Here's what I think.
(a) Europe tightens its belt, which precipitates a recession in the region. Not a bad thing, if you think about it. Really no different than cutting back on discretionary spending in my household- the end result is increased savings and/or decreased debt.
(b) China's economy undergoes several years of 'backing and filling.' Also not a bad thing.
(c) The combined effect(s) of (a) and (b) caps the growth of US companies over the same period of time.
(d) A few years later, we're ready to rock 'n roll once again. Just in time for the Roaring Twenties.
I'm toying with the idea of leaving the markets alone for a few years. Use the extra money to pay down the mortgage- a guaranteed 4.375% return.
"a guaranteed 4.375% return"
ReplyDeleteExcellent conclusion. Could anyone rely on anything more safe in this age of volatility?
Your points (a) - (d) are the way I see it too. Maybe worse for USA than merely capping US growth.
http://www.marketwatch.com/story/top-10-letters-of-2011-2011-12-26
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Stratfor - Stratfor customer database was reportedly hacked.
ReplyDeletehttp://articles.businessinsider.com/2011-12-25/wall_street/30556093_1_credit-cards-emails-mf-global
"Chinese refined copper imports jumps 16.5% in November »
ReplyDeleteLow Copper prices and arbitrage opportunities have pushed Chinese refined copper imports to its highest level since June 2009. As per data revealed by the General Administration of Customs, November imports rose by 16.5% to 343,926 tonnes from 295,341 tonnes in October."
Also see:"Copper traders are the most bullish since October »
Copper traders are the most bullish since October as global inventories at a two-year low add to signs that demand is improving. Sixteen of 28 analysts surveyed by Bloomberg expect the metal to advance next week, the first positive outlook in three weeks"
http://emetalprices.com/
"The only rational option seems to be pro-growth US fiscal policy from the White House and Congress."
ReplyDeletehttp://www.capturetrends.com/equities/1504-operation-twist.html
If 2nd is seriously contemplating pulling out, just think where that means the average joe investor is.
ReplyDeleteLooks like I'll be stopped out of my "trading" GDXJ position tomorrow -- gold and silver are going down the tubes now...
ReplyDeleteDavid- It's less than 1%!
ReplyDeleteStill, why are they going down? $USD is down as well, so it seems quite weird...
ReplyDeleteDavid- Why concern yourself with what will ultimately appear as an indiscernible blip on a longer-term chart? That's what I'm tired of- feeling as if I need to watch the market action 24/7, with little to show for it.
ReplyDeleteYou are right, 2nd_ave -- I became an investor in AUMN so as not to worry about short term moves in the stock. But on Friday, just to entertain myself, I opened a "trading" position in GDXJ, which I could not afford to keep as an "investment" position (since that GDXJ purchase reduced my buying power almost to 0, and hence any drop in AUMN will give me a margin call).
ReplyDeleteBy the way, about margin calls -- I saw "Margin Call" yesterday, and I liked it. If you guys haven't seen it yet, then I would recommend watching it.
SHLD - Ouchie!
ReplyDeleteSHLD- That one never made sense to me. They've been disappearing here.
ReplyDeleteSDOW - Stop-limit bid at $26.75 to catch doom and gloom if it strikes today.
ReplyDeleteSHLD - Woulda been a good short from the 100's, if you were gonna short something. We all knew they were going nowhere, right?
ReplyDelete$INDU - RSI(7) is over 70 now...
ReplyDeleteAverage age of cars locally has moved from 6yrs to 9yrs.
ReplyDeleteNice upgrades for VMW/INVN.
ReplyDeleteWhat the heck, 4K stinkys on INVN @ 9.47/9.45.
ReplyDelete2nd,
ReplyDeleteI would disagree with being 100% out of the market.
First off, you never know what will happen, and it is very possible we are setting up for a large rally with the market having cheap valuations and poor sentiment. As an example, Don Wolanchuck, who was a premier market timer in the 1990's, is saying that "The stock market is on the verge of a meltup..2012 will be the biggest up year in history. The epicenter of primary wave 3 up is arriving". Don't know if he's correct, but I do think it is possible. Stocks like MET or HIG could double here and still be below their long-term traditional valuations.
2nd off, stock valuations are cheap. As 1 obvious example, look at Buffet - buying more stocks in the last quarter than he ever has, plus markets are still below where they were in 2008 when he wrote his "Buy American" article. People thought he was crazy saying there was nothing to buy in the market in 1998 because everything was going so well, but 12 years later he was right. Now he is saying to buy and, again, people think he is wrong, but I'd bet a lot of money he is not. The one issue is timing things and it is very hard to know when stocks will move upwards, but look out a few years and they almost certainly will be higher.
It is always hard to buy when things look bad, but that is when you get the best prices. What's that quote? "You pay a high price for a cheerful disposition in the stock market" or something like that. Or as another guy I know says, "You have to buy stocks when you feel like throwing up."
Paying down your mortgage is certainly not a bad idea and it does save after tax dollars, but you always want to keep things in balance. You may want to have a smaller equity position than usual if you are overly concerned, but I would definitely be maintaining some equity exposure at this time.
Interesting read for the stats-oriented at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1970693&http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1970693
ReplyDeleteShows over last 40 years, best valuation metric for picking stocks is EBITDA / TEV (total enterprise value). Also, stocks cheap on this metric (value stocks) beast expensive ones (Growth stocks) by a consistent 9% per year.
someone (mark?) sold 20k shs at the bid on mitk and drove the price down...prob concerned it couldnt rally much above the 200dma. max frustration would be a flat close.
ReplyDeletethis has gotten me thinking. a lot of talk has been about why the mkt is so volatile and blame has been put on hft and leveraged etfs. id argue its the thousands of blogs focused on short term/technical trading and fast money type shows. people freak out if a stock doesnt move like they want it to within a day or two.
this presents excellent opportunities for the patient.
$INDU:$GOLD - Take a look at a three year chart...
ReplyDeleteso many of us r focusing on learning technicals when we should be focusing on learning patience.
ReplyDeleteKass calling for a big move up in 2012 getting over previous high of S&P 1527 in his 15 surprises for 2012:
ReplyDeletehttp://www.thestreet.com/story/11357403/1/kass-15-surprises-for-2012.html
Patience is important, but it is hard to say that there is too much focus on technicals.
ReplyDeleteDriving is an important skill, but there are a lot of parts to driving. Knowing how to steer, accelerate and brake are useless if we can't read a map, and reading a map by itself won't do us any good if we can't operate a vehicle on the roads the map represents.
Technicals are just a map. We still need to be versed in a number of skills. Driving, reading the map, and since we can only go so fast, the patience to arrive at our destination.
Patience is part of the picture, but if the driver can't follow a map and is driving off a cliff, patience in itself may be a bit of a problem.
FD: Sold MITK at $8.05. Driver forgot how to accelerate and sat at the signal at $8.05 bid/8.10 ask and I figured he didn't know where he was going, which is usually a sign he is not going my way. Turns out he was going home to $7.60.
I bought more KOG instead.
boy cc i wish i had ur ability to sell at the top each time
ReplyDeleteAnd I wish I had Mark's ability to buy at the bottom :)
ReplyDeleteNo you don't. It comes with the greater skill of selling exactly at the bottom.
ReplyDeleteI was *lucky* and listened to my fear.
I'm sure you were watching MITK this AM in the first half hour. First we had a bit of a push and then the market started selling and the indices were in the red. In the meantime MITK sat there without any trades at 8.05/8.10. It sat there for a long time. To me that usually means it isn't going to go up or it would. No chart would have told me it would go to 7.60 but I wasn't going to give up my profits with the indices going red after a holiday.
Pure fearful blind squirrel.
So far, actually, $USD seems to be slowly sliding down, TED spread is down 1bp and GDXJ did not yet hit my stop at $23.90, all of which is good! :)
ReplyDeleteThe best part of this, however, I think is that the TED spread is down, since it is only the second down day over the past month! In fact, over the past 3 months, the TED spread had ONLY ONE case of 2 down days in a row, in late October. So if tomorrow is another down day for the TED spread, then the chances of us being out of the woods have increased greatly, I would say (thanks to the LTRO by ECB).
Fuller disclosure: I'm still sitting on 3000 shares of NLS $1100 in the red. Ah patience.
ReplyDeleteLet me assure you, when that MF'er goes in the green I'm offing that position too.
Soooooo, that may explain why I jump on good profits and don't wait around anymore.
If we finally start trending I will be quite happy to sit and wait. That is my usual method and it's where the real money is, but not in a sideways market.
Are we being shaken out of gold and silver in this thin holiday trading? It seems absurd for gold and silver to be down when $USD is down as well...
ReplyDeleteFollowing the rule of law: Change the law if it doesn't suit your presidential campaign aspirations?
ReplyDeleteI'm with Craig here. I'm uneasy re the market. If I miss an up move, so be it.
ReplyDeleteKeep in mind we can easily make a year's worth of gains in a day or two waiting for a sharp selloff before taking positions- and THEN hold for further gains.
ReplyDeleteI'm thinking that the housing sector is going to rebound in 2012 and financials will do well...FAS could be a great investment.
ReplyDeleteIn looking at the returns of V and MA I can't help but think that eBay is going to have a huge run in 2012. I could see the market trading it at 22 times earnings, which is what V/MA are at and it hitting $50 in 2012.
ReplyDeleteA couple of interesting bits of 'news' on Re today.
ReplyDeletehttp://www.bloomberg.com/news/2011-12-27/home-prices-in-u-s-cities-decline-more-than-forecast-case-shiller-says.html
and this from CNBC: http://www.msnbc.msn.com/id/45795076/ns/business-real_estate/?ocid=twitter#.TvnOsEqVhw9
I have some issues with the info in this second link. The headline "America becoming a nation of renters" is misleading at best. We are down to 66.3% home ownership VS 69.2% in 2004.
That is a drop of 3% and approx. 40% renters. A change of 3% home ownership is not a giant trend leading to 51% renters. I am interested in the increase in multiple family units and I'm glad there is an increase and more employment there, but it's important to keep it in perspective.
We aren't becoming a nation of renters yet.
A nation of renters would look like a real trend to me and a nation of renters would outnumber owners, which would mean greater than 50%.
I am thinking of buying a rental property. It's a good way to lever up returns for the long term and I do think RE will return to supply VS demand at some point (especially with these interest rates), but when that is, in light of still falling prices, (and still lingering unemployment) I can't say.
It seems like a balancing act...3% lower home prices vs 3% lower home ownership and more multi-family units being built.
What does the closing of 120 SHLD stores mean for the unemployment rate- any guesses?
ReplyDeleteTOF- This is the first roll out to load prepaid cards I could find. I'm still trying to find some info on the credit card plan...
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2nd- If the local K-Mart is any example, that would be 3 employee's per store, so my math has it at 360 total jobs lost.
ReplyDeleteAre you serious? One manager, one am clerk, one pm clerk? Front the shelves, mop the aisles, and take out the trash in between the 15 customers and 100 shoplifters each day?
ReplyDeleteProbably not a whole lot.
ReplyDeleteA lot of these stores will get sold off, refursbished and reopened with a better band and hopefully more staff than they have now.
2nd- My data might be a little old. Patricia stopped going there when the buyer/shoplifter ratio was 15/88.
ReplyDeletenew post
ReplyDelete