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Post by xray on Feb 7, 2021 15:59:53 GMT
If you have noticed, "DANGER" brings on "NEW" buying like we are experiencing currently....
The term "BUY on Fear, Sell on exuberance" prevails....
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Post by rhythmmethod on Feb 7, 2021 16:21:25 GMT
xray , I guess. But if people are currently buying, is that not exuberance, regardless of posts, noise, etc.? All the more reason to have an allocation threshold, at least for us amateur timers. Best of luck to you.
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Post by Norbert on Feb 7, 2021 16:26:12 GMT
Just noting that ‘danger’ doesn’t seem to be much of a topic anymore. Is that reason to this things are more dangerous? It seems to me that the valuations of popular growth stocks are stretched. Since I started this thread they are even more stretched. So it goes. Of course, the valuations of IG bonds are also stretched; and many value stocks are cheap for a reason. Meanwhile, I am a bit alarmed about the Covid-19 situation because: - mutations - slow pace of vaccinations (especially in Europe) - vaccines have finite efficacy and apparently do not prevent us from spreading the virus. Mr. Market doesn't seem to care, but I have 25% in cash equivalents nonetheless.
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Post by xray on Feb 7, 2021 16:34:22 GMT
rhythmmethod Investors are buying. My current portfolio "jumped" in portfolio value this past week as investors are seeing the danger and are apparently changing their portfolio's [like the managers of the mutual funds] and are currently building some cash [some building a little more than usual]. No one can predict the market, so our strategy will continue to change [IMHO].... The "BIG" decisions are tough as many of us have a lot of CapGain buildup along with >10% dividend and distributions. When selling for CapGain, we lose some dividends and the balance for the corrective "DOWN" markets [as to when] must always be calculated. Changing markets bring us changing strategy IMHO.... You probably took notice that the dividend paying securities are getting less and less in their dividend percentages as MktPrc's rise. Many income investors [like me] are taking notice of this and this makes it harder for replacements .... Live Long and Prosper....
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Post by retiredat48 on Feb 7, 2021 18:57:30 GMT
Hi rhythm... I bought PSTIX, pyramiding the market down (PSTIX going up), during the March 2020 selloff. The goal was to "neutralize" a percentage of my equity side of portfolio. Like, if you sell 2% of a stock fund, you lowered your allocation by 2%. If you use the proceeds to buy PSTIX, you are effectively removing another 2% equity. I used PSTIX to remove about 3+ percent. After the bear market bottom, I considered stocks would most likely test the previous lows, so I continued to hold this hedge. Didn't happen. While I redeemed a little of PSTIX, I still hold it today. However, I never added to it either since. The posture is this: I don't care, and would really like , the stock market to double from here. Yes, PSTIX will lose, but my stock allocation will have huge gains. That is basically what has happened since April 2020. I always have the option of adding to PSTIX if I consider the market is making a large fall. But so far I have not felt this way. I'm keeping the option open that the next big money to be made, may be in avoiding a huge stock market collapse. But I have no crystal ball...just trying to be prepared. R48 Isn't this a little like Rob Arnott's owning PSTIX as a top holding of PAUIX back in the day? PAUIX underperformed PAAIX because he held the hedge in a market that just kept going up for years. Ultimately neither of his funds posted particularly good results, but PAUIX ("the best of Pimco") was a disappointment. I can't wrap my head around the idea of simultaneously being long and short the same assets. I share your sense of caution, so I'm just reducing my long-equity proportion. I didn't intend PSTIX to be a "long" position. Bear markets are shorter. It was bought in last March declines, and was doing its job well (going up in price). then came the rebound. I considered a most likely market track was to retest (if not breakthrough) the previous lows. Didn't happen. However, PSTIX did the job of taking some percent equity and "neutralizing it". Yes, I had sold a lot of stock funds in Jan and Feb 2020...into March, lowering my allocation. But a way to continue lowering is to take proceeds and buy a hedge, versus continued selling. If you sell a stock fund, and it goes up higher, it is very difficult to buy it back. It is easier to close out a losing hedge, which applies to the entire market. In hindsight, in a perfect world, I should have closed out PSTIX...but am OK that it simply (partly)offseting gains in stock funds I own. I clearly could not see many of my stock funds not only recovering, but going to far new highs, before covid economic recovery. But here we are...at new highs. I am smiling greatly on my overall portfolio size today. R48
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Post by retiredat48 on Feb 7, 2021 19:09:30 GMT
xray , I guess. But if people are currently buying, is that not exuberance, regardless of posts, noise, etc.? All the more reason to have an allocation threshold, at least for us amateur timers. Best of luck to you. Well, this is the crux of investing...current people exuberant, or not? During last bear market, Fido stated fully one third of all investors there sold all their stocks/stock funds. We had posters here post same. Currently about 3 trillion dollars sits in MM Funds. This money will find its way back again into stocks/funds...eventually. This money usually buys back in, when things seem "SAFE". The markets usually seem safe after they have gone up a lot (the opposite of reality). So people are starting to buy back in. I submit this money is not yet "exuberant". That occurs when the retail investor, who is finally buying back in, has some gains to brag about (the water cooler effect). That has yet to occur. We may have a ways to go yet. Disclosure: I am a little giddy (exuberant) since buying MJ (marijuana stocks) just after the last election, now up about 85%! I need to be careful. R48
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Post by chang on Feb 7, 2021 19:32:04 GMT
retiredat48 "If you sell a stock fund, and it goes up higher, it is very difficult to buy it back. It is easier to close out a losing hedge, which applies to the entire market." Good point, and well said. I can't remember ever buying back anything that I've sold.
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Post by rhythmmethod on Feb 7, 2021 20:57:54 GMT
All good points from Norbert , chang , retiredat48 , xray . I'm observing my musical development is similar to my investing one. I always borrowed elements/concept/techniques, etc. from musicians I admired and studied, yet tried to combine all those elements to my temperament. I find my modest growth as an investor similar. I've borrowed info from each of you. Each above poster has good reasons, and no doubt, the discipline for their strategy/implementation. Me, I'm de-risking a little around the edges. ~40% equity, >15% cash and enjoying the ride, though not as fast as it might be. Mostly I've been eliminating my more aggressive FI and re-allocating to my 'core' funds and short FI. Pity I'm missing out on the MJ rally after my decades of support. Edit to add - From Barron's - " The last time all three indexes closed at records was January 20". What could go wrong??
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Post by steadyeddy on Feb 10, 2021 14:31:14 GMT
Should we change the title of this thread from "Danger" to "Melt Up" ?
I think FOMO and TINA are in full force... until the herd is rattled (by something) and then some hot air will diffuse. Like RM, I am also clearing aggressive positions and "nice gainers" with a hope that I can buy them back cheaper later.
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Post by rhythmmethod on Feb 10, 2021 14:59:58 GMT
Should we change the title of this thread from "Danger" to "Melt Up" ? I think FOMO and TINA are in full force... until the herd is rattled (by something) and then some hot air will diffuse. Like RM, I am also clearing aggressive positions and "nice gainers" with a hope that I can buy them back cheaper later. I am a bit awe-struck with the seemingly unbound enthusiasm of this market. However, I've stopped trimming winners. I'm only trimming my low-conviction aggressive FI, like PDIIX. I'm replacing that with a combo of VWIAX, BSV, EDV and some cash. I've never really had consistent success selling high and re-buying lower. I'm sure others can do it. I'm trying to take what I consider crazy high, or low, markets to reevaluate my conviction on holdings. Stay safe and make $$.
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Post by racqueteer on Feb 10, 2021 15:47:06 GMT
"Can we keep increasing the supply of money by 25% every year with no consequences, and no inflation? Doesn't seem possible." Either inflation, debt or interest rates will get us eventually. Well if I can get a 30% raise every year as well as grow my assets by 30% a year that will work for me. If you were to get that, you can bet that the value of your money would have dropped by more than that each year!
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Post by Norbert on Feb 10, 2021 16:53:51 GMT
Have been taking some profits on growthy funds like PRGSX and ICLN, while adding to valuey funds like SCHD and FISMX. In general, have reduced equity exposure. The former two funds have insane charts and high valuations. The latter two are a bit less insane. (Click to enlarge.)
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Post by rhythmmethod on Feb 10, 2021 19:20:09 GMT
Good stuff Norbert, I'm betting you will navigate this market well over a few months time. I'd trim PRGSX but I don't have a huge position there. A while back I trimmed CNRG and others. When I was 16 years old, I had a paper route and made about $100 a month getting up very early every morning, seven days a week. When I turned 17, I got a job playing music in a strip club and made $50 a night. My mom only let me work weekends. Anyway, I was so overwhelmed with my good fortune I couldn't make a move and just stared and absorbed my good fortune. This market reminds me a bit of that. I've got plenty of cash for when the time comes for me to step forward and, 'man up', but until then I'm content to watch with amazement. Stay well.
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Post by retiredat48 on Feb 11, 2021 0:38:45 GMT
rythm...I learned pricing power in my Sunday paper route, started at age 11. The town routes had mark-up limits of 3 cents a paper, as paperboy profit. The country routes had no cap, which was the type I took over...in December...in Penna. 4 miles out of town.
Turns out ithe previous paperboy delivered about 75 papers--way to many to haul in the snow with a red wagon...and a markup from 10 cents to 20 cents a paper.
I decided to raise prices, to get some folks to drop out. Went to 30 c/paper...then 40c...then 50 c/paper. No one dropped subscription. I got to 75 cents a paper!, finally getting size more manageable.
However, my dad was getting phone calls about this, and how "greedy" I was, etc. In the end he backed me up. I watched as neighbors would get in the car and drive 4 miles to town, in snow, to get the sunday paper!
Price what the market will allow!
memories.
R48
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Post by steadyeddy on Feb 11, 2021 1:48:39 GMT
This market <expletive> amazes me. Powell says unemployment level is worrisome, and the market keeps on going on higher. This s&*t will hit the proverbial fan - just don't know when.
Happy investing!! (better yet, gambling!!)
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Post by chang on Feb 11, 2021 1:57:49 GMT
This market <expletive> amazes me. Powell says unemployment level is worrisome, and the market keeps on going on higher. This s&*t will hit the proverbial fan - just don't know when. Happy investing!! (better yet, gambling!!) What do you mean gambling? Matthews Asian Tech (MATFX/MITEX) just goes up 1-2% every day. Can't remember if they mention that in the prospectus. Lemme see, if it goes up 1.5% every trading day (about 253 in a year) that works out to (1.015) 260 = 43.2, so I figure a $10,000 investment in MATFX today ought to be worth around $432,000 this time next year.
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Post by steadyeddy on Feb 11, 2021 2:07:04 GMT
This market <expletive> amazes me. Powell says unemployment level is worrisome, and the market keeps on going on higher. This s&*t will hit the proverbial fan - just don't know when. Happy investing!! (better yet, gambling!!) What do you mean gambling? Matthews Asian Tech (MATFX/MITEX) just goes up 1-2% every day. Can't remember if they mention that in the prospectus. Lemme see, if it goes up 1.5% every trading day (about 253 in a year) that works out to (1.015) 260 = 43.2, so I figure a $10,000 investment in MATFX today ought to be worth around $432,000 this time next year. rofl
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Post by chang on Feb 11, 2021 7:02:30 GMT
Another danger signal? - Warren Buffett's favorite indicator hints that stocks are significantly overvalued
If you are a Warren Buffett investing disciple, then you may want to consider raising some cash by selling a good number of winning positions.
Because the Oracle of Omaha’s favorite stock market indicator is looking frothy, to say the very least.
The “Buffett Indicator” as it’s called in Wall Street circles — which takes the Wilshire 5000 Index (viewed as the total stock market) and divides it by the annual U.S. GDP — is now at a record high amid the latest climb to records in the broader market. In doing the math, the Buffett Indicator stands at about 194% — up markedly from 175% or so when applying third quarter GDP data.
The figure is well above the 159.2% seen just before the dot.com bubble.
“The stock market is significantly overvalued according to the Buffett Indicator,” said researchers at GuruFocus. “Based on the historical ratio of total market cap over GDP (currently at 194.6%), it is likely to return -3% a year from this level of valuation, including dividends.”
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Post by racqueteer on Feb 11, 2021 8:37:57 GMT
Another danger signal? - Warren Buffett's favorite indicator hints that stocks are significantly overvalued
If you are a Warren Buffett investing disciple, then you may want to consider raising some cash by selling a good number of winning positions.
Because the Oracle of Omaha’s favorite stock market indicator is looking frothy, to say the very least.
The “Buffett Indicator” as it’s called in Wall Street circles — which takes the Wilshire 5000 Index (viewed as the total stock market) and divides it by the annual U.S. GDP — is now at a record high amid the latest climb to records in the broader market. In doing the math, the Buffett Indicator stands at about 194% — up markedly from 175% or so when applying third quarter GDP data.
The figure is well above the 159.2% seen just before the dot.com bubble.
“The stock market is significantly overvalued according to the Buffett Indicator,” said researchers at GuruFocus. “Based on the historical ratio of total market cap over GDP (currently at 194.6%), it is likely to return -3% a year from this level of valuation, including dividends.”
The thing is, though, the market has not been allowed to function 'normally' for years now. Frankly, I doubt such as thing as 'normal' even EXISTS at this point. This pandemic has only served as a blip in this market! Sure, we OUGHT to be lightening. The same has been true for a couple of years! There's going to be a reckoning at some point, I believe, but I think it's coming later than it WOULD have. Obviously, an argument can be presented that this IS 'later'! 8^b
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Post by Norbert on Feb 11, 2021 12:11:15 GMT
History tells us that market exuberance can persist for a long time. Tops are challenging to call. Shiller's CAPE index hit 45 in early 2000. Presently it's just at about 36. The tech bubble was truly crazy, considering the earnings picture. Hell, now we've got ZIRP and QE. Globalization means organized labor is powerless. Oil prices are low and alternatives are arriving. The market top could be years away ... or just weeks. (Click to enlarge.)
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Post by uncleharley on Feb 11, 2021 13:17:36 GMT
"Sell your losers and let the winners run." George Soros a few yrs ago. He might have more money than Buffet.
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Post by jcserc on Feb 11, 2021 14:03:21 GMT
I stopped over worrying about when the reckoning day might come a long time ago. In my view, that's the main purpose of maintaining the asset allocation that "can help you sleep". Yes, that day will come and by the time we realize it is more than a simple correction it will probably be too late anyway to act on it. All I can do is try to follow the plan, moving bonds into equities as we go down.
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Danger?
Feb 11, 2021 14:03:41 GMT
via mobile
Post by Norbert on Feb 11, 2021 14:03:41 GMT
"Sell your losers and let the winners run." George Soros a few yrs ago. He might have more money than Buffet. There's wisdom in that. But, there will come a moment when the top is in. Do you have thoughts about using T/A to call it? Clearly, being "overbought" won't get us there. TIA.
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Post by steadyeddy on Feb 11, 2021 14:24:04 GMT
"Sell your losers and let the winners run." George Soros a few yrs ago. He might have more money than Buffet. There's wisdom in that. But, there will come a moment when the top is in. Do you have thoughts about using T/A to call it? Clearly, being "overbought" won't get us there. TIA. In these coordinated, global trading system we now have - I believe external shocks will be the reason for a rapid descent. I think the Feb/Mar 2020 was the steepest decent in the market, true? If so I suspect that could become the norm going forward. The slow grinding bear markets may be for the history books primarily because the world central banks step in to rescue the markets...and they are caught in that infinite loop.
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Post by Norbert on Feb 11, 2021 15:26:14 GMT
There's wisdom in that. But, there will come a moment when the top is in. Do you have thoughts about using T/A to call it? Clearly, being "overbought" won't get us there. TIA. In these coordinated, global trading system we now have - I believe external shocks will be the reason for a rapid descent. I think the Feb/Mar 2020 was the steepest decent in the market, true? If so I suspect that could become the norm going forward. The slow grinding bear markets may be for the history books primarily because the world central banks step in to rescue the markets...and they are caught in that infinite loop. You might be right. At present, bad news doesn't matter. Washington has us covered. So, it will take some unexpected external shock to cause a big decline. Something no one is expecting. I can think of a few things, but don't want to spoil anyone's day.
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Post by yogibearbull on Feb 11, 2021 15:33:16 GMT
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Post by uncleharley on Feb 11, 2021 16:40:55 GMT
"Sell your losers and let the winners run." George Soros a few yrs ago. He might have more money than Buffet. There's wisdom in that. But, there will come a moment when the top is in. Do you have thoughts about using T/A to call it? Clearly, being "overbought" won't get us there. TIA. Up & down volume seems to be a good way to confirm a turn in price under current conditions. The advance/decline tool or the OBV indicators at stockcharts have served me well as early warning signals of a change in direction of price. Both are derived from up & down trading volume. Other sites have other names for similar tools.
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Post by retiredat48 on Feb 11, 2021 18:39:55 GMT
Some more thoughts. This quarter, I read a posted article by MF manager Howard Marks--a noted value investor. It is sometimes difficult to read as his articles can get wordy/lengthy. However, in the one linked here, I went back and read it again, as it had some notable strategic points in it. Link here: www.oaktreecapital.com/docs/default-source/memos/something-of-value.pdfIn it, Marks is discussing with his son (during COVID lockdown), who also manages money, the differences in their investing philosophy (the kid last decade is doing better than dad). Marks is soul-searching his bad relative performance. An interesting take-away is this. The old style investor looked for values, maybe undervalued situations, bought the company, and sold (took profits) if the company got to "overvalued" by historic measurements. Most of us retirees relate to this. However, the new way, is: If you invest in a company and it is successful...growing...you NEVER SELL, unless the fundamentals get so bad the company is in trouble. You ignore trying to sell at peaks, or anytime. You simply hold, or keep adding more dollars to the investment. For example...you would have never sold AAPL...or Google...or Amazon...or Wellington Fund. Fido's Peter Lynch of Magellan Fund, one of the best manager records of all time, had a philosophy that every stock he bought, his goal was a ten-bagger (up 10X). Further, just having a few ten baggers at any one time, separated him from the rest of the managers. Further, if he sold out at 2X, you can never get to ten X; sell out at 5X, you can never have 10X. In my 54 years of investing, I realize the biggest impact on my portfolio and long term performance is ten baggers or more. All mutual funds. The following were held since inception: FSPTX high tech; FSEAX Asia; VGHCX Healthcare; Energy (since sold during last five years); Vang'ds small cap index fund. My daughter has a 30 year IRA in which FSPTX is now 85% of portfolio--just due to growth. When I was in my early twenties, I went and listened to an investing talk by a brokerage manager, and what stuck with me was this mantra, written on the blackboard: " When you are right, BE RIGHT BIG; when you are wrong, be wrong small." That stuck with me. Thus, I find it intriguing to consider that the investment style du jour may be to take your most successful investments, and never sell them. Even those people who bought high techs like microsoft, at the peak of NASDAQ bull market bubble of 2000, have now done quite well. Sell only if fundamentals greatly deteriorate. This approach suggests: stop fretting over whether things are overvalued or not...or is the market high. In the life of successful companies, such situations will always occur...but fuggettaboutit. Own them. R48
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Post by xray on Feb 11, 2021 18:45:41 GMT
Your: "there will come a moment when the top is in. Do you have thoughts about using T/A to call it? Clearly, being "overbought" won't get us there."
You might want to consider building into your excel worksheets a T/A program that calls it for you. You can then evaluate the T/A call in your worksheets against your current analysis [without the normal emotion that we all may have experienced in making the Buy/Sell decisions]. Some of us sold into the early market this morning for CapGains when our T/A told us to....
Do not expect it to work when you first install it. It took me several + years [in both up/down markets] of upgrades [in it] to make it workable for me. I still make minor changes when observing the differences with the current market variations. Since we all have different Goals and Objectives, the T/A should be quite different [IMHO]....
Live Long and Prosper....
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Post by anitya on Feb 11, 2021 19:38:27 GMT
I usually do not read lengthy posts, even if I am otherwise bored. But R48 post, which I liked, is good and is worth reading. May be R48 can expound on how investors go about selecting 10 bagger funds and whether they should just stick it out if the manager is underperforming even though the 10 bagger theme is working with other managers or you exit and find a performing fund with the underlying theme.
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