Dow 14,198?

[Tilted (Premo)]

Originally Posted by philibusters

By the way, I am taking profits when the S&P 500 hits 1550. I have already predetermined that I am doing that. Do other people have a sell off (take your profits plan)?

I'm not a big fan of pre-set action targets like that. I prefer to assess the ongoing propriety of a position based on current conditions and information and to reassess it as they change - what seemed like a good or bad valuation based on the conditions and information available last month may not seem as such based on the conditions and information available today. When things change, you need to reassess. That's not to say that, if you're investing rather than trading, you shouldn't still be considering the long-term prospects of the business itself when deciding what constitutes a fair valuation. I'd be doing just that, but an assessment of that can change as the information available changes.

[Tilted (Premo)]

Originally Posted by GURPS

how about Commodities Markets ....

They vary, but some of them have seemed less volatile of late.

[Wenchy (Premo)]

I've been stubborn and it may pay off (without too many losses)

It's good to hear there might be a rally. I'll call my broker tomorrow.

The bright side: My son and ex got a great house.

If I had it all to do again I would have sold my house high, invested in bonds, took my son and lived in an apt.

Good luck to all !

[Tilted (Premo)]

Originally Posted by Wenchy

I've been stubborn and it may pay off (without too many losses)

It's good to hear there might be a rally. I'll call my broker tomorrow.

The bright side: My son and ex got a great house.

If I had it all to do again I would have sold my house high, invested in bonds, took my son and lived in an apt.

Good luck to all !

I want to make sure you didn't think I was calling for a rally tomorrow. If President Obama were to announce support for a patriation tax holiday or cut, I think we'd most likely see a rally. But I think it's highly unlikely that he'll announce that - I was just daydreaming.

I think equity markets are more likely to react negatively to his address than positively, but it of course depends on what he has to say. Maybe he'll surprise me.

[Wenchy (Premo)]

Originally Posted by Tilted

I want to make sure you didn't think I was calling for a rally tomorrow. If President Obama were to announce support for a patriation tax holiday or cut, I think we'd most likely see a rally. But I think it's highly unlikely that he'll announce that - I was just daydreaming.

I think equity markets are more likely to react negatively to his address than positively, but it of course depends on what he has to say. Maybe he'll surprise me.

I'm going to call my broker and change my investments.

I've been with them for almost 30 years and they take good care of me when I want my money.

Investment for me hasn't been good since about 2003. I tried to ride it out and I can't any longer.

[w1llsterl1]

I'd be more afraid to own longer maturity highly rated bonds than equities at this point, if inflation is something you are concerned with. A 2% increase in long term rates can cause a 30 year treasury bonds price to drop between 20-30% in today's interest rate environment.

On the flip side most larger companies have been able to cut costs, refinance existing debt to historically low rates, and build cash on their balance sheets. Inflation may give back some pricing power that has disappeared over the past few years (assuming they can control input costs). Probably a good thing for corporate earnings. If you back out cash corporations are sitting on P/E ratios really aren't high on a historical basis.

I'm young and in a position where I can stomach volatility, and am using margin to effectively have 110-115% of my portfolio in stock and stock based ETFs.

[philibusters]

Originally Posted by w1llsterl1

I'd be more afraid to own longer maturity highly rated bonds than equities at this point, if inflation is something you are concerned with.

Sure but I think both U.S. equities and U.S. bonds are vulnerable to inflation and higher interest rates. If you like to park and sit your money I think going into mutual funds in other stock markets with lower P/E ratios is a safer bet.

Originally Posted by w1llsterl1

A 2% increase in long term rates can cause a 30 year treasury bonds price to drop between 20-30% in today's interest rate environment.

I agree its dangerous to buy long term bonds.

Originally Posted by w1llsterl1

On the flip side most larger companies have been able to cut costs, refinance existing debt to historically low rates, and build cash on their balance sheets.

To me that means its better to be in a mutual fund than try to pick individual winners and losers. Building cash on the balance sheet does not mean higher earnings, it means possible higher earnings. Some companies will have good management that uses the cash saved well to actually achieve higher earnings and some will use it poorly and not achieve higher earnings. Without a crystal ball, I think this adds risk to the stock market as today's earnings are probably less of an indicator of the companies earnings 5 years from now than is typical because of the added cash. Its hard to guess which companies will use that cash effectively to generate sustainable higher earnings.

Originally Posted by w1llsterl1

Inflation may give back some pricing power that has disappeared over the past few years (assuming they can control input costs). Probably a good thing for corporate earnings.

A good thing for nominal future earnings, but long term inflation should hit everybody fairly evenly.

Originally Posted by w1llsterl1

If you back out cash corporations are sitting on P/E ratios really aren't high on a historical basis.

You probably were not really responding to my post earlier, but if you were we are talking about apples and oranges. I really don't pick any individual stocks. I am all in mutual funds. I just chose the funds. So when I talk about high P/E ratios I am talking about the S&P 500's P/E ratio as a whole, not individual companies with large cash reserves. Higher interest rates will ALWAYS lower P/E ratios.

For example right now a 10 year treasury bond has about 2% interest. On a hundred dollar bond that is $2 a year. Now lets assume you could take 100 and buy a stock and that you are a rational investor so you think the price you pay for your investment should be related to you expected return. In order to pick the stock $100 of stock over the bond what P/E ratio would the stock have to have. Make two further assumptions, you the corporation will grow at a rate equal to 2.4% compound real growth over the next ten years. Your second assumption is that the stock market is riskier than bond market and you have the stock to produce a return 5% better than the bond market to justify the risk of investing in stocks rather than bonds. The P/E ratio you would require from the stock is one that produces over $21 of earning over the next 10 years. I am not sure exactly how to calculate that (I am bad at math), but like its a P/E ratio of like 60 to 1 given the 2.4% compound growth of earning.

Run those same numbers when bonds 10 year bonds are paying 12% interest rates on a 10 year loan. All of a sudden that $100 of stock has to produce $144 of earnings over the next 10 years to beat the payout from the bonds. In order to do so that stock is going to have to have much lower P/E ratios.

Originally Posted by w1llsterl1

I'm young and in a position where I can stomach volatility, and am using margin to effectively have 110-115% of my portfolio in stock and stock based ETFs.

I don't know how to do any of that stuff.

[Tilted (Premo)]

Equity markets surged yesterday on renewed confidence that the Fed would keep the Juice coming for the foreseeable future. The DJIA closed at another 5-year high (14,075.37) to leave it less than 100 points off its all-time closing high and about 120 points away from its all-time intraday high.

[Larry Gude (Premo)]

Originally Posted by Tilted

Equity markets surged yesterday on renewed confidence that the Fed would keep the Juice coming for the foreseeable future. The DJIA closed at another 5-year high (14,075.37) to leave it less than 100 points off its all-time closing high and about 120 points away from its all-time intraday high.

Yay! More juice! Dig deeper! Faster!

[bcp (Premo)]

Originally Posted by Larry Gude

Yay! More juice! Dig deeper! Faster!

build the market, crash the market, build the market crash the market.

cool way to pull more money from people if you ask me.