Whither the markets?

[Sunnybutt]

Re: Whither the markets?

Southie a quick question ,

in current scenario as stock indexes are being effected Chinese devaluation is it a good idea to invest in the stock market
I want to invest for Long term gains through dividend reinvestments

Thanks in advance

[Southie]

Re: Whither the markets?

@Sunnybutt

Southie a quick question ,

in current scenario as stock indexes are being effected Chinese devaluation is it a good idea to invest in the stock market
I want to invest for Long term gains through dividend reinvestments

Thanks in advance

Sunny you have asked a macro (economic ) question. That is, what is effective t of Chinese currency devaluation on stock markets.

I look at valuations. When this thread started market was overvalued. It is 1.5 years later. Mkt at same level. So less overvalued.

I invest mainly in US. Which I think is at least 10 pct overval8ed. But not bad time to start wading in. Little by little.

European market cheaper.

Don’t know Asian markets.

I buy mainly index funds.

You asked the right questioon. But I don’t pay too much attention to currency devaluation etc. I use the OPPORTUNITY that mkt provides when it REACTS negatively (to buy) or positively (to sell)

[Southie]

Re: Whither the markets?

Asset allocation is key. Fix that. Then you can rebalance periodically to set the allocation back to desired valie.

[OYMWA]

Re: Whither the markets?

@Sunnybutt

Yuan devaluation will have an affect on equities here in US ( and likely all around the world ), but it shouldn’t matter if you are a long-term investor. If you have been investing for a while ( meaning several years ), you will still be ahead of the curve when all this ends. In my opinion, we are about to enter bear-market. Once it does, start buying. For now, I am holding.

[Captain1]

Re: Whither the markets?

I *jhharred *my *haath *today, and exit is what I took today, waiting for more red ahead.

[Southie]

Re: Whither the markets?

@Captain1

I *jhharred *my *haath *today, and exit is what I took today, waiting for more red ahead.

Translation, preferably in Tamil please. Our Alamelu is stumped. (Of course Kamran was not keeping )

[Southie]

Re: Whither the markets?

@OYMWA

@Sunnybutt

Yuan devaluation will have an affect on equities here in US ( and likely all around the world ), but it shouldn’t matter if you are a long-term investor. If you have been investing for a while ( meaning several years ), you will still be ahead of the curve when all this ends. In my opinion, we are about to enter bear-market. Once it does, start buying. For now, I am holding.

Couldn’t have said it better.

Valuation matters.

[Southie]

Re: Whither the markets?

When I stated not a bad time to start wading in, little by little, it was targeted to someone who has no exposure to market. Rather 5han time the bottom, if you put 5 pct of your cash that gets you some exposure. If mkt goes down put some more. That is called dollar cost averaging down.

To me fair value is 1400 to 1600 snp500. But who knows if it gets there or blows past it on the down side etc.

This thread was started cause I felt it was overvalued when I started it. And as mkt rose I started taking more out. No one calls absolute tops and bottoms.

[Captain1]

Re: Whither the markets?

@Southie

Translation, preferably in Tamil please. Our Alamelu is stumped. (Of course Kamran was not keeping )

“haath jharna” = “clap hands to get rid of dirt”… meaning got rid of all the stocks I had.

[Southie]

Re: Whither the markets?

@Captain1

“haath jharna” = “clap hands to get rid of dirt”… meaning got rid of all the stocks I had.

Ok.

[chapter_2]

Re: Whither the markets?

@Southie

Even if I rebalance now, I still need to continue rebalancing periodically.

Your assignment for this quarter is to read the “Whither the Markets” thread in its entirety. You will note that I have been rebalancing at various times.

Do you think crude has bottomed out? Am dipping my toes in Big Oil.

Thanks again for stopping by our neighborhood.

From little age of mine I have been hearing of oil crashing the market. Of course oil makes even rebalancing and reallocations total vulnerable!

[Southie]

Re: Whither the markets?

@chapter_2

From little age of mine I have been hearing of oil crashing the market. Of course oil makes even rebalancing and reallocations total vulnerable!

How so?

[chapter_2]

Re: Whither the markets?

Southie, because oils are mostly subsidised by government, and they run all market! so craash in oil prices affects market like total!

[Southie]

Re: Whither the markets?

@chapter_2

Southie, because oils are mostly subsidised by government, and they run all market! so craash in oil prices affects market like total!

chapter 2 works in mysterious ways. Alert readers will recognize the good chapter recommending an out of favor value stock - an integrated play in Oil

TOTAL ticker symbol TOT

I don’t disagree. While no one knows where the bottom is, it is certainly fat cheaper than 10 months ago.

Thank you, chapter 2

[Southie]

Re: Whither the markets?

As always, our team appreciates it whenever you stop by. We value your input.

[Southie]

Re: Whither the markets?

@Southie

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

From 1824 to 1942. Gain of 7 pct. In 1 yr 10.6 months. Ot annulled return of 3.4 pct. Throw in 2 Oct fiv. Market returned 5.4 pct per yr.

Ok. So I guess with hindsight we can say mkt beat CDS handily.

[Southie]

Re: Whither the markets?

@Southie

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.

This was June 5 2014. Mkt same level. In 1 yr 7.3 months mkt has gain 0 pct. So 2 pct div yld has been the return since June 5

Tbis thread was opened with the premise mkt was approaching valuations for. Which gains would he limited. The hypothesis appears to have panned out.

[Southie]

Re: Whither the markets?

@Southie

The Snp500 closed above 2000 for first time. Continued micro rebalncing.

This was Aug 27 2014. Mkt loss 3 pct. In 1 yr 4.5 months. Or loss of 1.8 pct per yr. Add dividends and u get a whopping 0.2 pct return.

Started rebalancing at circa 1950 on up. So move appears 4o have been reasonable.

[Southie]

Re: Whither the markets?

@Southie

Burton Malkiel author of random walk on wall street had an op ed Aug 28 wsj. CAPE ratio 25.1 long term avg 15. So abt 60 pct overvalued?

He says well interest rates low. So discount rates for future earnings low. So NPV of future earnings higher. So can support higher p to e. Then he says interest rates expected to remain low for some time.

Crock I say. Overvalued means overvalued.

Then he says 10 yr returns expected to be low from these levels.

There u go. Isn’t an investor supposed to care abt long term returns

This was Aug 29. Malkiel appears to have been incorrect. As stated, mkt has given up 3 pct since.

[Southie]

Re: Whither the markets?

@Southie

This Saturday Jason Zweig article was his interview of Shiller. Which probably occurred earlier last week. With snp 500 close to 2000.

Shiller, wishy washy as always, stated the following. And I paraphrase
Well, you know , the CAPE ratio has been above average at 21 last 20 yrs. So compared to that, cape ratio of 26 is not very overvalued. Also, you know, who is to say history is not different this time. Maybe we are in a new time. With higher cape ratios. The market will go where investors bid it. Who is to say it can’t keep going higher. It certainly did after Dec 96. When cape ratio was higher. And if u got out, u missed the rally over next 3.5 years.

Of course he didn’t add that by 2009, all those gains had vanished. And the mkt was significantly lower than Dec 96.

This was October 15 2014. We rightly criticized Shiller for his wishy washiness. We called the mkt as overvalued. While the good Prof. Backed away from his own work.