Post: #26

Think this is a sign of more things to come. The commodity markets keep declining, basically have been in a 4 year bear market. This paints a better economic picture as commodities are real and are harder to goose than other financial assets financed by cheap money and credit.

Along with this, the economic data has been weak all year in the States, with weak manufacturing index numbers and all-time highs in the amount of people not in the labor force.

Don't think a market collapse is near, but with global economic turmoil and weak economic numbers in America, seriously doubt the Federal Reserve will raise interest rates anytime soon. If a serious correction occurs, maybe QE4 or negative interest rates? Have zero faith they will let the market correct itself.

Edit: See that the Dow has rallied, only down 110 points now. I think it will run out of steam and be down around 250-300 by the end of the day.

Post: #27

Looks like most of the mornings declines have reversed. But the stock market does look overbought. You can't have years of gains without severe pain...eventually. The Dow retracing back to around 12,000 over the next year or two would be a positive sign that the market is regaining sanity.

Doesn't often happen, but if this could occur without a big increase in unemployment or reduced real wages it would be very positive. i.e. Minimal impact on the real economy. Basically mean that the losses are borne by the investor class, rather than the broad working class. I know many people own stocks, obviously, but a good part of the gains of the last 6 years are "funny money", based on...well nothing at all. So a correction is long overdue.

Post: #28

Even with the corrections happening all over the world and now in North America if you have money, now's a good time to buy some assets. That's how the rich get richer anyway. They buy assets when they are cheap and then sit on them.

Post: #29

(08-24-2015 12:22 PM)TheSlayer Wrote:  Even with the corrections happening all over the world and now in North America if you have money, now's a good time to buy some assets. That's how the rich get richer anyway. They buy assets when they are cheap and then sit on them.

As Jim Rogers said, "sell euphoria, buy panic."

Post: #30

Attempting to predict financial markets and make money on them on a short-term basis is pretty hard - just ask the legions of guys who get paid to do so with other people's money in the Wall Streets of the world (hint: they still sometimes fail and sometimes eat the consequences [can't say always with the taxpayer bailouts a few years ago]).

If I recall correctly, there's a short-term trader data sheet on this forum, and it says (again if I recall correctly) that even the best short-term traders can't quite tell you how they do it. For them, it's more of an art than a science. And like any art, it's one that took them time and experience to develop.

On a long-term basis, unless you don't adjust - which includes spending the same even when the cost of living changes - you should be fine. As I mention in my relocation thread, just as there's no 100% fool-proof online business, there's no 100% fool-proof "living off interest" plan. In both cases, you've got to balance a plan with flexibility.

Post: #31

(08-24-2015 11:39 AM)CleanSlate Wrote:  

(08-24-2015 11:37 AM)Bear Hands Wrote:  The Dow was down more than 1000 points this morning. It's at -114 as of posting. The people who really lost their asses are the ones who panicked and sold because of a fluctuation in 1 part of 1 day. Whoever was the buyer in those morning trades already got a profit.

Damn. I should have bought something earlier this morning. Oh well, you can't really time the market anyways.

Yes, in hindsight some people made a good margin on apple this morning if they bought during the drop. It fell 10%, then recovered in 3 hours.

Post: #32

I've been actively watching YANG and CHAD (two inverse chinese ETFS).

It's a small 2k play with a bit of my savings. When I went in, the stocks all dipped from my average of 95ish dollars a share to 81 if I recall correctly.

I held knowing it was going to go back up. Calling market bottoms and tops is hard. So long as you're close you can't really complain.

I'll be taking profits along the way. Very happy with the 200$ I made doing nothing

Post: #33

Baron Rothschild (18th century British nobleman) - “buy when there’s blood in the streets.”
-----------------

(08-24-2015 10:07 AM)DamienCasanova Wrote:  There goes my 401k again

I've heard more than a few people say this about their 401K over the years. Most people are not about to retire right now and it should recover eventually in the long term unless there's some very risky investments.

Post: #34

Too many people are talking as if a 10% correction is a blood in the streets scenario. It's not. Im not saying one should not be buying at these prices(that's up to you) but as of now this is just a common correction. There is not blood in the streets and there is not that much panic, yet.

2008/2009 was just a few years ago, thats closer to what blood in the streets looks like.

Post: #35

Call me a hippie socialist who has one of those pussy beards to mask his weak face and stands with his feet close together (none of which is true), but I've never taken the Dow Jones--or other indices like it--as good markers of how we're doing as a nation, especially for people who actually work for a living. It measures how the corporations, who poison and fatten our women and children for selfish profit--and the ultra-rich sociopaths who run them--are doing. We need to keep buying shit to keep the Dow going up, not be good mothers or fathers who don't tell our sons to chop off their dicks to release their inner woman, who teach them how to stand up to a bully, or teach our daughters that the massive power their beauty affords them won't last forever. The Dow has been climbing as the opposite of those things, and even worse, have spread like collective cancers on our society.

One of the great lies the ultra-rich have pulled off was convincing people to give a shit about their quarterly earnings. There's no such thing as "too big to fail" without this lie being taken as truth. We don't need a society free entirely of profit motive--which sparks innovation and consumer choice--but we also don't need one where the average citizen gets scared when a company doesn't show growth every single fiscal year.

The best words ever spoken on this matter were said Robert F. Kennedy, who actually sounds like a good social conservative in much of this:

Post: #36

(08-24-2015 02:13 PM)Tuthmosis Wrote:  Call me a hippie socialist who has one of those pussy beards to mask his weak face and stands with his feet close together (none of which is true), but I've never taken the Dow Jones--or other indices like it--as good markers of how we're doing as a nation, especially for people who actually work for a living. It measures how the corporations, who poison and fatten our women and children for selfish profit--and the ultra-rich sociopaths who run them--are doing. We need to keep buying shit to keep the Dow going up, not be good mothers or fathers.

The best words ever spoken on this matter were said Robert F. Kennedy, who actually sounds like a good social conservative in much of this:

...

There is some reality in stock prices, but especially when the markets behave irrationally under the weight of debt (high leverage) the values are even completely divorced from the realistic "net present value of future cash flows" of the company; let alone divorced from actual value they add to the world.

Not to say that there is any mechanism that would result in a match between stock prices, $ value added and actual value added. Any kind of socialist system would be worse than whatever you have now, especially in America. A socialist America will just be a combination of the WORST aspects of socialism and capitalism.

The best approach may actually be what people are doing at this modest forum. Picking from "freedom" the best aspects and having the strength to reject the worst. An approach that severely restricts peoples ability to choose, in terms of law, never seems to have the desired effect.

Post: #37

Actually, those were the good old days when the Dow actually reflected the GNP. Now, the markets are managed by the central banks. The economy doesn't have to do well for the stock market to go up.

Post: #38

Swiss francs are probably the safest place to keep money right now. The Ruble is getting absolutely clobbered, might be a good time to visit Russia.

Post: #39

If this is only a 10% correction then there is bound to be a haymaker thrown in the next year.

Without some super invention like the computer or the internet how can it not happen? Elance jobs and food trucks won't save us.

$19T debt - $24T is the vanishing point.

Minimum wage is about poverty level.

Post: #40

(08-24-2015 03:34 PM)Travesty Wrote:  If this is only a 10% correction then there is bound to be a haymaker thrown in the next year.

Without some super invention like the computer or the internet how can it not happen? Elance jobs and food trucks won't save us.

$19T debt - $24T is the vanishing point.

Minimum wage is about poverty level.

Your imagined invention would likely need to be something in the energy field that results in energy so cheap that it sparks a sort of new industrial revolution. Something like very high efficiency solar capture. Orders of magnitude better than the best we have now. Of course most will say this is impossible in terms of the laws of Physics, but this belief has been proved wrong many times before. If something like this can be devised that "sucking sound" American politicians like to talk about will be all the Middle East's petro states money being sucked out of them and being distributed to others.

Post: #41

Lots of people with money and knowledge are going to be richer. If China tanks then social unrest may put a big spanner in its economy.

Post: #42

(08-24-2015 02:03 PM)Jaydublin Wrote:  Too many people are talking as if a 10% correction is a blood in the streets scenario. It's not. Im not saying one should not be buying at these prices(that's up to you) but as of now this is just a common correction. There is not blood in the streets and there is not that much panic, yet.

2008/2009 was just a few years ago, thats closer to what blood in the streets looks like.

It is when you've built a 'recovery' on the back of constantly rising asset prices. Our current model of economic growth requires the impossibility of prices rising in perpetuity forever. This means that what should be sane, normal contractions are met with alarm bells.

Post: #43

(08-24-2015 02:34 PM)Sherman Wrote:  Actually, those were the good old days when the Dow actually reflected the GNP. Now, the markets are managed by the central banks. The economy doesn't have to do well for the stock market to go up.

This is the truth.

Since 2008, with our extremely low interest rates + out of control wasteful govt. spending + business crushing regulations + bailing out wall street = the only place to put your money was in stocks.

Companies didn't trust the giant regulations coming from DC, so they took the cheap money (near 0% interest rates) and rather than expanding their companies and hiring more workers, they instead bought back stock. Everyone who could afford to do so followed suit. Gold is at an unbelievable level. T-Bonds don't pay worth a damn. Savings and CD accounts also don't pay anything. The only option left to invest in was stocks for the average person.

And as long as the economy remained dismal and the Fed couldn't raise interest rates, the stock market was the place to go. It was pretty much a point of "the worse the economy does, the higher the stock market goes" over the last 6 years.

They have tried to spin economic numbers to say the economy is getting better and they can raise rates. I think the last few days have showed this is not the case. So the interest rate hike might get delayed and once again because our economy is so bad the stock market might go back up again and continue to go up at a steady rate until the fed decides to raise interest rates.

Post: #44

(08-24-2015 02:13 PM)Tuthmosis Wrote:  Call me a hippie socialist who has one of those pussy beards to mask his weak face and stands with his feet close together (none of which is true), but I've never taken the Dow Jones--or other indices like it--as good markers of how we're doing as a nation, especially for people who actually work for a living. It measures how the corporations, who poison and fatten our women and children for selfish profit--and the ultra-rich sociopaths who run them--are doing. We need to keep buying shit to keep the Dow going up, not be good mothers or fathers who don't tell our sons to chop off their dicks to release their inner woman, who teach them how to stand up to a bully, or teach our daughters that the massive power their beauty affords them won't last forever. The Dow has been climbing as the opposite of those things, and even worse, have spread like collective cancers on our society.

One of the great lies the ultra-rich have pulled off was convincing people to give a shit about their quarterly earnings. There's no such thing as "too big to fail" without this lie being taken as truth. We don't need a society free entirely of profit motive--which sparks innovation and consumer choice--but we also don't need one where the average citizen gets scared when a company doesn't show growth every single fiscal year.

The best words ever spoken on this matter were said Robert F. Kennedy, who actually sounds like a good social conservative in much of this:

GDP is not a good indicator of the health of a nation, with regards to richness of culture and the social climate. It use to mean something regarding the economy but fails to tell the true story today as well. GDP once reflected economic production, where in America today, it is basically a metric for consumption financed by debt. You need to factor in the savings rate, balance of trade, manufacturing indexes, etc. to adjust for possible distortions in GDP.

Enjoyed the Kennedy video, and the materialistic things he talks about are exacerbated today as we consume goods and services from the work of others in the world (namely China). At least in the 1960's the United States was the greatest creditor nation in the world, where there was demand for our work and output. We were able to focus on art, poetry, and philosophy because our production was beyond our consumption needs for the majority of the 20th century. This created a high standard of living for all and a society and culture that thrived, with things starting to decline in the 70's.

Our economy and nation is very sick. A man in 1950 with a high school diploma could get a blue collar job and support his wife and children. Today, both the husband and wife are saddled with student loans, forced to endure mind-numbing work at a corporation, and maybe can afford a child when they're around 40 and the woman is near the end of her biological clock. But hey, GDP is still growing and we all have our smartphones, so everything must be great...

Post: #45

Well, its not like most people here DIDNT see this coming: http://reason.com/blog/2015/08/24/the-in...-stock-mar

Quote:The Inevitable Crash of China’s Stock Market Has Arrived

The Washington Post describes today's massive stock sell-off as "carnage." The Dow Jones industrial average plunged more than 1,000 points upon opening this morning (it has since recovered about half of those losses as of 10:30 a.m.). From the Post:

The stock drop was fueled by what China's state media is already calling "Black Monday," in which markets there recorded their biggest one-day plunge in eight years amid growing fears over an economic slowdown.

On Friday, China reported its worst manufacturing results since the global financial crisis, a new sign of woe for the world's second-largest economy, which surprised investors earlier this month by announcing it would devalue its currency. China's benchmark Shanghai Composite index has fallen by nearly 40 percent since June, after soaring more than 140 percent last year.

China's woes stoked fears over commodities and forced oil prices further down. Brent crude oil, the global benchmark, dropped to about $43.61 a barrel, dropping below the $45 mark for the first time since 2009.

That a "market correction" was coming to China has been pretty well known for years. The country's growth has been pushed by centrally planned economic development that was oftentimes separated from the basic concepts of supply and demand and fed the false narrative of China as our economic future.

As we stumble through the day, some reminders of China's warning signs:

Solyndra on steroids: Remember the solar power trade war and how China was kicking everybody's asses with low prices? That started coming home to roost for China a couple of years back. China's solar companies racked up huge amounts of debt that they could not repay. America's solar embarrassments pale next to the amount of money China has sunk into an energy program that it turns out is far from "sustainable."

Cities nobody needed: China deliberately forced a housing bubble as America was fighting its way out of one in order to boost its economy. (The Reason Foundation's Shikha Dahlmia and Anthony Randazzo explain it all here.) Its stimulus spending rivaled ours to a degree that eventually became absurd. China ended up with massive, mostly empty cities and malls.

China's infrastructure model that wasn't: Once upon a time President Barack Obama praised China's massive investment in infrastructure like roads and high-speed rail, calling it "vastly superior" to what America was doing.

In actuality, China's infrastructure spending has proven to be troubled with corruption and shoddy work that has caused bridges to collapse, and the country's high-speed rail system is both expensive and dangerous.

Vox has a useful little reader of how China attempted to respond to the bubble it had deliberately created to spur growth, and how it didn't work. China's crash should serve as a warning against centrally planned efforts to artificially spur growth.

As China devalued their Yuan last week it was pretty hard not to see this coming (oh and other developing nations are devaluing their currency too, mostly in anticipation of interest rate hikes in the U.S.. . .and to compete with China)

Although if you've been paying attention since July, you would have seen this coming anyway.

Post: #46

My 401k is not nearly enough so I'll just dollar cost average and stick it out. I suspect it's going to drop a few thousand dollars.

I could move some stuff into cash or something but then you have to remember to re-allocate when and if it climbs again.

Post: #47

(08-24-2015 09:34 AM)Roosh Wrote:  As of 10:30am today, the Dow is down nearly 500 points. It took a steep dive at the end of last week.

http://finance.yahoo.com/news/u-s--stock...02330.html

Quote:Wall Street plummeted early Monday -- with the Dow falling as much as 1089 points -- as traders aggressively sold stocks and bid-up only the safest asset classes.

All three major U.S. market indexes are now in contraction territory, a 10% drop from a recent high. The latest round of selling comes on the heels of the worst week for the broad S&P 500 since 2011 that stripped more than $1 trillion in market value from U.S. equities.

Global equity markets faced selling across the board on the day. China's volatile Shanghai Composite (000001.SS) crumbled 8.5%, wiping out its gains for the year, while Japan's Nikkei 225 (^N225) tumbled 4.6%. The selling ricocheted across European bourses, sending the Euro Stoxx 50, a gauge of large-capitalization eurozone companies, sinking 5.3%.

Small correction or sign of something greater economic turmoil?

The fact that the market ended near the middle of it's range today ( down 588 on the DJIA when it was down over 1000 at some point) leaves the issue a bit undecided. A close on the high would have made a short term bounce from here seem a little more probable.

On the other hand, if it had closed at the bottom of it's range or, even worse, lower than its morning low, that would portend the most ominous scenario.

But we ended in middle ground.

One thing we can count on: Volatility will remain very high over the coming days and probably coming weeks.

Beware of any rallies straight up off the bottom. Markets very rarely go straight down then straight back up in V fashion.

It's quite possible the multi year bull market which started in 2009 is in jeopardy and this is a topping/fracturing taking place and then long term trend in the market could change.

My advice for those who have the balls to trade this kind of environment ( this advice is for those who are speculating on individual stocks, not long term mutual fund investors );
* Snap back rallies should probably be traded.
* If you bought low today, a good place to look at taking profits is when the stock gets near it's 50 day moving average (DMA) and certainly near it's 20 DMA.
* In these types of corrections, stocks have to go through a basing period before we see any sustained advances. By basing, I mean a period of a stock going sideways and then slowly coming back up, before continuing a serious advance. Here is an example of a stock forming a proper base after a correction:



This is a chart of an individual chart, but the stock market ( DJIA or S&P 500) forming a base would have a similar chart. The principle is the same - after such a violent fall, stocks are not just going to start going back up for a sustained period. They're going to whipsaw, do a dead cat bounce, get everyone's hopes up, then whipsaw back down and do that for weeks or, most likely a few months, before basing and resuming an uptrend ( or downtrend if this indeed the beginning of a bear market)

The point is, if you're trading individual stocks, patience and standing aside while being in cash is probably the best way to go here unless you're in it for the very long term or you're simply a masochist.

What's happening now is a bit similar to the 1998 stock market crash:



Some of the similarities between then and now are; the correction began in late August and the correction occurred during a long term bull market.

You'll notice on the chart, the market started recovering and shooting straight back up (dead cat bounce ) beginning at the end of August only to tank again at the end of September.

This was the last correction in the bull market of the 90's before the parabolic run up and blow off top of the dot com bubble;




On the above chart, notice the correction in 1998 we just discussed, followed by an insane run up in asset prices before things fell apart in early 2000.

If history repeats itself in this fashion now, it would be an opportunity to make some very fast and big money. The key would be to let this correction play out and 'base' like I mentioned, then go long once stocks break out of a nice base. The nasdaq saw dot com stocks double, triple and more in just a 18 month period after the '98 crash.

This is the euphoria stage of a bull market and can be, as I mentioned, quite profitable.

The euphoria stage is when every last investor and their brother gets in on the stock market because they're afraid they're going miss out on all the easy money.

Again, this is all speculation at this point, but history does repeat itself in the financial markets.

I think after this correction plays out and provided it's a short term correction and not a new bear market, you'll probably see new leadership emerge in the market.

New leadership is often names we've never heard of which will be the new leaders. Old leaders that have already reached their highs and are now in their death throes, will languish near their lows for years and years.

While this may only be a correction, it may also be the market pricing in a recession. Time will tell.

It will be interesting to see what the Fed does. At the very least, it seems they'll hold off interest rate hikes longer than expected. At most, they'll implement another QE program.

Bottom line;
1. Bottom feeders and traders who bought recently should sell rallies and book profits as they most likely won't be sustained.
2. A sustained uptrend won't be seen unless: This is not the beginning of a new bear market, but rather a shorter term correction AND stocks base for sometime.
3. These kind of environments, cash is king. It's a nice feeling to be in cash and sit back and watch it unfold as a movie until real set ups in stocks and the market in general, happen.
4. Long term investors in mutual funds, especially those dollar cost averaging, should be fine and can use corrections and bear markets to help their cost basis.

Post: #48

S&P 500 Technical Viewpoint - Current Support Levels

   

Bear in mind, this does not mean that this market will not break support; just that it has not until now.

How do I feel about the whole thing? I'll defer to Buffett:

"If you're a net buyer of stocks over the next ten years, then you should prefer lower prices" - Warren Buffett

Obviously, in order to do this you have to have:

•Big Brass Balls
•Capital
•Fairly long investment horizon

It's interesting to note that someone who went long the S&P500 during the 2007 peak (before the 2008 crash) and held his position is still up ~22%, even after today's declines.

Time and compounding is always your friend.

Post: #49

Wait are you saying up 22% from 2007 through today?

Post: #50

(08-24-2015 10:16 PM)HowardRourke Wrote:  Time is always your friend.

Well, the short term matters too, man.

On a long enough time line...we're all dead.

Not only this, but there is another reality here that needs to be appreciated. There is some truth--much truth, in fact--to Thutmosis's point that the stock market is not always a good indicator of the national economic health. I agree with this, but with a qualification.

I agree with this up to a point, but we also have to appreciate just how vulnerable we all are to these market fluctuations. They impact every facet of our lives. This is a dark truth that needs to be appreciated.

The financialization of the US economy (or as I would say, the over-financialization) that has happened in the past 30 years or so means that more people than ever are exposed to fluctuations in the financial markets.

Financialization of the economy has exacerbated the gap between rich and poor, and has made us all more vulnerable to the depraved greedsters who pull the financial market wires.

See more on this subject here:

http://america.aljazeera.com/articles/20...onday.html

The article points this out:

A white paper on financialization, published last month by the liberal-leaning Roosevelt Institute, describes the [financial] sector’s creep into other spheres of society as “the securitization of public life.” Since the mid-1980s, private financial instruments have taken on some of the functions previously left to the public sector and other more stable institutions, according to the paper.

“When it comes to security in old age, people no longer depend on their companies for pensions, or on the state for Social Security, but rather on their own 401(k)s,” wrote Roosevelt Institute fellow Mike Konczal and Program Manager Nell Abernathy. “Higher education is no longer a state responsibility, or provided collectively, but instead a private, individual investment in ‘human capital’ that one makes with debt contracts, like a miniature corporation."

The rise of the 401(k) plan and other defined-contribution retirement programs has made a growing share of Americans depend on rising stock prices for their long-term financial security. That carries some serious risks, particularly for those investors who are already more economically vulnerable, Konczal told Al Jazeera.

“It leaves people at the mercy of these financial market gyrations,” he said.

.