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June 2014 Stock Market Discussion


tank

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So will new records continue to be set, or are we setting up for a prolonged downturn?

Jason

Gainesville, Florida

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Well, I'm still happy I am fully invested and about 50% margined with a lot of AAPL - haven't bought or sold anything in almost a year. But I am a little uncomfortable with what I am sensing is a lot of complacency here. Including myself.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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"But I am a little uncomfortable"

thats a good thing - thats not a bad thing.

everyone and his brother hates this rally and thinks its about to top - its when folks are not uncomfortable that it crashes

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Well, I'm still happy I am fully invested and about 50% margined with a lot of AAPL - haven't bought or sold anything in almost a year. But I am a little uncomfortable with what I am sensing is a lot of complacency here. Including myself.

Doubled my stake in the $450 range to offset my initial purchase. Have been long the whole time. Hopefully they've lowered folks expectations enough that when they do what everyone expects, the stock will fly. So far so good. Up over 50% since tanking last year and closing in on their previous high. Seemingly good news on the horizon. Have some GOOGL as well and lately it seems to have gone a bit flat. Would be strange if the two companies ended up reversing roles.

Jason

Gainesville, Florida

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"But I am a little uncomfortable"

thats a good thing - thats not a bad thing.

everyone and his brother hates this rally and thinks its about to top - its when folks are not uncomfortable that it crashes

Then please explan to me why the VIX (sometimes referred to as the Fear Factor) is at a seven year low. I'm thinking people are capiulaing that they have been wrong, and if so, we could have a mini melt up before the long awaited correction materializes.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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Dean-

lets say you are correct.

tell me exactly how to play the market with your information. ?

1) when do I sell ?

2) when do I short the market ?

3) when do I buy back in ?

Edited by trioderob
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Dean-

also - how does someone look at this chart as you have highlighted and know what to do now ?

in other words is it unreaonable to think that the VIX could muddle along for up to another year before bottoming out as it did on the right side of the chart:

https://finance.yahoo.com/echarts?s=^VIX+Interactive#symbol=^vix;range=my;compare=^gspc;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

Edited by trioderob
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and one final point -

the VIX is low but what about the liquidity levels ?

in other words how much money have governments around the world made available for the purchase of equities as compaired to the past bull markets - in other words are they still pumping ?????

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Rob - I have already answered your questions over the course of the last year - but you don't pay attention.

I guess you still haven't figured out that I don't play the "market." I buy individual stocks when I see major inflection points. Sometimes this may coincide with the general market, and at other times it may not.

For example, in real time, a year ago now, I told you I was picking such an inflection point in AAPL. And you can see that it has outperformed the market by about 30% (including dividends, up over 50% in the last year). So even if the market lost 10%, I would probably still be up.

So while I look at the general market, the only time I "play" it would be to hedge if/when I sense an extreme. But it would only be a temporary "insurance" policy, and I would not exit my main positions. In most cases, I would continue to collect my dividends and defer my taxes in my longer term plan.

So to answer your question, if I would sense a melt up to an extreme, I would hedge with an index of some kind. But extremes are uncommon, and I am only suggesting that the ground work may be in place for one to occur before year's end - because of the liquidity you have mentioned and the complacency I have mentioned. A lot of people have been missing out on what looks to be the "only game in town" for profit. Can they afford to keep waiting?

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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Dean-

So to answer your question, if I would sense a melt up to an extreme, I would hedge with an index of some kind.

please let me know when we have your "melt up to extreme"

also what would it take for you to exit your positions - for example in the crash of 2008 - how did you know at what point of the epic decline of 75% into the abyss - that it was time to "get out" before it dropped to SPX 666 ?????

Edited by trioderob
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Dean-

So to answer your question, if I would sense a melt up to an extreme, I would hedge with an index of some kind.

please let me know when we have your "melt up to extreme"

also what would it take for you to exit your positions - for example in the crash of 2008 - how did you know at what point of the epic decline of 75% into the abyss - that it was time to "get out" before it dropped to SPX 666 ?????

Rob, it was never time to get out, history shows that. But it was time to add more.

Those who got out, were those who lost. Those who road it out, lost nothing - and over the 20-30 years of a person's "investment window" they still came out ahead. Again - we have been through this before. Don't be in stocks if you need the money in 5-10 years. If you follow that advice, you can just ride out the inevitable downturns.

And as to my positions, I could lose 30-40% on them today and still have a profit. So I am not in any hurry to ever sell. The dividends are too sweet, and I don't need the money. And I am not investing for the long term anymore. But as mentioned, I could buy a little insurance if I was that worried. And if I ever foresee the need for that money within 5 years, that is when I will average my way out.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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I am not in any hurry to ever sell. The dividends are too sweet, and I don't need the money.

you win - you are wrapped in gold foil

Edited by trioderob
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I am not in any hurry to ever sell. The dividends are too sweet, and I don't need the money.

you win - you are wrapped in gold foil

Why would I be anxious to put myself in a position where zero profit is guaranteed. I want to be either long and collecting dividends, or short. At least then, in either case, I have a chance for a home run.

But I just hate watching from the sidelines.

Just like your garden. You could buy that rare species, plant it, and watch it grow, and maybe even pup or seed so you can make more. Or you can live in fear that it could die in a freeze or be food for a gopher. But if you want a fabulous mature rare plant, or make good money investing, you have a much better chance staying in the game and buying the right plant or the right stock.

But to be fearful of the big freeze and sell all your plants, only to start over when it didn't materialize, is the sure way to never have a killer mature garden.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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Dean-

it all sounds wonderful - but its bad advice.

and that's not just my viewpoint - that's the viewpoint of world famous stock traders and businessman.

you will talk big but you wont lay any actual numbers on the table as to how you have done year to year.

and remember you are the guy who real time on this forum stated he greatly reduced his equity exposure - one week before the biggest stock rally of all time -

I outta here

Edited by trioderob
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Advice and claims are worthless.

Unlike you, I told you in real time the only move/call I made with real money since "Stock Talk" started. And I posted the chart above.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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Anyone thinking about picking some Alibaba shares when they are made available?

Jason

Gainesville, Florida

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DEAN- DEAN- DEAN

any fear at all that a true intermediate bear market may soon be forming ?

(not your minor "correction" but a true brutal Bear market)

"I search for new investment horizons- if they do not come to fruition - that's fine - as it will ultimately represent a buying opportunity - all the while I reap lucrative dividends"

Edited by trioderob
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Tell me what a "true intermediate bear market" is.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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Tell me what a "true intermediate bear market" is.

Intermediate-Trends

Within all primary trends are intermediate trends, which keep the business journalists and market analysts constantly searching for the answers for why an issue or a market suddenly turns and heads in the direction opposite to that of yesterday or last week. Sudden rallies and directional turnarounds make up the intermediate trends and, for the most part, are the results of some kind of economic or political action and its subsequent reaction.

History tells us that the rallies in bull markets are strong and that the reactions are somewhat weak. The flip side of the coin shows us that bear-market reactions are strong and that the rallies are short. Hindsight also shows us that each bull and bear market will have at least three intermediate cycles. Each intermediate cycle could last as little as two weeks or as long as six to eight weeks.

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I still didn't hear a definition of an "intermediate bear market." I see mention of intermediate trends and intermediate cycles within a bear market - but you have to be in a bear market first. And we are a long way from a bear market.

I am accustomed to the 20% decline definition. If that is what you are trying to ask then no, I am not in fear of a 20% market decline at the moment.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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here is something to watch:

http://finance.yahoo.com/echarts?s=OIL+Interactive#symbol=OIL;range=1d

go to this chart and see what oil prices have done in the last 3 months

$5 gallon gas might not be the best thing - instant salary decrease for everyone

for you rich guys growing palms its no big deal - but the guy in OK who makes 40k and has 3 kids is going to stop buying things

and what if the Iraq issue expands to Baghdad and it collapses into total civil war ?

gas at 6 or 7 dollars ?

oh and QE ends at the same time - will the market like THAT ?

"i am a reaper of lucrative dividends"

Edited by trioderob
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you flip flop more than Shamu

"But I am a little uncomfortable with what I am sensing is a lot of complacency here. Including myself." - Dean

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you flip flop more than Shamu

"But I am a little uncomfortable with what I am sensing is a lot of complacency here. Including myself." - Dean

I have been 100%+ long - 100% of the time - in my speculative account (my only account now) for four years straight. No flip flopping here.

Complacency = low VIX

VIX close to all time low.

So yes, I am watching all my sentiment indicators.

Wall of Worry = Rob's constant agonizing about pending doom.

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Kona, on The Big Island
Hawaii - Land of Volcanoes

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International stocks are a much better deal than US stocks right now Yielding over one % higher and cheaper based on PE and book value also US REITs are not as overvalued as US stocks and yielding 3.77%. I'm in for the long haul regardless of what happens, but upping my international %.

US

P/E=20.2

P/B=2.6

Yield=1.84%

International

P/E=17.2

P/B=1.7

Yield=3%

Encinitas, CA

Zone 10b

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I can't recall a time when international stocks have ever reached parity in valuation with US stocks. In other words, under-valuation in contrast with US stocks is normal, and the simple comparison itself does not make them a 'buy'. However other measures may validate your decision to overweight internationals.

Kim Cyr

Between the beach and the bays, Point Loma, San Diego, California USA
and on a 300 year-old lava flow, Pahoa, Hawaii, 1/4 mile from the 2018 flow
All characters  in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.

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I can't recall a time when international stocks have ever reached parity in valuation with US stocks. In other words, under-valuation in contrast with US stocks is normal, and the simple comparison itself does not make them a 'buy'. However other measures may validate your decision to overweight internationals.

Kim,

It is has been hard for me to find out the historic values of the international markets. The one major thing I am looking at is the dividend yield. It looks like the average has been close to the US average of around 4%. US Yield is now 60% lower than international markets. How do you rate the valuation of the international markets vs the US? Does the US book value usually trade at a 65% premium over the international markets I know the accounting in other countries is different than the US and that can effect a lot. With that being said I am certainly no expert.

Encinitas, CA

Zone 10b

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