Where are all the bears now?

[Trembling Hand]

This implies that the stock market is little more than a lottery governed by the whims of the "elite". It goes up because people think it will and vice versa....

No thats way too simplistic and thats why we have 10000000000 bears watching in horror as the market keeps on going up.

There is a lot in what he is saying there. It has little to do with your assertion.

 

[FlyingFox]

No thats way too simplistic and thats why we have 10000000000 bears watching in horror as the market keeps on going up.

There is a lot in what he is saying there. It has little to do with your assertion.

On the contrary, stock prices are meant to be an indicator of company health and by proxy the market is an indicator of economic health. If the two are diverging than then there is possibly something wrong.

Perhaps my choice of words were a bit exaggerated but I don't think I ever said that this divergence is not possible but what does it say for the markets and the economy when it does happen? Is it just the cheap money forming another bubble to be burst further down the line?

Over any sufficiently long period of time both the bears and bulls will be right. It just depends on your timelines for being in and out of the market. If your actively trading then perhaps nothing much of what the bears are saying matters. However investment and or growth that is engineered just for the sake of it will bear consequences.

 

[Macquack]

However investment and or growth that is engineered just for the sake of it will bear consequences.

Very clever.

 

[Trembling Hand]

On the contrary, stock prices are meant to be an indicator of company health and by proxy the market is an indicator of economic health. If the two are diverging than then there is possibly something wrong.

Remember when the topic du jour of the bears was how oil going from $30 to $60 was going to cause out of control inflation and wreck company profits? Back in the early naughty's. It was economics 101 and there was no arguing against it if you were sensible.....

 

[white_goodman]

Perhaps my choice of words were a bit exaggerated but I don't think I ever said that this divergence is not possible but what does it say for the markets and the economy when it does happen? Is it just the cheap money forming another bubble to be burst further down the line?

perhaps, perhaps not... maby the gap will close with the real economy catching up as the market stagnates, or the market drops to meet the reality or perception of the economy...

what im trying to say is that you cant necessarily argue the market is going down cos the economy is effed... and arguing on economics in a market thread when there is an obvious divergence doesnt make sense...

The market is plain as day a bull market, if the economic fundamentals arent there then it can be chalked up to printing press, flight for yield, game theory, "animal spirits" or whatever the soup dujour

imo i forecast stocks to go much higher when US budget solvency/inflation is at hand... all that cash rolling over in short term treasuries will flood to property,shares when this happens (Im assuming), so bad economy but market up more.. Until the market diverts from this trend and other things come to light you have to go with it or sit on the sidelines as an ego trip so you can say in 5 years 'see I was right', whilst everyones made triple digit returns

 

[brty]

WG,

Well stated, especially this bit...

The market is plain as day a bull market

My preferred statement on this was written many years ago in Reminiscences.

"It's a bull market, you know"

Though your line is very good.

It is a concept that many find hard to believe given current general conditions, yet similar occurrences have happened many times before. When everything looks clear ahead, with no visible problems at all, is the time to look for the top of a bull market, not while everyone is worrying about the future.

 

[young-gun]

not while everyone is worrying about the future.

People often confuse the members on this forum with 'everyone'.

Talking to everyday people they either
A - Don't know what's going on.
B - Don't care what's going on.
C - think that this rally is sustainable, and is somehow warranted.
D - Think that the global economy is just rosie, and that it's just a few minor headwinds up ahead, nothing we haven't dealt with before....

or E - are concerned as to what is on the horizon. Which in my experience is a very very small minority.

 

[FlyingFox]

perhaps, perhaps not... maby the gap will close with the real economy catching up as the market stagnates, or the market drops to meet the reality or perception of the economy...

what im trying to say is that you cant necessarily argue the market is going down cos the economy is effed... and arguing on economics in a market thread when there is an obvious divergence doesnt make sense...

Yes at any given point in time you can have a market going up and a economy in bad shape. The point is whether this will last? This is the argument between long term investing and trading (see tech/a's earlier comment). All the ordinary blokes with money in stocks in super get smoked in the process.

The market is plain as day a bull market, if the economic fundamentals arent there then it can be chalked up to printing press, flight for yield, game theory, "animal spirits" or whatever the soup dujour

Agreed. The stocks are going up for now. If your trading, time to make money.

imo i forecast stocks to go much higher when US budget solvency/inflation is at hand... all that cash rolling over in short term treasuries will flood to property,shares when this happens (Im assuming), so bad economy but market up more.. Until the market diverts from this trend and other things come to light you have to go with it or sit on the sidelines as an ego trip so you can say in 5 years 'see I was right', whilst everyones made triple digit returns

True. However the returns will only be there if they are realized. In such an environments companies close quickly and liquidity turns pretty solid. If you can time it and preserve your capital then you might never have to work again. Something to aspire to for everyone...

 

[white_goodman]

Agreed. The stocks are going up for now. If your trading, time to make money.

trading could = 5 years. Its been a while since March 09 lows, Im invested/trading until the market breaks down. We could not be in a buy and hold market for 3 decades possibly, cycles of trading/investing for 4-5years then purging... who knows, it could be a lifetime till that buy and hold forever market is back, which seems silly as all you have to do to 'trade' is look at a weekly chart for a few minutes a week essentially

 

[tinhat]

Looking at the XJO it is weighted around a few banks, miners, insurance/financials, the big two retailers, Telstra and a few oil/energy companies.

The flight to yield is not over yet. Quite a few of the "blue chips" from the above are still yielding around 6% net of franking credits. The demand for these shares is going to go up in my opinion. The supply is going to be constrained. I for one am not interested in selling any "blue chip" shares when they are paying dividend yielding in the range of 7-12% return on my investment (grossed up).

So we have banks still yielding good dividends with a stable outlook.

Miners coming off a cyclical bottom for now anyway.

Supermarkets - about as defensive as you can get and still yielding 5.6% grossed up (eg, WOW).

As for the price of oil and what return on investment the oilers are likely to get over the medium term I have no idea, except that I suspect there will be a market for oil and electricity even post the collapse of western civilization.

Around 1991 (may have been 1992) I remember going into my local NAB branch. The teller was a bit gob-smacked as two retiree aged customers left. She said to me, "that couple just bought $200,000 of long dated [I think she said five year] term deposits at 16% interest p.a." They must have loved Paul Keating. Well, history could prove me completely wrong, but the last few years have been the most fantastic opportunity to buy companies such as Telstra, CBA, etc at fantastic yields.

Sure, different people, different risks, but for the time being I forecast more dividend chasing money flowing into the Aussie stock market. Yes owning CBA, WES, TLS is more risky that money in a government guaranteed bank account but retirees such as my mother (SMSF pension phase) wouldn't be taking overseas holidays if the only return on capital she was receiving is term deposit interest rates. A lot of people can afford to live off bank interest only. A heck of a lot of self funded retirees cannot. It's a risk, but when the financial apocalypse arrives at least my mother can say she got to see Turkey.

Right now, I suspect the bubble is in the bond markets.

 

[chrislp]

All the ordinary blokes with money in stocks in super get smoked in the process.

Double-digit returns push super funds to new highs

 

[FlyingFox]

People often confuse the members on this forum with 'everyone'.

Talking to everyday people they either
A - Don't know what's going on.
B - Don't care what's going on.
C - think that this rally is sustainable, and is somehow warranted.
D - Think that the global economy is just rosie, and that it's just a few minor headwinds up ahead, nothing we haven't dealt with before....

or E - are concerned as to what is on the horizon. Which in my experience is a very very small minority.

+1 and I believe the vast majority fall into A and B and when pushed will say C or D.

 

[Trembling Hand]

Yes at any given point in time you can have a market going up and a economy in bad shape. The point is whether this will last? This is the argument between long term investing and trading (see tech/a's earlier comment). All the ordinary blokes with money in stocks in super get smoked in the process.

I don't understand where the bit I put in bold is coming from? Does that mean its not fair cuz the market doesn't make sense and send out screaming "its ok to buy and hold for the next 2 years" signals.

 

[tech/a]

To me it means
The ordinary guy with SMSF is reactionary to immediate news and will be too slow in a crash situation.
OR
The ordinary guy in a superfund will just get smacked as the superfund holds for the long term.

Point is they arent capable or in the position to control their own risk.
There maybe things in place but they just dont know how to best utilze them.

On the general populace.

I believe they are reactionary to immediate news.
They view say the Greek crisis like a Plane crash in Pakistan---glad I wasnt on that plane.
To them the news doesnt or wont (in their view) affect them.
Commentary explains away the movements of the stock market EVERYDAY.
Simple really!

The bigger picture is just an opinion and may not happen.
After all We dont have to worry about such things---we will all be in the same boat--so why worry about something we cant control and may not happen enyway!

But like the God fearing ---we will be ok as we have--FAITH.

 

[FlyingFox]

To me it means
The ordinary guy with SMSF is reactionary to immediate news and will be too slow in a crash situation.
OR
The ordinary guy in a superfund will just get smacked as the superfund holds for the long term.

Point is they arent capable or in the position to control their own risk.

Exactly. Not everyone has a SMSF. For the majority,investing in the stock market is via super or long term holdings and in many cases they might be misinformed about the risks associated with their investments. Or what if you happen to retire during the crisis?

 

[tech/a]

Exactly. Not everyone has a SMSF. For the majority,investing in the stock market is via super or long term holdings and in many cases they might be misinformed about the risks associated with their investments. Or what if you happen to retire during the crisis?

A real and present danger.

The only thing I have been able to come up with as a safeguard is passive income from various sources.

(1) Business---not everyone has access to a business that will continue with minimum to no input during retirement. But perhaps (If your capable) some surplus income could go here.

(2) Property for rents on freehold--majority Industrial sheds.

(3) Shares provided they remain above purchase price--IE little or no erosion of initial capital.

(4) Short term discretionary trading---I use the FTSE pretty easy to supplement an income from just this ---many other instruments you could become proficient at---but you MUST be able to go long and short.
Not expensive to trade a few contracts.

(5) Be debt free

This is my setup for semi then full retirement.
All will change if the crash we have to have belts us---still would rather be here than

A - Don't know what's going on.
B - Don't care what's going on.
C - think that this rally is sustainable, and is somehow warranted.
D - Think that the global economy is just rosie, and that it's just a few minor headwinds up ahead, nothing we haven't dealt with before....

THERE!

 

[FlyingFox]

A real and present danger.

The only thing I have been able to come up with as a safeguard is passive income from various sources.

(1) Business---not everyone has access to a business that will continue with minimum to no input during retirement. But perhaps (If your capable) some surplus income could go here.

(2) Property for rents on freehold--majority Industrial sheds.

(3) Shares provided they remain above purchase price--IE little or no erosion of initial capital.

(4) Short term discretionary trading---I use the FTSE pretty easy to supplement an income from just this ---many other instruments you could become proficient at---but you MUST be able to go long and short.
Not expensive to trade a few contracts.

(5) Be debt free

This is my setup for semi then full retirement.
All will change if the crash we have to have belts us---still would rather be here than




THERE!

Sage words.

 

[tech/a]

Oh God thats all we need a Sage Duck

 

[FlyingFox]

Oh God thats all we need a Sage Duck

View attachment 50887

If the suit fits :

 

[FlyingFox]

I don't understand where the bit I put in bold is coming from? Does that mean its not fair cuz the market doesn't make sense and send out screaming "its ok to buy and hold for the next 2 years" signals.

No I mean it's not fair that the market is being moulded to such an extent that there maybe no relationship between the market and the economy. The market, derivatives etc are meant to help trade in real objects. Does it make sense that the paper gold market as an example is 100X the real one? Does it make sense to artificially prop up companies and markets? What happens when things get back to the real economy?