Dow 14,198?

[Tilted]

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]

how about Commodities Markets ....

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

 

[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 !

 

[Tilted]

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]

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]

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.

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.

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.

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.

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.

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]

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]

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]

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.

 

[MMDad]

Yay! More juice! Dig deeper! Faster!

It's "Push the rope harder!!!"

 

[Tilted]

Yay! More juice! Dig deeper! Faster!

Not just any juice, the Juice. Capital J, not lower case. Show some respect please.

 

[Larry Gude]

Not just any juice, the Juice. Capital J, not lower case. Show some respect please.

There are some great unwritten books to be done.

One of them is about the FBI, 9/11 and Jamie Gorelick's memo, how a piece of people transformed the United States.

Another one is how Barack Obama sedated the people he HAD to sedate with a market rebound perhaps more hollow than the bubble that burst and deflated it in '08.

Working title;


"Juice"

 

[Tilted]

Dow futures suggest that the DJIA has a chance to take out 14,198 this morning.

 

[stgislander]

Dow futures suggest that the DJIA has a chance to take out 14,198 this morning.

At 9:44AM EST, it was at 14,218.11.

 

[Tilted]

At 9:44AM EST, it was at 14,218.11.

And it's at about 14,240 right now.

For a little perspective, it hit an intraday low of 6,470 on March 6, 2009. That's a gain of about 120% over four years - an annualized return of about 22% over a four year period.

The question remains whether it will close at an all-time high (i.e. above 14,165), that's generally regarded as the more noteworthy historic comparison.

 

[kwillia]

The last time the DOW was here...

"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer, quoting Stanley Druckenmiller, to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables), namely that "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%
•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

http://www.zerohedge.com/news/2013-03-05/last-time-dow-was-here

 

[Baja28]

"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer, quoting Stanley Druckenmiller, to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables), namely that "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%
•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

http://www.zerohedge.com/news/2013-03-05/last-time-dow-was-here

That is an excellent example of how the democrats and the obama administration has ruined this country.

 

[Tilted]

That is an excellent example of how the democrats and the obama administration has ruined this country.

Wouldn't the better tack be to endeavor to understand the numbers, what they mean (beyond just the self-evident arithmetic differences), and what (to include who perhaps) is responsible for them? That seems a lot more worthwhile than just reflexively (or, more to the point, conveniently) accepting and asserting that bad number A happened at X time so entity Z must be the cause. Especially considering that, so often when people do just that they - when confronted with good number B having happened at time X - reflexively and conveniently deny that entity Z could be the cause.

For example, why - beyond the simple arithmetic realities - did the public debt grow from $9 Trillion to $16+ Trillion? Why did the deficit explode (for that matter, what was the change in the real, as opposed to the reported, deficit)? Was it mostly because of new policies that were enacted? New spending that was added (and when was it added)? Or was it more because of the natural effects of a significant economic recession (e.g. reduced revenue from taxes and increased programatic spending for things like Social Security and Medicaid)? Because of legacy policies continually catching up to us and becoming more problematic fiscally? How much did bailout spending contribute to the problem?

What accounts for GDP being a point lower today than it was then - private sector activity being (comparatively) sluggish or government spending being (comparatively) sluggish?

I so wish we could get some honest - and sincerely truth-seeking, rather than preferred-meme-protecting - conversations going on these kinds of subjects. There are a number of widely accepted (in various circles) memes that seriously need exploring (and possibly vanquishing).

 

[philibusters]

My portfolio is not doing that well at least comparatively to what the stock market is doing. I am only 30 so I don't have hundreds of thousands of dollars to play around with but my savings are about 30K. I have about 20K out of that 30K is either global stock funds or commodity funds and the remaining 10K in the U.S. stock market. Its frustrating to watch the stock market shoot ahead while my portfolio flat lines. At the same time, I feel fundamentally the only thing keeping this stock market at its current levels is the cheap money from the federal and depressing interest rates. The market is not that great and I don't trust myself to time my exit at the right time so I am intellectually okay with my situation even though its frustrating.