Bear Market Coming?

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FreeLunch's picture
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I was just wondering what some of you thought.
Now I know that we're not in the business of timing the market, but we're sure as hell more likely to make a good call than 99% of people.
I'm trying to convince myself that being more conservative and balanced is probably a good idea, but:
P/Es are still ridiculously low
Bond Rates are on the rise - Bonds don't look good to me....
But when I like at a weekly/monthly chart on the S&P - It looks scary.
I'm not trying to call a top, I'm just curious what some of you guys think about the next 6months to a year...
 

wallstreeter's picture
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It obviously depends on your time frame.  When you look at the short term chart, I would agree, it doesn't look great, probably trading in a range from 12,000 to 13,500.  It brings the old saying "Sell and go away in May" to life as we hit the summer doldrums.  Long term charts show the markets just starting to break out, new all time highs (except for the sh*tty Nasdaq right now)...could still continue to run another few thousand points (18,000?) before any significant pullback.  Lately I've been bullish on gold and copper and other metals and mining plays, could see a run before too long.  I'm really hoping techs and biotechs will take off though, I feel I've made some great bets there...but don't see it in the short term. 
As far as feeling that you should be more conservative and balanced, it's probably wise for the majority of clients out there.  That being said, the recent trading action has allowed for some discounted deals to be found.
Overall, right now I believe this market is piss poor and leaving many a little queezy.
Just my own personal thoughts. 

GolFA's picture
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Worth talking about.
I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%?
We're coming off a nice run in the market, and bonds will be okay in the long run. Retirees should trim back to 40% stocks (maybe that's all they ever have, but it can be increased at times). A lot of clients have 50-50 right now, more growth oriented still has 60-40 in favor of stocks.
Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.
Great stuff to continually touch clients with, if just to let them know you are thinking about them.
We have had a nice run, economic cycles still exist, and you can't get burned too badly if you never give up on stocks, or don't have too many.
The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.

FreeLunch's picture
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Hey I appreciate the response. 
Something I've been battling with, Can a chart on an index be as valid or as good as a tool as a chart on an individual security? 
At any rate, this market is ridiculous & tough to trade in my opinion.  I mean, if this thing sells off these financials are going to be a steal.

FreeLunch's picture
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Its like this.
Real Estate stocks are DRAGGING
Bonds have been CLOBBERED  (good bargain?)
Oil Stocks LOOk extremely extended - but have P/Es of 10?
Banks & Financials - P/Es of 10 too, but nobody likes them!
Consumer Staples - Most have PEG ratios of 2
Technology - About to take off?
Consumer Discretionary - Credit Card spending keeping it going.
 
Where are we at?  wheres the next Bull Market?

troll's picture
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We're probably in a secular bear market still and will be for a while. Bullsh*t, Bobby, you may say!!! Here's some information for you...if you take the average up year in a bear market and compare it to the average up year in a bull market, the bear market is higher. That's why I love VA's so much. They address all 3 possibilities of market direction. Most of you dumbsh*ts position your clients for the market going in one direction - higher.

FreeLunch's picture
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Bobby,
Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?
And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?

troll's picture
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FreeLunch wrote:
Bobby,
Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?
And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?

How can I expand on a fact? The data is out there. Go look it up. The UIT's that I've been using employ strategies that screen out weak companies. In 2002, when the S&P was down 22% and the average investor was down 40%, the strategy was down about 12%. Clearly, I don't believe in a "well balanced growth portfolio." This is also why EIA are so attractive.

AllREIT's picture
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FreeLunch wrote:I was just wondering what some of you thought.
Now I know that we're not in the business of timing the market, but
we're sure as hell more likely to make a good call than 99% of people.

If you were able to time the market better than 99% of the people out there, you wouldn't be posting here.

What makes you think you know more about the future than anyone else?

AllREIT's picture
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GolFA wrote:Worth talking about.
I'm taking the view that a lot of analysts think stocks could do 8%
this year. How much (more) risk do you want to take to get 8%?

If the analysts knew that stocks would do 8%, why are they not
trading SPX futures instead of writing predictions about the SPX?

Quote:Asset allocation is cool, but you need to add a factor for
nearer term market expectations. Large cap looks better now than small
cap, international is important, well managed tax exempt muni bond
funds are always a good idea.
Great stuff to continually touch clients with, if just to let them know you are thinking about them.

Do you mail clients their horoscopes?

Quote:The risk reward relationship between balanced portfolio and all
stocks is exponential for risk and less or linear for reward. Allreit
can probably explain that better than me.

I'll explain something much simpler, you are mouthing off platitudes
and cliche's from your firm's daily/weekly/monthly market and strategy
letter.

Mucho de Tejas's picture
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I am a big fan of sentiment (Hulbert/Newsletters & Burke/Individual Investors) and am trying to gauge bullishness. Right now we have a divergence between Hulbert and Burke as Hulbert is more bullish and Burke is defensive.
A correction sometime this summer would probably be healthy longer term. I would prefer to see a long sideways correction as opposed to the straight drop and flush... unless I was holding puts or inverse ETF's, then I wouldn't mind the quick money. 

futurestrader's picture
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Hey guys,I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up. I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?Thanks!

troll's picture
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futurestrader wrote:Hey guys,I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up. I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?Thanks!
VA's, EIA's, DPP's, anything outside of the stock/bond markets.

GolFA's picture
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AllREIT wrote: GolFA wrote:
Worth talking about.
I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%?
If the analysts knew that stocks would do 8%, why are they not trading SPX futures instead of writing predictions about the SPX?

Quote:Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.
Great stuff to continually touch clients with, if just to let them know you are thinking about them.
Do you mail clients their horoscopes? Quote:The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.
I'll explain something much simpler, you are mouthing off platitudes and cliche's from your firm's daily/weekly/monthly market and strategy letter.
When did you start getting so uppity, anyway? I think for myself, not that I said anything amazing. How many down markets have you been through with your clients money. It is one thing to bring up some new points, and another to attack someone you don't know. I've been around the block, Allreit, as in decades,  and I notice you got snitty over the past six months.

futurestrader's picture
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Bobby Hull wrote:futurestrader wrote:Hey guys,I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up. I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?Thanks!
VA's, EIA's, DPP's, anything outside of the stock/bond markets. And why do you think that is?

Dust Bunny's picture
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There's a bad moon a' rising.
 

troll's picture
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futurestrader wrote: Bobby Hull wrote:
futurestrader wrote:Hey guys,I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up. I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?Thanks!
VA's, EIA's, DPP's, anything outside of the stock/bond markets.
And why do you think that is?
Don't know, don't care. I just sell them what they want to buy.

futurestrader's picture
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Bobby Hull wrote:futurestrader wrote: Bobby Hull wrote:
futurestrader wrote:Hey guys,I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up. I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?Thanks!
VA's, EIA's, DPP's, anything outside of the stock/bond markets.
And why do you think that is?
Don't know, don't care. I just sell them what they want to buy. Ahhh.. there's the salesmen spirit now! I was wondering where that was!

AllREIT's picture
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futurestrader wrote:
And why do you think that is?

The high sales comissions. (rimshot!)

Bobby is our resident annuity shark/troll.

AllREIT's picture
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GolFA wrote:
Quote:The risk reward relationship between balanced portfolio and
all stocks is exponential for risk and less or linear for reward.
Allreit can probably explain that better than me.
I'll explain something much simpler, you are mouthing off platitudes
and cliche's from your firm's daily/weekly/monthly market and strategy
letter.
When did you start getting so uppity, anyway? I think for myself,
not that I said anything amazing. How many down markets have you been
through with your clients money. It is one thing to bring up some new
points, and another to attack someone you don't know. I've been around
the block, Allreit, as in decades,  and I notice you got snitty
over the past six months.

If you post here, you are casting bread upon the water. Don't complain about what nibbles on it.

The point I'm making is you were quoting the same sort of lame market
commentary that every firm puts out in its market/strategy letter. The
problem is that no one knows the future, and trying to make point
estimates (e.g SPX goes up 8%) about the future is a worse than useless
activity.

The general record of market forcasters/commentators is bad. Some
people need the reassurance of a talking head. People who could
actually forcast macro events accurately would be running global macro
hedge funds, and making lots of money.

The main reason firms put out all this strategy commentary is to encourage more trading.
The hope is that clients will put alot of money in motion overweighting
and underweight various stocks/sectors/funds etc. Of course if you did
all the under/overweighting that is advocated, you would be 167%
invested

Even worse is the issue of aggregate opinion. If you want results from your private opinions, it has to be very different
from the general market opinion. If you think the fed will/won't cut
rates, it does you no good if everyone agree's with you and that is
priced in.

The in house commentators (and everyone else in the mainstream
financial services) will never be very different, because if they are,
they could be wrong, and lose a cushy job. Far better to be in the hurd
and say "The Fed's sudden 50bp increase in rates was entirely
unexpected and far in excess of the consensus estimate"

IMHO the best policy is to be agnostic, and stick your Asset
Allocation/Investment Disicipline regardless of what you think about
future market conditions.

GolFA's picture
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IMHO the best policy is to be agnostic, and stick your Asset Allocation/Investment Disicipline regardless of what you think about future market conditions.
We can agree on that, but a little tactical asset allocation may be prudent now, just common sense given the market cycle. You've gotten more didactic and it feels patronizing, just my feedback to you personally, because I have admired your thinking here. Don't assume you are cutting any particularly new ground here, if you know what I mean.

FreeLunch's picture
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ALLREIT
those are the some BLAND and Negative posts.
You honestly think it is impossible for us to understand market strategy and market conditions?  Why would I come on here and post what is on my market letter? 
If I relied on the market strategies of my firm, I would SUCK b/c my firm can't make a profitable trade to save their ass.
It sounds like you've given up on the game.  I'm sorry.
However, you're criticism has no value, as your responses weren't anywhere close to adding to the educational conversation we were having.  If you want to provide a good answer, go ahead.  But we weren't looking for someone who HAS NO idea who we are or what we know to tell us we don't know anything.  

anonymous's picture
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Now I know that we're not in the business of timing the market, but we're sure as hell more likely to make a good call than 99% of people.
I see absolutely no reason why this would be true.   We have no special training that will allow us to time the market any better than a mechanic.
 

ManagedMoney's picture
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FreeLunch wrote:But when I like at a weekly/monthly chart on the S&P - It looks scary.
I'm not trying to call a top, I'm just curious what some of you guys think about the next 6months to a year...
Other than the fact that the market has gone up for 4 years, what exactly is it about the weekly/monthly chart on the S&P that scares you?Two rules that I always live by:  "never fight the tape"  and "never underestimate the power and duration of an impulse wave."I have yet to see any market action that indicates that the major uptrend is done.

FreeLunch's picture
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Anonymous
YOU see absolutely no reason why it would be true for you.  Because YOU have no special training to time the market like a mechanic.
Let me make this clear - I AM NOT trying to time the market.  I am trying to determine a risk/reward ratio for UPSIDE/DOWNSIDE in the next 6 months to a year.
If you have no opinion on this topic, other than an opinion on MY OPINION - Don't Post. 
This topic is not for people who have NO FAITH in their abilities to at LEAST try and make adequate guesses about whats coming in the future.  It's all a frieking guess anyway, as there are too many variables in the future that we don't even know about yet.
If what you are saying is true, then there is no one out there that can adequately make forecasts on the economy & the market.  For every bull theres a bear.  If it wasn't worth talking about - YOU WOULDN'T LISTEN

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I have no special training to time the market.  What is your special training.  If I could time the market, I would not be earning money by being a financial advisor.  I would be on my yacht.
Call it what you want, but you are trying to time the market. 
I'll post when I want.
I'm not quite sure how you can have faith in your "adequate guesses".  Please explain how if it is a guess, you can let this have any influence on the advice that you give.  That doesn't sound too smart. 
For every bull theres a bear
That's not remotely close to being true.
I happen to be very good at predicting the market.  Every year, I predict that it will go up and down. 

ManagedMoney's picture
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FreeLunch wrote:For every bull theres a bear.  If that were true, then prices would never move even one tick.Stocks go up when there are more buyers than sellers.  Stocks go down when there are more sellers than buyers.

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FreeLunch wrote: Anonymous
YOU see absolutely no reason why it would be true for you.  Because YOU have no special training to time the market like a mechanic.
Let me make this clear - I AM NOT trying to time the market.  I am trying to determine a risk/reward ratio for UPSIDE/DOWNSIDE in the next 6 months to a year.
If you have no opinion on this topic, other than an opinion on MY OPINION - Don't Post. 
This topic is not for people who have NO FAITH in their abilities to at LEAST try and make adequate guesses about whats coming in the future.  It's all a frieking guess anyway, as there are too many variables in the future that we don't even know about yet.
If what you are saying is true, then there is no one out there that can adequately make forecasts on the economy & the market.  For every bull theres a bear.  If it wasn't worth talking about - YOU WOULDN'T LISTEN

Ha, have you ever even seen a bear market? You sound like a wet-behind-the-ears kid! Don't worry about tomorrow or 6 months from now or even five years from now. You ARE attempting to time the market when you talk short-term, like you are. Think long-term and it really doesn't matter.

What the "market" does really doesn't make a difference in anything, anyway. What matters is what you/your clients own does.

Come back and talk in 15 years or so...or at least stand over my grave. Then, you won't be so moist behind the ears and maybe you'll have some experience to know how silly your babble was back in 2007.

AllREIT's picture
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FreeLunch wrote:You honestly think it is impossible for us to
understand market strategy and market conditions?  Why would I
come on here and post what is on my market letter? 
If I relied on the market strategies of my firm, I would SUCK b/c my firm can't make a profitable trade to save their ass.

And you can? If understoond your original question, you're working
from the assuption that a profitable market strategy is possible.

Quote:

It sounds like you've given up on the game.  I'm sorry.
However, you're criticism has no value, as your responses weren't
anywhere close to adding to the educational conversation we were
having.  If you want to provide a good answer, go ahead.  But
we weren't looking for someone who HAS NO idea who we are or what we
know to tell us we don't know anything.  

Telling you that you don't know anything about the future could be the most valuable insight in this thread.

FreeLunch's picture
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You guys obviously have no insight.
Go back to my original question.   What do you guys look for in the next 6 months to a Year.
I apologize if you do not think it is a fun issue to talk about.
And yes I have seen a bear market.  I began my investing for my personal portfolio in 2001.  You do the math.  I have seen a bear market and I know the reasons why they occur.
Call me what you want, but you obviously have nothing valueable to add.  If you did, you wouldn't be so scared about making a post where other people might disagree with you.
That's the problem.  You guys are too Scared to even make an educated guess, b/c you don't want to be judged by the others on this post.  I am not trying to time the market, I'm trying to see what some of you think about where our market is right now.
It doesn't require specialized knowledge to have an opinion - I mean really.
Get a Grip - You have made more assumptions about me, but refuse to make assumptions about the markets.  Hypocritcal.

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Managed Money
Thanks for your Investing 101. 
- My response that for every "Bull there's a bear"  is obviously wrong if you take it out of content.  My point is, Markets wouldn't be efficient if you didn't have people taking both sides of the fence.

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AllREIT wrote:And you can? If understoond your original question, you're working
from the assuption that a profitable market strategy is possible. ...
Telling you that you don't know anything about the future could be the most valuable insight in this thread.

Quote:Profitable trading strategies are not only possible, they're easy to construct, and you don't have to know anything about the future to trade profitably.

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FreeLunch wrote:Managed Money
Thanks for your Investing 101. 
- My response that for every "Bull there's a bear"  is obviously wrong if you take it out of content.  My point is, Markets wouldn't be efficient if you didn't have people taking both sides of the fence.People don't take both sides of the fence equally, and markets aren't efficient.

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EXACTLY
Market's aren't efficient.  That is why every day, there is opportunity.  And that is why IT IS possible to take advantage of an inefficient marketplace.
It is possible to discover the next bull-market and it doesn't take a damn rocket-scientist.
None of you have said what you think yet.  Managed Money - Do you really think that none of the managers of your SMA account aren't looking AHEAD?  What do you think they are doing?  After all, equities do trade on FUTURE EARNINGS potential & if they didn't, Forward P/Es would not be a valuable tool at all?
Don't you think that The Consumer Staple stocks trading at 2X Forward earnings gives ANY INSIGHT at all? 
Do you really think there is nothing to take from that?
 

Dust Bunny's picture
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Go back to my original question.   What do you guys look for in the next 6 months to a Year
Using my cloudy crystal ball:  I think the market is going to go nowhere for a while, bouncing up and down in a moderate range. I don't believe that interest rates are going to be hiked by the Fed unless we see a lot more inflation or unless there is some dramatic change in the Mid East that affects oil.
As we get closer to the election and IF it appears that Hillary and the Dems are going to take control of the economy (God help us all) the market will drop precipitiously as people take their profits and captial gains before we get reamed by tax hikes and soclialized medical care.
 

FreeLunch's picture
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That's a good point Dust Bunny.
Don't Vote for Hillary!
 

AllREIT's picture
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ManagedMoney wrote:Profitable trading strategies are not only
possible, they're easy to construct, and you don't have to know
anything about the future to trade profitably.

If this is so damn easy to do, why are slaving away as an FA?

FreeLunch's picture
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Here's why I don't think we'll go much lower.
P/Es for Financials and Energy are AROUND 10
- How much Lower can THOSE sectors go?
P/Es for Consumer Staples are trading at around 2X growth rate
- They may not be able to go too much higher
Healthcare stocks haven't done much.  Baby Boomers, Baby Boomers, Baby Boomers..
Technology - I'm just not sure about this sector - I think it goes higher.
Industrial Sector - Still Low P/Es and global industrialization
Consumer Discretionary - The Consumer is not Dead.
I PERSONALLY THINK THE MARKET TIMES OUT - THEN GOES HIGHER.
However, I guess I'm going to have to throw out all the Charts

troll's picture
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FreeLunch wrote:Here's why I don't think we'll go much lower.
P/Es for Financials and Energy are AROUND 10
- How much Lower can THOSE sectors go?History tells us they can go lower, especially if the "E" starts eroding in the financials.  Like if there were some major problems in the corporate debt market.  We don't have anything like that developing, do we?

FreeLunch's picture
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That's a good point Joe.
I guess if the E and the FP/E shrink @ the same time that would be brutal.
But maybe 'ol Ben will start lowering rates and that'll balance things out?

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joedabrkr wrote:
FreeLunch wrote:Here's why I don't think we'll go much lower.
P/Es for Financials and Energy are AROUND 10
- How much Lower can THOSE sectors go?History
tells us they can go lower, especially if the "E" starts eroding in the
financials.  Like if there were some major problems in the
corporate debt market.  We don't have anything like that
developing, do we?

Joe, you sound like a stern bear.

Perhaps you would  be interested in shares of ING Senior Income Fund? Its an income fund for especially for seniors' like yourself.

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FreeLunch wrote:None of you have said what you think yet.  Managed Money - Do you really think that none of the managers of your SMA account aren't looking AHEAD?  What do you think they are doing?  After all, equities do trade on FUTURE EARNINGS potential & if they didn't, Forward P/Es would not be a valuable tool at all?
Don't you think that The Consumer Staple stocks trading at 2X Forward earnings gives ANY INSIGHT at all? 
Do you really think there is nothing to take from that?
 I understand what you're trying to get at, but I honestly don't care what the managers are looking at.  That's their problem. I was a trader (not an investor) for 15 years.   Now, I let someone else worry about those things.  Seriously, I simply gather assets and manage people relationships.  I have handed over the responsibility of making money in the markets to others.I will say, though, that even when I was trader, my systems were strictly techincal systems.  I never looked at fundamentals.

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AllREIT wrote:
ManagedMoney wrote:Profitable trading strategies are not only
possible, they're easy to construct, and you don't have to know
anything about the future to trade profitably.

If this is so damn easy to do, why are slaving away as an FA?

First of all, I never said that trading is easy.  I said that developing and writing winning trading strategies is easy.Do you know the difference?Give a winning trading system to 1000 people, and maybe 5 of them will have the discipline to follow it and be winning traders.  The rest won't have the discipline to follow the system and will no doubt make a total mess of things.  They will get killed, while the system keeps generating one winning trade after another.By the way, I'm not slaving away as a FA.  At this stage of my life, becoming an FA is like semi-retirement.  I simply gather assets and manage relationships, while others are doing the real work.

FreeLunch's picture
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Joined: 2007-06-16

Managed Money,
90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.
It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)
I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.
I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

GolFA's picture
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Joined: 2007-06-19

There are definitely some lessons to be taken from the late 90's and turn of the century, and it has to do with managing real money for real clients for the long run.
Just saying, " the only thing you can say for sure is that you can't predict the market " is what a lot of advisors were telling their clients in 2000, 2001, 2002 and so on.
I can assure you that if the market really gets hammered, even for a short period, and maybe due to geopolitical reasons, you will lose some points just sounding like a buy and hold parrot. Worse, you are in the business to try to help you clients not lose money, and there is an active allocation responsibility here -at least, experience suggests that a lot of the above comments may feel like intellectual  hooey if things really fall apart. Look, we all learned the basics in our CFP or finance classes, there is a behavioural aspect here.
Allreit, I question if you really manage money for clients, or have for long, because this question is as much about handling clients as it is about running money.
From a financial planning point of view, if you have a client who has enjoyed gains for the past six years or so, they have more money, are closer to being able to finance their goals, are closer to retirement, whatever. This fact alone can affect portfolio construction, versus the esoteric academic questions about market timing. I know from experience that a lot of advisors have not gone back and looked at portfolio construction from this point of view, along with a great economic recovery and the fact of life that economic cycles still exist, apparently.
The biggest thing I learned around 2000 is that in moving from 50% stocks and 50% bonds, or so, up to a higher percentage of stocks, there is an exponential increase in risk but not reward.
Has anyone here at all been trimming back to fixed positions a little, or am I crazy? My clients are plenty happy to capture two thirds of the S&P with half the risk (right now). We still have plenty of stocks to catch a rising market, but we can buy more if stocks take a plunge.
Some of this " tactical " allocation also happens inside some managed funds.
In handling client relationships, getting some input from clients helps to continuously define a clients risk profile - these are smaller adjustments, but the communication itself is educational and helps prepare us for all market conditions.
At least, it works for me.
 

GolFA's picture
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Joined: 2007-06-19

Here's  a question: your client's money has nearly doubled since 9/11.
Your client is six years closer to retirement, closer to " being there " from a financial planning point of view.
In terms of the investment portfolio, is geopolitical risk more important, less important, or the same  in terms of portfolio construction ( after six years of a great economy ) - net of the portfolio withdrawal time frame consideration?
They said we were living in a new paradigm at the end of the 90s, but good old fundamentals along with things like style drift and portfolio concentration and terrorists who hate capitalism blew things up for a while. Is the world more or less complex now, and how important is thinking for yourself and your clients individual needs versus historical wisdom. 
Historical wisdom (Modern Portfolio Theory) is the core, and the " tactical" allocation is really alignment with client's finanical planning considerations, but there is definitely a market performance expectation. There is a danger of imparting too much of our own view, but with the client, the right amount is really another form of diversification.
Of course, each to his own, I'm not suggesting I have a monopoly on helping clients get there.

ManagedMoney's picture
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Joined: 2007-01-25

FreeLunch wrote:Managed Money,
90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.
It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)
I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.
I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough oneI've never traded individual stocks.  I traded the S&P futures exclusively.  However, I spent a lot of time with William O'Neil 20 years ago, and I am a firm believer in the CANSLIM method for anyone who would want to trade stocks.If you can't find anything to buy, then take the summer off and let those managers try to figure it out.  :)

troll's picture
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Joined: 2004-11-29

AllREIT wrote:
joedabrkr wrote:
FreeLunch wrote:Here's why I don't think we'll go much lower.
P/Es for Financials and Energy are AROUND 10
- How much Lower can THOSE sectors go?History
tells us they can go lower, especially if the "E" starts eroding in the
financials.  Like if there were some major problems in the
corporate debt market.  We don't have anything like that
developing, do we?

Joe, you sound like a stern bear.

Perhaps you would  be interested in shares of ING Senior Income Fund? Its an income fund for especially for seniors' like yourself.

Funny man.Am I a bear, or a realist?  Especially when it pertains to the banks and their exposure to the current issues in the credit market.Cyclical stocks, be they exposed to a credit cycle or economic cycle, often appear cheapest when their earnings are at peak levels.

troll's picture
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Joined: 2004-11-29

FreeLunch wrote:
Managed Money,
90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.
It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)
I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.
I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

Wait a minute!!! You told me that YOU were a money manager. What's up with that?

Oldproducer's picture
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Joined: 2007-05-14

FreeLunch - It sounds like you have this whole market thing figured out, so I'm not sure why you are even asking anything about it. With your experience and knowledge, we should be asking you what to do next. Thanks for all of YOUR insight.

OldP

PS - In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn't a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.

GolFA's picture
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Joined: 2007-06-19

In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn't a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.
Old, that's horrible. And there is plenty of mental suicide. How many of us could deal with waking up next week to having half a book to manage? Maybe it just becomes partly selfish self preservation at some point. We have had a great run.

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