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The U.S. economy is poised to surprise very strongly to the upside, and investors have not fully...

The U.S. economy is poised to surprise very strongly to the upside, and investors have not fully priced in the dramatic turnaround ahead, James Kostohryz believes. Or this type of rising bullishness despite so many looming troubles could set us up for a fall, with any type of shock sending the market reeling.
Comments (32)
  • wyostocks
    , contributor
    Comments (8229) | Send Message
     
    Stay awake; ride the current uptide and prepare to take profits. Market timing is a bi#$h so each must pick their own points.
    3 Jan 2011, 06:18 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    There is a huge disconnect between those forecasting strong economic growth and those watching the public debt clock. The former seem to ignore the debt as a data point while the latter fight the Fed at their (so far) peril. Fortunes will be made and lost by the gamblers among us, but I see capital preservation as the foremost objective and that is difficult enough with ZIRP and 14T in public debt. There is nowhere to hide so it's hit and run for this guerrilla investor.
    3 Jan 2011, 07:01 PM Reply Like
  • wyostocks
    , contributor
    Comments (8229) | Send Message
     
    Thats why one must be a nimble trader in this market. Keep diligent, study the daily action, and don't fall in love with any stock At some point some obscure ( or maybe not so) announcement will trigger a huge sell off and those not alert will get screwed big time.
    3 Jan 2011, 07:11 PM Reply Like
  • bmcpic
    , contributor
    Comments (150) | Send Message
     
    I'm curious why you think $14T is such a huge problem. I mean, its a big number, but any amount of debt is meaningless without a corresponding examination of income and assets. $1 billion in debt is alot... unless you make $2b a year and have $100b in the bank in cash. Then $1b in debt is meaningless, despite it being a very scary number. Most people who get scared of $14T do so simply because its a big number. In relation to history, it is not all that big. Now, the deficit we can talk about, but an economy as big as ours that generates the amount of tax revenue we do, $14T in debt is not outrageous. Take off a few zeros, and its like someone make $390,000 per year with a $1.4M mortgage. Reasonable.

     

    Now, the deficit is really bad, and thats a problem, but we are borrowing this money at tiny interest rates, and we don't seem to have that big a debt compared to our assets and our income. Could you explain why you think $14T in public debt will be a drag on growth?
    3 Jan 2011, 08:24 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    The 14T figure is as of today. It is increasing by roughly 8%-10% annually unless Congress puts on the brakes. The average interest rate is @ 3%. Most debt is short duration. If rates rise 2%, the annual nut is @ 300B. As debt service crowds out private investment, interest rates will rise further to compensate for added risk. It's a viscous cycle which is why we have ZIRP. Bernanke is betting the economy can sustain itself before the bond vigilantes call his bluff. So far so good.
    3 Jan 2011, 08:44 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2061) | Send Message
     
    bmcpic

     

    $14T is big.

     

    To give you an idea how big it is, my research (which is limited) indicates that the total deposits in America's three largest banks, namely, BofA, JPM, and Citi are of the order of $8T.

     

    This means that if tomorrow every depositor would withdraw every penny from their accounts (I suppose both checking and savings) it would still not enough to pay off Uncle Sam's debts.

     

    $8T is the number I've got. Some wealthy folks might have hidden it somewhere in those "Wealth Management Accounts" though.

     

    It is big, very big, IMHO.
    3 Jan 2011, 08:52 PM Reply Like
  • wyostocks
    , contributor
    Comments (8229) | Send Message
     
    " but we are borrowing this money at tiny interest rates,"
    OK, what happens if interest rate goes up?
    Think housing crises when just a small jump in interest rates forced people out of their homes.
    Let me guess, you owe lots of money!!!!!!
    3 Jan 2011, 10:28 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    fill in the dots for me.

     

    how does the the US government debt negatively impact investment returns?

     

    how?

     

    E
    3 Jan 2011, 11:30 PM Reply Like
  • thotdoc
    , contributor
    Comments (1725) | Send Message
     
    OK. The market could go up or down. How does this get in this site?
    3 Jan 2011, 07:21 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    Some guy on CNBC this afternoon said it could go sideways.
    3 Jan 2011, 07:54 PM Reply Like
  • srimes
    , contributor
    Comments (109) | Send Message
     
    Is backwards an option? Then we'd really have it covered.
    3 Jan 2011, 10:02 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    Maybe it will evaporate into a black hole.
    3 Jan 2011, 10:17 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Two words of caution: debt ceiling. This could become a very big and contentious issue resulting a very negative outcome in the stock market.
    3 Jan 2011, 08:06 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3812) | Send Message
     
    The debt ceiling is today's brick in the wall of worry. "Catastrophe" showed up an inordinate amount of times today, too.
    3 Jan 2011, 08:25 PM Reply Like
  • Rightwing
    , contributor
    Comments (123) | Send Message
     
    Yes.. but no one likes to address that kind of "negative" stuff.. Like my mom always said.." If you don't have anything nice to say, then don't say anything".. When this happens, It could get ugly.
    3 Jan 2011, 08:27 PM Reply Like
  • bob adamson
    , contributor
    Comments (4558) | Send Message
     
    7footMoose –

     

    You’re correct.

     

    What makes the debt ceiling issue a real wild card is that the ceiling is essentially an arbitrary ‘line in the sand’ which is seen by key elements in each of the political parties as embodying a challenge to the core values for which they stand
    (a) the debt hawk Republicans – the public debt and deficit control, and
    (b) the more liberal Democrats – the need to stay the course to promote the recovery and preserve key social programs.
    The danger is that there are scant grounds for compromise and a perception is abroad that major political gains can be made by besting the other side.

     

    The possibility of impasse is compounded by the fact that several major States and cities themselves have budget problems that arguably can only be addressed with some Federal Government help.

     

    Undoubtedly saner heads will try to find a suitable resolution but the danger is that matters will drag on too long.
    3 Jan 2011, 10:09 PM Reply Like
  • Rightwing
    , contributor
    Comments (123) | Send Message
     
    ..another guy on CNBC said market was up because "people feel good".. interesting, I usually leave that kind of expert analysis to my 12 year old son..
    3 Jan 2011, 08:24 PM Reply Like
  • Mattabi528
    , contributor
    Comments (81) | Send Message
     
    I told Wilbur and I told Orville , it'll never fly.
    3 Jan 2011, 08:28 PM Reply Like
  • Tack
    , contributor
    Comments (13562) | Send Message
     
    Every major country in the world has been busily inflating currencies, yet some folks persist in amazement that the very same currency inflation that gradually increases the prices of gold, oil, wheat, cotton, corn, coal, food, automobiles, clothing, etc., etc., would inflate the prices of securities. Has it not occurred to them that share prices are just another proxy for the nominal prices of everything else in life and business?

     

    Inflation in nominal prices has been occurring for hundreds of years. Get used to it, even if belatedly.
    3 Jan 2011, 09:04 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    Tack: The Bernank has successfully inflated the stock market by design. The question is whether it can levitate long enough for the economy to sustain itself or whether investors will buy up scarce resources and cause another bubble to burst.
    3 Jan 2011, 09:51 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    Geo- I guess we will just have to wait and see, because thats the game isnt it,

     

    Bernanke is just trying to stay in the relay race long enough to hand off the baton to the next runner,

     

    as far as bubbles go, if there is another, who is really at fault the bubble salesman or we the bubble customers, this game will repeat its in our nature
    4 Jan 2011, 07:15 AM Reply Like
  • Credible Clarity
    , contributor
    Comments (160) | Send Message
     
    There are so many potential inflection points that it is difficult to imagine that none will send a tilt back down. The medicated markets make logic and fundamentals almost worthless with respect to “free market” investments.

     

    I hope I am wrong, I do genuinely want for us all to experience a happy new year, but I expect more pain in the economy and no quick fix. This will be difficult in a society that has a short attention span and prefers magical thinking. It is long past time for leaders to lead by example and ask for sacrifice. We have not seen this in many many years. For more click on bit.ly/bUhdTr
    3 Jan 2011, 09:55 PM Reply Like
  • dankourny
    , contributor
    Comments (22) | Send Message
     
    The outlets that keep citing how "bullish" investors have become obviously don't pay enough attention to you guys on Seeking Alpha and the doomsday-bears over at Zero Hedge. As long as these two blogs stay so negatively slanted on the markets/the economy/the deficit/the national debt, I will continue to view sentiment as no worse than neutral. When you guys start feeling good about the world, that's when I am going to take my profits and move to the sideline.
    3 Jan 2011, 10:46 PM Reply Like
  • No Free Cake
    , contributor
    Comments (1220) | Send Message
     
    Welcome Dan, I see you are new here but fair enough observation. Note though that a year ago a thread like this would have almost exclusively negative sentiment with plus votes in the dozens on each. A year ago, any positive outlook would have been "run out of town" with bunches of negative votes.

     

    Looking at the thread today compared to that shows a good deal more optimism - as a group. The negative sentiment seems tame now compared to then and there's even positive sentiment without "down" votes :) Something to consider since you weren't on this board back then.
    4 Jan 2011, 12:06 AM Reply Like
  • mubirasymbu
    , contributor
    Comments (395) | Send Message
     
    It's been over two years since I last traded the markets short-term and reading hundreds of charts on a daily basis. To my surprise, as I found myself scanning through the charts today, the markets are in fact stronger than I thought. Whether or not you believe that there is an asset bubble, many technology stocks in QQQQ have cleared the 200-day, 50-day, and have in fact been trading above the 20 day moving averages for a month or two. Then needless to say, basic materials (XLB) have been going strong as well. What's more, small caps have been outperforming the large caps for the past 18 months or so (stockcharts.com/freech...). These are unmistakable signs of an an upswing in the business cycle.

     

    I have learned over the years that whenever I hear people say opposite things about where the market is going, I go back to the actual price movements because that's where people put their money. The last thing you want to do is to try to fight the market or prove it wrong. I can grant that there is an asset bubble because of the Fed pumping tons of money into the system, but even the homebuilders (seekingalpha.com/symbo...) such as Toll Brothers (seekingalpha.com/symbo...) are beginning to show signs of life. If you try to prove the market wrong, chances are you are sitting on the sidelines or worse yet attempt to short in a market like this.

     

    Unless there are clear signs that the markets begin to deteriorate, for instance, when healthcare and utility begin to outperform technology or basic materials, I remain long.
    4 Jan 2011, 12:37 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Great thoughts, but while you are looking intently at your charts (road maps) do not ignore the pot holes in the road ahead. They could cause you to have an unanticipated accident.
    4 Jan 2011, 05:14 AM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    7ft

     

    "nobody said it would be easy"

     

    anonymous

     

    PS anonymous was right!
    4 Jan 2011, 07:18 AM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    Engineered, this is engineered.

     

    Use taxpayer dollars to pump equities back up for the banks and investment houses for "free" on the back of the average household.

     

    Then, once the pensions and savers and investors have re-invested in the fake phoney baloney markets pull the rug out from under them and socailize any bank losses and make the individual eat the losses due to market manipulation.

     

    This is transparent and obvious, why believe this time is any different?
    4 Jan 2011, 05:26 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Just a question: If you invest or when you invest, what types of assets do you invest in? Your positions on the market and the government seem contradictory to investing in anything other than gold and farmland. I'm am just interested in hearing about your investment philosophy, no deeper meaning to my question.
    4 Jan 2011, 05:42 AM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    Gold and farmland is about right, especially since 2008.

     

    Thirty year investor but NO TRUST in the system anymore.

     

    It is a form of theft to invest and trade in markets that are manipulated by HFT algorithms run by investment firms and banks who are supplied capital by the FED (taxpayer).

     

    Millions of regular folks going to work and not "in on the game" getting ROBBED by the suits in Washington and Wall Street.

     

    It debases the society, and the foundation of capitalism and free markets - the rule of law.
    4 Jan 2011, 12:14 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Thanks, your cynicism is not much different than mine. The game is rigged but at times a rigged game is the only game in town.
    Best wishes in the New Year.
    4 Jan 2011, 12:27 PM Reply Like
  • wyostocks
    , contributor
    Comments (8229) | Send Message
     
    Ditto................
    4 Jan 2011, 12:28 PM Reply Like
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