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Tales From The Future
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Tales From The Future (tftf). I picked my nickname because many advisors and investors claim they can predict the future of the (stock) markets and somehow pick the winners. I don't. I usually do not engage in short-term trading and myopic analysis (quarter by quarter, without looking at the big... More
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  • A Sober Quote For All These Recent Market Highs: The 3 Stages Of A Bull Market 1 comment
    Jul 3, 2014 2:14 PM | about stocks: SPY

    It's worth repeating. Stock prices won't rise forever:

    Very early in my career, a veteran investor told me about the three stages of a bull market.

    Now I'll share them with you.

    • The first, when a few forward-looking people begin to believe things will get better

    • The second, when most investors realize improvement is actually taking place

    • The third, when everyone concludes things will get better forever

    (Book Source for the Quote: The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor, Howard Marks)

    I think we are past stage 2 and headed towards stage 3. But it's difficult to estimate the stage 3 timeframe even for the most experienced investors and traders.

    Be cautious and use trailing stop losses for long positions at these levels remains my personal advice.

    A good gauge when stage 3 is near: Rising interest rates mixed with higher volatility (absent any catastrophic, high-impact event that could turn the markets to the downside faster of course).

    Stocks: SPY
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  • Tales From The Future
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    Author’s reply » More evidence that the five-year rally could be over or at least flattening out:


    " Individuals Pile Into Stocks as Pros Say Bull Is Spent "


    " Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute. "




    An interesting take from B. Ritholtz on the above stats:


    "Be forewarned: It takes more than a few months of stock buying for that full-on exuberance to make an appearance. When former Federal Reserve Chairman Alan Greenspan described the “irrational exuberance” of stocks investors in 1996, it took almost four more years until that climax was reached. If we even go half as long, we might see another year or two before small investors become too bullish. "




    Timing in bubbles is always hard...
    14 Jul 2014, 12:55 PM Reply Like
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