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TranceAddict Investors Club @ Marketocracy (pg. 16)
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| Capitalizt |
| quote: | Originally posted by Krypton
Capitalizt, your NAV has barely moved. What are you doing son!? I know you've got some short ETFs or something. Did you buy a money market security? Is your assets in fixed income? I know it is! Or its in cash. I'm watching you. |
I decided to sit out for a while...There is just too much uncertainty to make a decision on which way things are going..
Personally, I believe if the FED wasn't intervening by pumping 50+ billion into the system over the past few weeks, and if the president were not planning HUNDRED billion $$ in government bailouts for mortgage companies, the market would be in the sewer right now. All of this government intervention is preventing natural market cycles from taking their course. It's hard to stay bearish with the 3 trillion dollar monster in Washington fighting to keep things up.
Best to sit on the side and wait for things to play out IMO ;) |
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| atbell |
| quote: | Originally posted by Capitalizt
Personally, I believe if the FED wasn't intervening by pumping 50+ billion into the system over the past few weeks, and if the president were not planning HUNDRED billion $$ in government bailouts for mortgage companies, the market would be in the sewer right now. All of this government intervention is preventing natural market cycles from taking their course. It's hard to stay bearish with the 3 trillion dollar monster in Washington fighting to keep things up.
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And it's keeping money in the hands of risk takers who should have lost it. This is like sitting outside a casino with a suitcase full of cash offering it to people who've just lost thier shirt. |
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| Krypton |
| quote: | Originally posted by atbell
I've been holding GS since the start, one of my worst performing stocks. Just read an economist article that pointed out they have a division that holds cash and is waiting on bargins to apear.
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You can offset your losses by buying as much Goldman stock as you have in losses. Dollar-cost averaging when you think you've hit a low is a great way to offset losses.
| quote: | | I'm betting on continued US$ slide because I don't like Ben's argument for the overstatement of inflation. In my reasoning that means that there is a doubling effect because 1. there are a lot of inflationary pressures (especially demand side), and 2. the Fed's response is going to consistently under account for inflation so long as Ben is at the wheel. |
I don't get how you can fight inflation AND at the same time pump liquidity into the market and give bailouts.
| quote: | I decided to sit out for a while...There is just too much uncertainty to make a decision on which way things are going..
Personally, I believe if the FED wasn't intervening by pumping 50+ billion into the system over the past few weeks, and if the president were not planning HUNDRED billion $$ in government bailouts for mortgage companies, the market would be in the sewer right now. All of this government intervention is preventing natural market cycles from taking their course. It's hard to stay bearish with the 3 trillion dollar monster in Washington fighting to keep things up.
Beast to sit on the side and wait for things to play out IMO |
I'm beating you again:)
Are you trying to time the markets? If you have nothing but companies that are fundamentally outstanding, why sell even in a market contraction? I personally think its impossible to time the markets because the damn thing is just too impossible to predict. What event would trigger you to re-enter the market? Would it be a Fed rate cut? |
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| Krypton |
| quote: | Originally posted by atbell
And it's keeping money in the hands of risk takers who should have lost it. This is like sitting outside a casino with a suitcase full of cash offering it to people who've just lost thier shirt. |
It's communism. |
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| Capitalizt |
| quote: | Originally posted by Krypton
What event would trigger you to re-enter the market? |
When we get down to the historical valuation of an 8-10 p/e ratio on the S&P ;) |
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| Krypton |
| quote: | Originally posted by Capitalizt
When we get down to the historical valuation of an 8-10 p/e ratio on the S&P ;) |
The S&P's average PE is 21.9. What PE are you looking at for the S&P? What number do you have and where are you getting it?
According to the Fed Model, the S&P is relatively undervalued still. The S&P Earnings Yield is relatively higher than the 10Year Treasury note. I'm going to call the ratio that compares the S&P yield to that of the Treasury note the Fed ratio. Current T-bill yield is 4.53% and the S&P yield is 5-6%. The Fed ratio is currently (.73). When the Fed ratio is below .90, the S&P is undervalued. When the ratio is between .9 and 1.1, the S&P us fairly valued. When the ratio is above 1.1, the market (S&P) is overvalued.
As this chart shows, the blue line represents the Fed ratio, the S&P is undervalued. I would be a bull, but Capitalizt, just follow the strategy that works for you. Obviously, both our strategies are very different.
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| Capitalizt |
meh, you're right (kinda). I'm not a historical expert. For some reason, I thought the average ratio over the past 100 years was closer to 10...but after googling, I've found it stays in the mid teens most of the time. It has ranged from 10-22 for most of the past century (excluding the insane 45+ p/e during the 2000 bubble and the 7-8 p/e's during the depression and 1987 crash), so if the current ratio is 21.9 as you say, it's still trending at the high end historically. If we see a 20% haircut across the board, I might start dipping into the general market.
I recommend you sit back and look at the big picture for a minute. That's where I get my investing ideas..
So what's happening in the world today? Let's see...the Fed has been printing currency like crazy, devaluing the money already in existence...so it's probably a good idea to buy precious metals (since they rise when the dollar falls). GLD and SLV track gold and silver prices. Overseas, we have China creating a new city the size of Philadelphia every month, and they need MASSIVE amounts of energy/oil to do this. There is crazy growth both there and India...and these two countries are virtually sucking the earth dry. So it sounds like a smart idea to go long oil using an ETF (USO tracks the price of crude oil).
Forget about earnings and individual company fundamentals for a second.. Ask yourself...what is happening the the unit of value ($) used to CALCULATE those earnings?? It's going down down down! How are WORLDWIDE fundamentals looking...What are the big political trends..? Looks to me like the USA is drowning in debt (currently sitting at 9 trillion)...China and India are becoming superpowers. They are killing us in manufacturing, education, and technological advancement. Given the record low approval numbers for Bush, it looks like we are going to have a left-wing sweep in US elections next year with the dems likely controlling all branches of government, and you know they have a HUGE list of new taxes, laws, and anti-business regulations they've been dying to impose over the past 7 years..
Throw in our huge foreign trade deficit and a federal budget deficit that going to EXPLODE when baby boomers start retiring in a few years, and man...it doesn't look good. The fundamentals of the companies you've found may be great, but the fundamentals of the USA aren't looking so hot over the next few years/decades...and if the country goes down, you can bet it will take those stocks with it. ;) |
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| Krypton |
| quote: | Originally posted by Capitalizt
meh, you're right (kinda). I'm not a historical expert. For some reason, I thought the average ratio over the past 100 years was closer to 10...but after googling, I've found it stays in the mid teens most of the time. It has ranged from 10-22 for most of the past century (excluding the insane 45+ p/e during the 2000 bubble and the 7-8 p/e's during the depression and 1987 crash), so if the current ratio is 21.9 as you say, it's still trending at the high end historically. If we see a 20% haircut across the board, I might start dipping into the general market.
I recommend you sit back and look at the big picture for a minute. That's where I get my investing ideas..
So what's happening in the world today? Let's see...the Fed has been printing currency like crazy, devaluing the money already in existence...so it's probably a good idea to buy precious metals (since they rise when the dollar falls). GLD and SLV track gold and silver prices. Overseas, we have China creating a new city the size of Philadelphia every month, and they need MASSIVE amounts of energy/oil to do this. There is crazy growth both there and India...and these two countries are virtually sucking the earth dry. So it sounds like a smart idea to go long oil using an ETF (USO tracks the price of crude oil).
Forget about earnings and individual company fundamentals for a second.. Ask yourself...what is happening the the unit of value ($) used to CALCULATE those earnings?? It's going down down down! How are WORLDWIDE fundamentals looking...What are the big political trends..? Looks to me like the USA is drowning in debt (currently sitting at 9 trillion)...China and India are becoming superpowers. They are killing us in manufacturing, education, and technological advancement. Given the record low approval numbers for Bush, it looks like we are going to have a left-wing sweep in US elections next year with the dems likely controlling all branches of government, and you know they have a HUGE list of new taxes, laws, and anti-business regulations they've been dying to impose over the past 7 years..
Throw in our huge foreign trade deficit and a federal budget deficit that going to EXPLODE when baby boomers start retiring in a few years, and man...it doesn't look good. The fundamentals of the companies you've found may be great, but the fundamentals of the USA aren't looking so hot over the next few years/decades...and if the country goes down, you can bet it will take those stocks with it. ;) |
Well, how about diversifying into the international markets. There are markets that are outperforming the US market by a pretty good margin. And these markets have little subprime exposure which is mainly an american problem. Just a suggestion. I've got a few ADRs(foreign stock trading in US markets) on my watchlist if you want some good ones. I've got about 10 stocks that have given me double digit gains and several are ADR international stocks. |
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| atbell |
| quote: | Originally posted by Capitalizt
Forget about earnings and individual company fundamentals for a second.. Ask yourself...what is happening the the unit of value ($) used to CALCULATE those earnings?? It's going down down down! How are WORLDWIDE fundamentals looking...What are the big political trends..? Looks to me like the USA is drowning in debt (currently sitting at 9 trillion)...China and India are becoming superpowers. They are killing us in manufacturing, education, and technological advancement. Given the record low approval numbers for Bush, it looks like we are going to have a left-wing sweep in US elections next year with the dems likely controlling all branches of government, and you know they have a HUGE list of new taxes, laws, and anti-business regulations they've been dying to impose over the past 7 years..
Throw in our huge foreign trade deficit and a federal budget deficit that going to EXPLODE when baby boomers start retiring in a few years, and man...it doesn't look good. The fundamentals of the companies you've found may be great, but the fundamentals of the USA aren't looking so hot over the next few years/decades...and if the country goes down, you can bet it will take those stocks with it. ;) |
Both India and China are going to need other resources too. Building cities takes steel and concrete, building cars takes steel, building ships takes steel, building dishwahsers takes steel and nickel. I've been trying to pick international companies who's trade bypasses the US economy and the sinking US$. It's only worked moderately well because I don't know enough foreign companies and a bunch of them aren't listed in this game.
Krypton - you're right that figting inflation and giving bailouts can't happen. The fed has chosen to ignore inflation. |
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| Krypton |
I've pretty much got the stock market down. What is getting me is the FOREX market and Options market. Anyone have any experience in these markets. I've been reading everything I can and writing out "what if" situations, but I still don't get it.
For example of one "what if" (purely theoretical) situation...
FOREX - Foreign Exchange
1. I have $1000 in initial capital. My broker lets me leverage it at a ratio of 50:1. So I have $50,000 in leveraged funds.
2. I buy €36,720 and sell $50,000. The currency rate is €0.7344/$1.00. I expect the Euro to rise against the dollar.
Now two things can happen. I can sell at a loss or I can sell at a gain.
Loss: I sell €40,005 and buy $50,000. The currency rate changed to €0.8001/$1.00 where the dollar gained in value. Now €36720 - €40,005 = -€3280 which is my loss. This would be around a $4,099 loss.
Gain: I sell €32,560 and buy $50,000. The currency rate changed to €0.6512/$1.00 so that the value in the dollar fell. Now €36,700 - €32,560 = €4160. This would be a $6,388 gain.
I'm not expecting much of a response from anyone, but if there are anyone who knows anything about FOREX, can that person provide any insight whatsoever? |
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| Shakka |
| quote: | Originally posted by Krypton
I've pretty much got the stock market down. |
:haha: :stongue: :crazy: |
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| Capitalizt |
| quote: | 2. I buy €36,720 and sell $50,000. The currency rate is €0.7344/$1.00. I expect the Euro to rise against the dollar.
Now two things can happen. I can sell at a loss or I can sell at a gain.
Loss: I sell €40,005 and buy $50,000. The currency rate changed to €0.8001/$1.00 where the dollar gained in value. Now €36720 - €40,005 = -€3280 which is my loss. This would be around a $4,099 loss.
Gain: I sell €32,560 and buy $50,000. The currency rate changed to €0.6512/$1.00 so that the value in the dollar fell. Now €36,700 - €32,560 = €4160. This would be a $6,388 gain. |
WTFFFFFSICLE...ZOMG....KRYPTON...Stay away from that crap!! Stick with stocks and ETF's. Don't even f*ck with that crazy stuff...It's an easy way to go bankrupt. You could make many gains over the years trading the market then lose everything in the blink of an eye with one wrong bet in the futures markets. It's not worth it. |
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