market is relatively expensive, but if the scale tips I won't hesitate.

     

    And I'm half German (half Hungarian).
    5 May, 01:52 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1411) | Send Message
     
    DD, do you have any traditional recipes from your grandmothers? I only have a few, but now I cook mostly Italian and Indian food.

     

    Whenever I go home to visit my family, they require me to cook lots of Indian food for them. Funny how we love spicy food, maybe because it's so good? I make everything from scratch, using fresh ginger, garlic, vegetables, etc. I even grind my spices. Especially like fresh ground cinnamon.

     

    Luckily, we have many good Indian grocery stores in NJ.
    5 May, 07:13 PM Reply Like
  • dancing diva
    , contributor
    Comments (2410) | Send Message
     
    I do have some, but they're all in my head and not written down. My Hungarian grandmother's stuffed cabbage is phenomenal, although so much work I haven't made it for years. And unfortunately while the recipes are great, tend to be on the heavy side.

     

    These days I'm more into Asian style cooking - stir fry type, lots of veggies relative to meat. Hubby loves Indian food, and makes if occasionally, but I don't care for many of the spices.
    6 May, 07:18 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Bank of America: Story that California State Teachers' Retirement System pension fund prepared to vote against bank directors following capital errors (15.08 -0.17)
    5 May, 01:00 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    Well -- I have to be impressed with the resiliency of the market today. Not sure what to make of it, but the bulls won the battle today.
    5 May, 05:04 PM Reply Like
  • satan2liberals
    , contributor
    Comments (1207) | Send Message
     
    Macro trader
    Well -- I have to be impressed with the resiliency of the market today. Not sure what to make of it, but the bulls won the battle today.

     

    =======
    I just hate it when people twist my arm & force me to make money. LOL
    5 May, 07:07 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    M:

     

    Pretty simple.

     

    The JPM trading news is barely news and has almost no broad economic effect, but the general data keeps being positive.

     

    As discussed previously, rotation is not retreat.
    5 May, 09:01 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2910) | Send Message
     
    T,

     

    So far you are absolutely correct. Rotation continues to occur. I don't like some of it -- utilities leading -- banks and homebuilders lagging -- but no breakdown.

     

    Not the healthiest looking rally I've seen, but it is what it is. Buying shows up on dips.
    5 May, 09:44 PM Reply Like
  • southgent1951
    , contributor
    Comments (2521) | Send Message
     
    The ISM Services number released this morning offset the slightly negative HSBC final manufacturing April PMI for China.

     

    Morningstar has an interesting chart showing the time length and percentage gain of bull markets for the past 100 years or so. This may or may not be available to non-subscribers:

     

    http://bit.ly/1q8Fuwz

     

    A bull market is measured from the lowest close after the market has fallen more than 20% and ends at the next high.

     

    The current move has lasted 61 months and has risen 183.9%.

     

    Some prior moves:

     

    167 months +815.3%
    181 months +935.8%
    155 months +845.2%
    153 months +816.5%

     

    I am not making any suggestions about the length and potential upside for the current bull move. I would just note that the move off the March 2009 low is not that large from a historical perspective.
    5 May, 09:17 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Author’s reply » - I'm not done reading this chapter... but here's chapter #23!
    http://seekingalpha.co...
    5 May, 11:35 PM Reply Like
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