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They know it's coming but they can't help themselves. The number of investors fearing a...

They know it's coming but they can't help themselves. The number of investors fearing a catastrophic crash is rising even as they pile back into stocks. "They aren't so much expecting one as hoping for one," Josh Brown says, "so they can rationalize buying into a market that's left them behind."
Comments (50)
  • tunaman4u2
    , contributor
    Comments (2742) | Send Message
     
    Sadly I fit this category... just being honest!
    18 Feb 2011, 06:26 PM Reply Like
  • cowpieTX
    , contributor
    Comments (29) | Send Message
     
    ditto. but only recently. i dove head first into 200 shares of TVIX today.
    18 Feb 2011, 08:11 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    The stock market is levitating on Fed liquidity and I've been along for the ride. if you believe Bernanke will take the sugar away in June, you best get out while the getting is good. It might not matter either way if the bond vigilantes pounce. Then, look out below.
    18 Feb 2011, 06:43 PM Reply Like
  • alphaman991
    , contributor
    Comments (94) | Send Message
     
    You would think that the market is already discounting a June ending of QE2. Maybe 1-2% drop, but it's not like it will surprise anyone.
    18 Feb 2011, 07:19 PM Reply Like
  • DagnyTaggart
    , contributor
    Comments (486) | Send Message
     
    It will surprise the banks and blowup their borrow short, lend long strategies. I bet the fact that banks are not prepared for the withdrawal (most likely on purpose) will be reason enough for Bernanke not to go through with it... At least until after inflation is out of control.
    18 Feb 2011, 07:54 PM Reply Like
  • alphaman991
    , contributor
    Comments (94) | Send Message
     
    You've clearly disconnected with reality.

     

    Please come back.
    18 Feb 2011, 07:57 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    I'm not sure that the market is discounting anything longer than the trading day. The HFTs are only holding stocks for 22 seconds.
    18 Feb 2011, 10:46 PM Reply Like
  • Duude
    , contributor
    Comments (3358) | Send Message
     
    My experience has been if too many people are hoping for a correction to buy in lower, it won't happen till after things get especially frothy. The market has to fulfill every possible investor's interest in ownership before the bottom drops out.
    18 Feb 2011, 06:45 PM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
     
    History repeats itself. I guess 1999 is coming less than three years after 1929. I'll be content to wait a little longer for a correction. Besides, why investors are so concerned with this bewilders me. The market will be numerically higher in 5 years but how much will the typical investors holdings be worth in USD?
    20 Feb 2011, 02:05 PM Reply Like
  • Egg
    , contributor
    Comments (268) | Send Message
     
    I fear a steep correction also - but I fear Bernanke (and his printing press) even more.

     

    So, yes, I might lose a lot short term not being in cash - but Bernanke will flood the market with more liquidity if the market drops - eventually taking the market even higher than it is today (in nominal terms.)
    18 Feb 2011, 06:48 PM Reply Like
  • rooftop
    , contributor
    Comments (140) | Send Message
     
    I regretted not getting in on Madoff's gig also ... but eventually I was happy I didn't.
    18 Feb 2011, 07:11 PM Reply Like
  • bigazul
    , contributor
    Comments (963) | Send Message
     
    I've been keeping a much tighter leash on my trades lately. And I hedged myself pretty well for the long weekend. Been in that mode for the last month. It has hurt the returns a bit.
    18 Feb 2011, 07:15 PM Reply Like
  • erniem
    , contributor
    Comments (548) | Send Message
     
    I have the largest standing position in FAZ I have had. It has been beaten down so much, and there is so much buy interest that it almost stay static in an up market. Yesterday the Dow was up 50 at one point and FAZ was down one or two cents.
    19 Feb 2011, 10:54 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2000) | Send Message
     
    It is called 'tapping on the velvet of the table at a hand of 15 to16', real old story.
    18 Feb 2011, 07:19 PM Reply Like
  • Rightwing
    , contributor
    Comments (123) | Send Message
     
    yeah man... and I can't wait. and It is coming.. soon.
    Benny can't accelerate QE2 just because the market drops... sure he wanted to raise equity and commodity prices in August, which he did do, but he also wanted to stimulate growth and hiring in the economy (which is debatable upon who you ask), so at this point he can't just flood the market with more liquidity only to prevent a correction .. at least until June , where he could always break out QE3...though I really can't see that happening considering all the heat he's getting lately for QE2.
    The market is way overdue for some type of correction, almost every indicator today is signaling that.
    The average bounce after a crash is about 70% (we are at 100 %), and the correction after the postcrash bounce averages 25%.. so, we will see.. The market can't, and wont , go straight up forever.
    18 Feb 2011, 07:19 PM Reply Like
  • Tack
    , contributor
    Comments (12723) | Send Message
     
    Right:

     

    But published right here on SA just recently the news that of six markets, since 1942, rebounding from recessions at least 100%, they went on to average 244% rises, ultimately.
    18 Feb 2011, 09:41 PM Reply Like
  • mikeybronx
    , contributor
    Comments (347) | Send Message
     
    greetings Rightwing,

     

    i am not a financial wiz, just a fortunate successful businessman who can mull over the numbers from time to time, so please bare with me.

     

    all time high dow 9/2007 was 14164
    dow 7/2009 was 8500 (-40%)
    dow 2/2011 is 12391 (+46%)

     

    1) 14164 - 12391= 1773
    2) 1773 / 14164 = .1251765
    3) .1251765 x 100 = 12.51765 %
    4) 100 - 12.51765 = 87.48235 %

     

    i see the market up at 87.48235 % from crash and if you say at current levels you feel we are at 100% then can we still see upside before a correction if i use my math? i enjoy all opinions.
    18 Feb 2011, 10:42 PM Reply Like
  • Rightwing
    , contributor
    Comments (123) | Send Message
     
    On March 6, 2009, the S&P 500 hit an intra-day low of 666.79. On Wednesday, Feb 17th, the index broke through 1,333.58 marking an official double. This is the market’s fastest double in over 70 years.
    My apologies, when I refer to the market, I am referring to the S&P500 index.
    seekingalpha.com/artic...
    ...Interesting read from which I gathered that statistic.
    As for your last comment, we still may see some upside, but I think a correction is coming very soon.
    Regards.
    19 Feb 2011, 12:20 AM Reply Like
  • Rightwing
    , contributor
    Comments (123) | Send Message
     
    I hear you Tack, and this market may eventually double or triple from these levels... but I would have to imagine there were some corrections and/or meaningful pullbacks along the way in most, if not all of those rises.
    19 Feb 2011, 12:31 AM Reply Like
  • Pathfinder's
    , contributor
    Comments (117) | Send Message
     
    Market trading volume remains medium to low, and it appears to be set into a pattern. Usually down a few points in early trading and in the afternoon it moves in to positive territory and finally closes , up a few points. DJI, INX , IXAC. All are near or at 52 week high.
    I follow the Industrials and Energy very close. Boy, companies ,
    like , CAT, DE. XOM, CMI, BWA, ITW, UTX,,CVX , DGT,
    All at or near 52 week high, and DE is at a All time high .
    Remembering the old saying "Pigs get Slaughtered", have taken and will be taking some profits on a number of positions.
    18 Feb 2011, 07:35 PM Reply Like
  • Topcat
    , contributor
    Comments (412) | Send Message
     
    Yep, hey it is pretty simple really..you ride the trend up, and move your STOPs up, and only trade in stocks that have the circuit breakers to prevent huge loss by dropping way below your STOP if we have another flash crash. This is a trader's market. If you can't watch and adjust your stocks every several days, or hire someone to do that for you, then you should not be playing.
    20 Feb 2011, 11:57 AM Reply Like
  • surfgeezer
    , contributor
    Comments (6678) | Send Message
     
    No. It's an investors market, just ride your solid earnings reports and collect the divvys, let the mark to market do what it wants.
    21 Feb 2011, 11:15 AM Reply Like
  • Bouchart
    , contributor
    Comments (755) | Send Message
     
    I got out of the market when the Dow was somewhere around 10,500. This has gone on far longer than I expected.

     

    Still, I have to be patient that reality will hold at some point.
    18 Feb 2011, 07:50 PM Reply Like
  • jonpay
    , contributor
    Comments (191) | Send Message
     
    im with you bouchart and shorting try to catch the correction has been PAINFUL
    18 Feb 2011, 07:54 PM Reply Like
  • Bouchart
    , contributor
    Comments (755) | Send Message
     
    Unlike a lot of you here I'm just a novice, young 25 year old guy without a lot of experience in the market. I'm slowly learning and reading and most importantly, trying not to lose anything.

     

    But I get the feeling that things will go strumming along just fine for awhile and someone in Azerbaijan will sneeze and the market will fall 80% as a result. It looks that bizarre to me.
    18 Feb 2011, 07:58 PM Reply Like
  • Bill S. Friend
    , contributor
    Comments (711) | Send Message
     
    Day trading is a good way to make a small fortune out of a large one. High frequency traders skim the cream off the top all day every day. Conventional market wisdom has no advantage in this market where the government is calling the shots. Dont fight the tape, and dont fight the Fed. Market insiders have more information to trade on than someone unconnected or 1000 miles away. plenty of guys with 40-50 years experience have gotten their clocks cleaned lately.
    18 Feb 2011, 10:15 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4009) | Send Message
     
    You are wise beyond your years.
    18 Feb 2011, 10:51 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    I hope your reading includes stuff on behavioral finance. To be a successful investor you have to understand human psychology. Including your own psychology.
    18 Feb 2011, 10:51 PM Reply Like
  • surfgeezer
    , contributor
    Comments (6678) | Send Message
     
    I ignored you're first comment, but explaining you are my sons age, let me give you my 2 bits. There are MANY ways to make money in the markets. Some resemble Vegas and some resemble real estate or buying a regular business. I personally prefer the buying a biz model. For me that means understanding what you are buying foremost. How they make money, how they compare to peers, what their niches prospects are, etc. Having said that you WILL be subject to a very volatile mark to market pricing. This article, and all commenting here are merely guessing. It almost does not matter, if you are an investor who has done due diligence and understands and wants to own the biz.-ignore it. I have rentals also and could not care less the mark to market pricing has dropped. Traders will hate my comments and regal you with tales of 10 baggers. It happens, no dispute. I prefer income and DRIP shares with solid growing stocks, you have the time to be a millionaire easily. Traders depend on selling to someone else for a profit, so they worry if they bought to high. A divvy player that just holds through the market gyrations and makes sure the earnings are there, does not care if he could have gotten a slightly higher yield. At 25 learn to be an investor and if you get good, then start gambling with trading.
    19 Feb 2011, 04:12 AM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
     
    Azerbaijan, try the floor of the NYSE. As long as technology continues to evolve ahead of the exchange's controls the flash crash of last year could only be a preview of what could happen someday in the near future.
    20 Feb 2011, 02:14 PM Reply Like
  • mikeybronx
    , contributor
    Comments (347) | Send Message
     
    hi bricki,

     

    i like to think i have an excellent understanding of social and individual psychological tendencies and yet the fluctuations in this market for no apparent reason is not rational at times to my perceptions. and yes, i have talked to my myself and we both agree.
    20 Feb 2011, 02:41 PM Reply Like
  • alphaman991
    , contributor
    Comments (94) | Send Message
     
    Bouchart - you come across as paranoid. Be cautious, but no one is out to "get" you or the market. Bad stuff happens, so hedge a bit, but remember that the long-term trend is up, my son.
    21 Feb 2011, 11:32 AM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    In behavioral finance it's called myopic risk aversion.
    21 Feb 2011, 03:18 PM Reply Like
  • buy/sell/hold
    , contributor
    Comments (21) | Send Message
     
    I believe we are getting close to the top.The market will take a hit, down to,maybe,9,000.With inflation rearing it's ugly head,the market will recover and head to new highs,along with metals and agriculture.
    18 Feb 2011, 08:22 PM Reply Like
  • mikeybronx
    , contributor
    Comments (347) | Send Message
     
    i scaled back by taking profits off the table while staying in positions that have not reached my expectations. who can say what the top is when no one saw the crash coming and no one saw the rebound coming. this global intertwined market makes it so very difficult to read. it gains for no reason and falls for the same. we all have our own reason for it but cannot see it coming. one day its PM, another day its retail and then tech, banks on tuesday with realestate on thursday. i don't short for this very reason.
    18 Feb 2011, 09:20 PM Reply Like
  • dondon
    , contributor
    Comments (282) | Send Message
     
    Stops on stocks and a few June or July puts and you should be covered and able to sleep at night. There is other protection like SDS which loses money over time but will make it back and more if there is a sizable correction.
    18 Feb 2011, 09:58 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Well I got out in late 2007 when the the market looked toppy to me - inverted yield curve and all that. I started dollar cost averaging back in when the market went down 25% and kept doing it through the 2008 panic.

     

    Now I'm fully invested. While I certainly don't expect things to go straight up it seems to me that it is too early in the business cycle to start unloading. There are dark clouds out there but I think earnings growth will be ok for a while yet.
    18 Feb 2011, 10:20 PM Reply Like
  • nmelendez
    , contributor
    Comments (1622) | Send Message
     
    Truthfully, i do not care. If you cost average it will all work itself out. You lose when you panic. I am in 50% cash 50% stocks and enjoying the ride.
    18 Feb 2011, 10:21 PM Reply Like
  • mikeybronx
    , contributor
    Comments (347) | Send Message
     
    though i exercise cost averaging on positions it should be noted that my accountant has cost averaged himself into a $115,000 deficit, cost averagers beware.
    19 Feb 2011, 08:38 AM Reply Like
  • Frank J. Constantino
    , contributor
    Comments (236) | Send Message
     
    The market climbs a wall of worry
    19 Feb 2011, 12:01 AM Reply Like
  • serena wiliams
    , contributor
    Comment (1) | Send Message
     
    I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it.

     

    Easter revision courses
    19 Feb 2011, 12:24 AM Reply Like
  • Agbug
    , contributor
    Comments (1085) | Send Message
     
    With The Bernank making cash the least attractive option, isn't it the place to be right now from a Seeking Alpha perspective? An opportunity to get a 10% off sale can be just a headline away.
    19 Feb 2011, 12:55 AM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    Lemmings running to the edge of the cliff.

     

    Politicians, media, and corporate leaders urging the populace on.
    19 Feb 2011, 02:42 AM Reply Like
  • kimboslice
    , contributor
    Comments (1464) | Send Message
     
    If you kept you money "safe" in cash, and Bernake and Washington keep destroying its value, is cash really more or less risky than buying stocks of profitable companies and those that pay dividends?
    19 Feb 2011, 03:32 AM Reply Like
  • erniem
    , contributor
    Comments (548) | Send Message
     
    Nobody knows and that is what we are all in the process of discovering.

     

    I am maybe 20% cash, 30% equity and 50% bond funds. I trimmed all my muni holdings long ago.
    19 Feb 2011, 11:16 AM Reply Like
  • nicasurfer
    , contributor
    Comments (123) | Send Message
     
    I believe the psychology of the market is: We are gonna have a correction and when that comes i am all in. Every one wants in no matter the costs. That being said i believe it is a stock pickers market.

     

    My largest holding in order are as follows
    MPEL
    DF
    HBAN
    SKF january 2012 $15 puts

     

    When looking over these investments (I know the Puts are crazy idea but i believe 2011 is the year of the banks) i don't feel like the valuations are that far stretched.

     

    Look at a Weekly chart of Dean Foods. At $10 bucks this thing is a steal. If food prices come down which they will this companies margins will go ricter and they have some serious pricing power.

     

    Melcro Crown, this is a pure Macau play on the casinos. I currently believe that this one is on the verge of an upside breakout. China is starting a secular bull market very similiar to the united states in the late 70's. The chinese are in love with macau and so am i. Google map the city it is really cool place and will be an international destination for years to come. Melcro made money lasy quarter and report on wednesday. I belive they are going to blow out the numbers. I am buyer if they show any weaknes.

     

    The banks are sitting in a sweet spot. They are flush with cash and able to borrow next to nothing and lend out at a higher interest rate. This isn't changing any time soon. The big money has been purchasing some large amounts of the C $5 september calls.

     

    Currently have about 25% cash for this correction that the market needs. I read somewhere if it is a flash crash it would be in the bulls favor.
    19 Feb 2011, 08:13 AM Reply Like
  • mikeybronx
    , contributor
    Comments (347) | Send Message
     
    i too enjoyed the ride of HBAN, i entered at 3.85 and exited at 7.58 but feeling not too rosey when it comes to the banking sector right now. good luck.
    19 Feb 2011, 08:36 AM Reply Like
  • Micah
    , contributor
    Comments (462) | Send Message
     
    Fund flows are finally coming in positive for the first time in many years. Do not underestimate the naive money coming into this market - which can go on for a long time. People are finally starting to see positive returns in their retirement funds which creates a positive feedback loop for more inflows.
    19 Feb 2011, 09:22 AM Reply Like
  • Agbug
    , contributor
    Comments (1085) | Send Message
     
    So true Micah. Bernanke is getting just what he is tasked to provide, except the jobs of course. I find the charts for the S&P interesting from a long term, not tradable 401K perspective. Of all the posts on this thread not much mention of this. The dividend yield on the S&P especially blows .

     

    www.multpl.com/

     

    Dividend yield at historic lows, P/E getting into the historic over bought range and those scared out of the market seeing that they are missing out, especially with money market and CD rates at "let them eat cake" levels. As the boot camp barber says, "Next".
    19 Feb 2011, 01:27 PM Reply Like
  • golden1234
    , contributor
    Comments (31) | Send Message
     
    I too am very wary of this market. I'm trimming my holdings and taking my profits. I'll be back in when the inevitable correction occurs. Good Luck to all.
    19 Feb 2011, 03:22 PM Reply Like
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