Is this market a bear trap?

[william the wie]

The Dow is about 50% above its dividend yield valuation of 6700.

The market is poised for a panic out of equities and into commodities.

Gold is below its inflation adjusted trend line of $3000/oz based on its 1/1/33 price.

But haven't all of these conditions been redlining since 1998 or even earlier? So why should the market return to reality right now? Why shouldn't the sugar high last another week, month, year or decade?

 

[iamwhatiseem]

I haven't put mine back in....it is critically too high right now.
Right now it is as if every tid bit of good news, no matter how small drives up another 100 points in a day.
Things are a little better...there have been some good signs since the first of August...but absolutely nothing that could be responsible for driving the markets as high as they are..it cannot continue. if we don't have an adjustment now - it will be a much larger one later, and we could be right back into another slide.

 

[Sallow]

I was in at the beginning of the year and just liqudated to do renovations on my apartment.
I bought ford, american steel, citibank and a couple of others that I can't remember right now.

Made a small fortune.

And many companies are reporting some pretty good earnings. If you do the research and trend for a little bit before getting in...might be a good time. But use money you can afford to lose..

 

[iamwhatiseem]

I was in at the beginning of the year and just liqudated to do renovations on my apartment.
I bought ford, american steel, citibank and a couple of others that I can't remember right now.

Made a small fortune.

And many companies are reporting some pretty good earnings. If you do the research and trend for a little bit before getting in...might be a good time. But use money you can afford to lose..

I am in the neighbourhood of pushing 35% return since this all began.

 

[Sallow]

I haven't put mine back in....it is critically too high right now.
Right now it is as if every tid bit of good news, no matter how small drives up another 100 points in a day.
Things are a little better...there have been some good signs since the first of August...but absolutely nothing that could be responsible for driving the markets as high as they are..it cannot continue. if we don't have an adjustment now - it will be a much larger one later, and we could be right back into another slide.

There is ALOT of construction going on. Those are probably the sorts of companies to check out.

 

[Sallow]

I was in at the beginning of the year and just liqudated to do renovations on my apartment.
I bought ford, american steel, citibank and a couple of others that I can't remember right now.

Made a small fortune.

And many companies are reporting some pretty good earnings. If you do the research and trend for a little bit before getting in...might be a good time. But use money you can afford to lose..

I am in the neighbourhood of pushing 35% return since this all began.

Grats.

 

[LordBrownTrout]

I'm seeing commodities heading north, precious metals as well. I was leery at the end of 2007 and pulled my safe stocks out. Still haven't put anything back in.

 

[Flopper]

I haven't put mine back in....it is critically too high right now.
Right now it is as if every tid bit of good news, no matter how small drives up another 100 points in a day.
Things are a little better...there have been some good signs since the first of August...but absolutely nothing that could be responsible for driving the markets as high as they are..it cannot continue. if we don't have an adjustment now - it will be a much larger one later, and we could be right back into another slide.

There is ALOT of construction going on. Those are probably the sorts of companies to check out.

A lot of that construction is the 800 billion in stimulus money the Democrats have pumped into the economy. I have to wonder what's going to happen when the money dries up.

 

[Toro]

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.

 

[Paulie]

But I could change my mind

This is the Toro disclaimer that should be attached to all Toro investment opinions.

 

[Toro]

But I could change my mind

This is the Toro disclaimer that should be attached to all Toro investment opinions.

Well, that's 'cause I often change my mind.

I once read an interview with a former employee of Soros. He said that Soros is only right 20%-30% of the time. But when he's wrong, he identifies it quickly and gets out of his position ASAP. Cutting your losses is an integral part of investment success IMHO.

 

[william the wie]

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.

what DJIA or S&P range do you expect? I know the arguments for continued upswing and for downturn but all the range arguments I have heard rely on wild swings:

The US consumes less until a major exporter to the US goes belly up. During the crisis lots of money flows into the US and consumption increases for a a time until the slow sink resumes.

However looking at the results for Japan when it played this game with us two decades ago I think it might be difficult to get play dates in the future.

 

[Toro]

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.

what DJIA or S&P range do you expect? I know the arguments for continued upswing and for downturn but all the range arguments I have heard rely on wild swings:

The US consumes less until a major exporter to the US goes belly up. During the crisis lots of money flows into the US and consumption increases for a a time until the slow sink resumes.

However looking at the results for Japan when it played this game with us two decades ago I think it might be difficult to get play dates in the future.

I have no idea what the ranges are. We will only know in retrospect. I think the March 09 lows are probably the lows we'll see. I doubt we'll get to new highs. Somewhere in there. But wherever it is, it is a traders' market. However, there are definitely bull markets, such as gold and silver. And it is much easier to make money in a bull market than a traders' market.

 

[loosecannon]

The market is poised for a panic out of equities and into commodities.

This is just beginning and it is all about a falling dollar not a weak stock market. See Sept 2007-July 2008 for evidence.

The stock market has been divorced from fundamentals since the mid 90's at least.

 

[loosecannon]

There is ALOT of construction going on. Those are probably the sorts of companies to check out.

NJ canceled the biggest project in the nation, our residential construction is only 20% of what it was in 2005, and state contracts have all but dried up.

We must live in different nations.

 

[loosecannon]

But I could change my mind

This is the Toro disclaimer that should be attached to all Toro investment opinions.

Well, that's 'cause I often change my mind.

I once read an interview with a former employee of Soros. He said that Soros is only right 20%-30% of the time. But when he's wrong, he identifies it quickly and gets out of his position ASAP. Cutting your losses is an integral part of investment success IMHO.

Meanwhile Buffet makes it a point to buy at the bottom and gamble on long term results. He wants bargains not quick profit taking.

 

[loosecannon]

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.

what DJIA or S&P range do you expect? I know the arguments for continued upswing and for downturn but all the range arguments I have heard rely on wild swings:

The US consumes less until a major exporter to the US goes belly up. During the crisis lots of money flows into the US and consumption increases for a a time until the slow sink resumes.

However looking at the results for Japan when it played this game with us two decades ago I think it might be difficult to get play dates in the future.

as long as 401K's are force feeding the stock markets it seems unlikely they can fall below current levels for long. 10,000 has been the magic resistance number for almost a decade now. "Conventional wisdom" still says that long term stocks always exceed inflation. That will likely remain true until the US pension system is overhauled.

 

[Toro]

This is the Toro disclaimer that should be attached to all Toro investment opinions.

Well, that's 'cause I often change my mind.

I once read an interview with a former employee of Soros. He said that Soros is only right 20%-30% of the time. But when he's wrong, he identifies it quickly and gets out of his position ASAP. Cutting your losses is an integral part of investment success IMHO.

Meanwhile Buffet makes it a point to buy at the bottom and gamble on long term results. He wants bargains not quick profit taking.

When I invest, I buy more as stocks fall. When I trade, I sell as stocks fall.

 

[william the wie]

I believe we are in a trading range that will play out over several years.

But I could change my mind if I think I'm wrong.

what DJIA or S&P range do you expect? I know the arguments for continued upswing and for downturn but all the range arguments I have heard rely on wild swings:

The US consumes less until a major exporter to the US goes belly up. During the crisis lots of money flows into the US and consumption increases for a a time until the slow sink resumes.

However looking at the results for Japan when it played this game with us two decades ago I think it might be difficult to get play dates in the future.

I have no idea what the ranges are. We will only know in retrospect. I think the March 09 lows are probably the lows we'll see. I doubt we'll get to new highs. Somewhere in there. But wherever it is, it is a traders' market. However, there are definitely bull markets, such as gold and silver. And it is much easier to make money in a bull market than a traders' market.

I can see your reasoning, which is solid and you may be right even though I disagree with you. Where I differ is that I think the urge for revenge is taking over not only in foreclosuregate here but also in the Chinese real estate market and the EMU debt crisis. Once the first economy hits the to hell with it this isn't fair point those dominoes are going to start falling. The level of market rationality, it's direction and/or rate of change is notoriously difficult to measure just so long as your stops work well enough for you to keep posting I'm happy.

 

[william the wie]

This is the Toro disclaimer that should be attached to all Toro investment opinions.

Well, that's 'cause I often change my mind.

I once read an interview with a former employee of Soros. He said that Soros is only right 20%-30% of the time. But when he's wrong, he identifies it quickly and gets out of his position ASAP. Cutting your losses is an integral part of investment success IMHO.

Meanwhile Buffet makes it a point to buy at the bottom and gamble on long term results. He wants bargains not quick profit taking.

What tends to be forgotten is that virtually all of his wealth was created in the 70s bear market and he has had a difficult time since I believe 96 to do nearly as well. Since the meltdown his returns have improved markedly but I doubt he will live long enough to be vindicated again. His mentor Graham had the same problem in 1956 and retired.