Re: Whither the markets?
Related question.
Of somebody's net worth, how much should be in the nest egg (retirement fund) and how much in non-retirement funds, monies and assets, proportionally ?
Re: Whither the markets?
To me everything is nest egg. Retirement funds may provide matching funds. You SHOULD get ALL the matched funds. Also it may not be bad idea to invemst Max in retirement Acct since u get tto defer taxes.
One should have at least 6 months expense in cash. Preferably 2 years. The rest can be in non retirement mutual funds or individual stocks/bonds.
I don't know real estate. Do nothing there. I don't know gold. So nothing there.
Of course ur home equity u built up is part of ur assets also.
Re: Whither the markets?
Market had 3 worst days cumulative.
Don't just do something. Stand there.
Re: Whither the markets?
In the 3.5 months since this thread opened mkt either flat or up couple pct. Today there were two guests on cnbc. One from Raymond james. Both bullish. The RJ guy was a tech analyst. Here is what he said
We r in a secular bull mkt. Dow transport making new highs. The industrials hut new high couple Weeks ago thus confirming the trend. The transports hit new high again. So the industrials have to follow suit.
Q: what is there r negative surprises?
A in a secular bull mkt all surprises r positive
Q isn't this bull mkt long in the tooth. What is avg age of bull mkt
A you don't measure from March 9 low. You measure from valuation low. Which happened Oct 2011. So only 32 months old.
Q so where do u see the mkt ending up
A it could reach 2000.
Seriously? Mkt is at 1890. That is a 110 puts move. Or all of 6 pct.
For perspective the mkt is up 2.9 x or 190 pct from 2009 lows. And he is bullish now. Where was he in march 09. 0 royally saying the trend is downwards. Hottie will agree.
Re: Whither the markets?
Trimmed stock and stock fund allocation further. Sold 33 pct of Eli Lilly (LLY) shares at close to multi year highs. Exchanged some stock fund for stable value fund. So 61 pct allocation is stock and stock funds.
Will sit tight now. Unless mkt increases 10 pct. Then lighten some more. If mkt drops 15 pct start nibbling.
Not exact science. But covering all bases.
Re: Whither the markets?
Forgot to add - market has hit one record after another. At 1915
Re: Whither the markets?
Trimmed stock and stock fund allocation further. Sold 33 pct of Eli Lilly (LLY) shares at close to multi year highs. Exchanged some stock fund for stable value fund. So 61 pct allocation is stock and stock funds.
Will sit tight now. Unless mkt increases 10 pct. Then lighten some more. If mkt drops 15 pct start nibbling.
Not exact science. But covering all bases.
So it's time to 'capture some gains' ? Is that the correct term ?
Re: Whither the markets?
So it's time to 'capture some gains' ? Is that the correct term ?
Ideally a simple re balancing is all that is needed. So if ur plan is 70 pct in stocks or stock funds and 30 pct rest - cash real.estate bonds, then as stocks move up a lot a simple rebalancing would allow u to book gains.
It so happens I have not only rebalanced. But over past few months reduced my stock allocation from 74 pct to 61 0ct. This could end up hurting my returns if mkt keeps going up. I wouldn't recommend others do this - because that would be presumptuous of me. I would recommend rebalancing periodically. With market making 5 to 6 record highs in last 2 weeks now is as good a time as any.
Re: Whither the markets?
When this thread opened mkt at 1824. Now 1923. Up 5%.
Those who simply rebalanced got to sell a little bit at high prices.
No need for greed. Asset allocation is the mantra. Ommmmmmm
Re: Whither the markets?
May 27 wsj
The VIX is at a 14 month low at 11.7. Note it was around that level late 2006 thru 2007. Low VIX means investors calm. Investors calm when things look good. That is when stick prices up.
I believe March 09 the VIX was as high as 60. Investors nervous. Was good time to get in.
So one more data point. Low VIX high complacency. Not good for mkt.
Of course no one can predict short term movements. But odds of mkt being nearer to top high based on VIX.
Re: Whither the markets?
Sold some financials June 3 or 4. They had reached their high since 09 lows. Looking to sell some Merck or TEVA if they keep going up. If not no action needed.
Baby steps. Market reached 1940 I think today. At 2000 rebalance a bit. That's all. Not rocket science.
As mkt goes higher it's long term potential returns go lower. Simple Rithmetic.
Re: Whither the markets?
Actually you are incorrect. Thread opened after close of trading Feb 20. Price was 1840.
now at 1950. 6.5% gain in little over 4 months. Nothing to sneeze at. For perspective mkt up lose to 200 pct since March 09 low.
Of course, OP picked a down day to do analysis. Typical.
Re: Whither the markets?
In the meantime, there is bullish call on the market. Expect DOW to reach 44000. Apparently bull mkt age well. And age is not expected to kill bull markets.
OK.
Re: Whither the markets?
We have been talking abt buybacks in various threads. That these make sense when sticks r cheap and vice versa. We have been critical of the surge in recent buybacks. Finally someone took notice.
Re: Whither the markets?
Last week WSJ had an article on buybacks. In 2013 us companies spent 700 billion dollars on buybacks. The highest level since - wait for it - 2007. And in the 1st Q of 2014, they spent 200 billion. Well over 2013 rate.
So as stock prices reach all time highs, companies r buying back more of the high priced stocks. Nice.
Re: Whither the markets?
You will recall the forward p to e ratio is around 14 pct lower than based om last 12 minths. Reason is 50 pct comes from buybacks by reducing share count. This helps artificially support prices.
Another indicator that caution warranted.
Rebalance. Asset allocation.
Re: Whither the markets?
^ above was June 30 2014.
In July 8 wsj - “announced buybacks have slipped in 2nd Q. Slipped to 2 yr low. Buybacks tend to peak when bull markets do”.
Read the last sentence carefully, #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) . It is stated matter of factly.
Re: Whither the markets?
Speaking of buybacks the stocks of companies who did buybacks rose 115% between Jan 1 2013 and end of June 2014. While snp up abt 50 pct. That indicates buyback cos probably even more overvalued.
IBM has been doing a lot of buybacks. Most of it with borrowed money. So there is another elephant in the room. Low interest rates prompting companies to issue debt and buy back stock. The bill will come due one day.
Last week's WSJ.
Re: Whither the markets?
When this thread was started Feb 20, snp500 closed at 1850. It leaked at 1980 a week ago. For a gain of 7 pct. Today closed at 1920. Gain of 3.8 pct.
Re: Whither the markets?
Raghuram Rajan was one of the few who got it right predicting the 2008 crash.