And when that dip eventually happens, they will view it through the prism of their bias, and assume it is confirmation that their bear thesis was right all along - no doubt popping up here on ET to say the end is nigh. If it then turns out to be just a normal dip in a multi-year bull market, they will get badly hurt.
WTF ? Cant believe market is going up like this !!!
- Thread starter zanek
- Start date
And when that dip eventually happens, they will view it through the prism of their bias, and assume it is confirmation that their bear thesis was right all along - no doubt popping up here on ET to say the end is nigh. If it then turns out to be just a normal dip in a multi-year bull market, they will get badly hurt.
But which matters more - short-term sentiment, or valuation and fundamentals? AAPL has been overbought numerous times in the past, it's still at all-time highs. How many times has LVS been "overbought" in its run from 1.5 to 50? Sentiment is a short-term timing factor, and yes I agree that buying the S&P after a 200 point rally up to the early 2010 highs is probably not the ideal entry point. But ultimately, corporate profit and valuation is what matters for the price of stocks - and right now, bonds yield a pittance, cash yields nothing, and stocks are at a normal PE, with earnings increasing steadily in most sectors. It might not be the buying opportunity of a lifetime, but it's pretty clear which is the most attractive place to put capital for long-term investment.
I feel your pain brother... I am sitting since the 18's and it feels so much like a blowoff top that I have triggery fingers.... Very hard to stay on this one. I'm pretty much sure this will reverse on me around the 30 USD area... oh well they say trend is your friend until it bends right? ahha
It's a thread about trading the market, on a trading site, not a political forecasting site or a long-term investing site. So IMO the timeframe is going to be anything from a few weeks to months, maybe a couple of years at most.
I think it's silly to say we were better off in 1990, when 1/3 of the world was in slavery and another 1/3 was flat broke, when the world wide web was unknown and almost no one was on the internet, when music cost enough that a decent collection would set you back 10,000, when cars and planes were much more dangerous to travel in, when medical science was far inferior to today, when the cold war or collapse of the USSR still loomed and people were committing genocide in SE Europe, where lots of people still seriously thought that communism was a viable political system. Or on the smaller scale, when a laptop cost a fortune, mobile phones were the size of bricks, televisions were CRT lumps that cost an arm and a leg, data storage costs were prohibitive, and e-commerce was a subject for futurists and sci-fi writers. Now we have large swathes of the developing world achieving better standards of living, some parts of E Europe and Asia are close to 1st world living standards, and places like Brazil, Russia, India and China are seeing a rising out of poverty that plagued them for centuries. I guess for you, nostalgia ain't what it used to be!
Yeah it's tricky to hold on. I bought some silver at 20.60ish and then during one of the sharp corrections, felt I had too much risk on - as I had plenty of gold longs too - and decided to ditch the silver. A nice little $30-40k per contract error.
But back then, stocks had competition from bonds and t-bills yielding 10% or so. Of course they have to be cheaper, to be competitive compared to 10% in nearly risk-free government securities. A 12 or 13% earnings yield, compared to 10% in low-risk t-bills, is a reasonable price - about 200-300 basis points risk premium.
Today, t-bills yield pretty much 0%. 10 year Treasuries yield less than 3%. What earnings yield do stocks need to offer in order to be just as attractive as back in 1982? It certainly isn't 12-13%, is it? That would be a risk premium of 1000 basis points, over 3 to 5 times more than in 1982.
Given the extremely low returns on offer in bonds and cash, earnings yields of 7-8% are a compelling alternative. Once you add in the fact that corporations are able to grow their earnings over time, compared to the static income from bonds, then the decision becomes even more attractive.
No matter what you say about the current economy, the major problem for the bears is that stocks are offering 7-8% returns even if earnings stay flat, and bonds are offering a pittance by comparison. Many blue chips have dividend yields in the 3-5% range, so the dividends alone are paying more than Treasury yields. And those dividends are likely to keep growing over the long-term. In 1, 2, 5, 10 years, earnings will most likely be higher, and you will have collected dividends or retained earnings along the way.
If you are bearish on stocks, what alternatives should investors consider? Bonds at <3% yields when Bernanke is printing money? Cash at 0%?
S&P FUT
1223.5 _ 3.5 +0.29%
DOW FUT
11396.0 _ 34.0 +0.30%
NAS FUT
2194.0 _ 10.0 +0.46%
OIL
87.37 _ 0.31 +0.36%
Same thing everyday.
As for gold and silver, when they finally do sell off many people are going to wish they never bought in. Anyone who thinks this type of upward momentum for stocks, conmodities and everything else is healthy better think twice. This market is being played and manipulated in one direction and everyone should take notice to markets that only move in one direction.
If these markets were in free fall mode they would probably have halted trading on every index, however since they are rising they are ignoring the fact that too much of a good thing usually doesn't last forever.
1223.5 _ 3.5 +0.29%
DOW FUT
11396.0 _ 34.0 +0.30%
NAS FUT
2194.0 _ 10.0 +0.46%
OIL
87.37 _ 0.31 +0.36%
Same thing everyday.
As for gold and silver, when they finally do sell off many people are going to wish they never bought in. Anyone who thinks this type of upward momentum for stocks, conmodities and everything else is healthy better think twice. This market is being played and manipulated in one direction and everyone should take notice to markets that only move in one direction.
If these markets were in free fall mode they would probably have halted trading on every index, however since they are rising they are ignoring the fact that too much of a good thing usually doesn't last forever.
So, have all of you gotten with the program and buy the 3-5 point dip we got overnight, because you know thats all you get. Futures do look a little tired here, kind of acting like they did at 1193 when they pulled back a bunch of times before busting through. If they can't plow through this area, we may get that huge 10 point pullback we are all waiting for. Pretty amazing move since September 1, 175 points on the Spz without any meaningful giveback in between. Thats fine, but when the talkingheads get on tv and talk about this as the beginning of the move, and the vix is so low, and everyone says any pullack will be shallow, have to watch out. The thing about chasing performance is that the guys who come to the party late always tend to get burned, so if you are buying here and chasing, you have to be wary of the smart money who were in early and are locking in their year now.