Stocks, Banks, Gold-This board has all been wrong.

[Chris Scoreboard Johnston]

PW – you have again misquoted me please go to the newsletter and copy and paste out of it into here. As it CLEARLY STATES, not every rally during these years has followed a decline. This is not only annoying, it is beyond what I am willing to stand for.

That is not legal to misquote someone like that. Farewell everyone, I have had enough at this point. You had never even heard of this concept until I mentioned it, now it has happened, and you are telling people what I meant by my articles about it? Has the market rallied this year or not?

Let the market insights come from that little punk anx ( who has the stupidest handle name of anyone here – what a shock ) and has never contributed a postive thing in here since I have been reading.

There will be no further opportunities to misquote me because I will not visit here again.

To the good people here, which is most of you, I wish you all well

[powayseller]

Sorry, Chris, I did not read the newsletter. I apologize if I made a mistake on item #1. However, the gist of my post is correct. You’ve called a lot of correct moves, and it is too early to tell if we will have the mid-year rally that you are expecting.

I do know however that this narrow rally in the big caps is not the mid-presidential year rally, which is a 2-year rally of the entire stock market, starting in the fall. I assume i was correct in quoting you on items #1 and #2. So I wanted to clarify that what we have here is some kind of odd divergence, not a repeat of the mid-presidential election year rally.

Chris, after all the names I’ve been called, I still post here, and now one of your fans and most vocal proponents of your service (me), makes a mistake on 1 out of 3 points, and you leave the forums? It’s puzzling, to say the least.

[carlislematthew]

Chris, after all the names I’ve been called, I still post here, and now one of your fans and most vocal proponents of your service (me), makes a mistake on 1 out of 3 points, and you leave the forums? It’s puzzling, to say the least.

It’s only puzzling if you take this particular incident in isolation.

[(former)FormerSanDiegan]

powayseller
This rally is limited to a few Dow stocks,
This statement is simply not true.

See the chart below shows the DOW along with S&P 500 ETF and Wilshire 5000 ETF for the past three months. The S&P 500 made a 5.5. year high as the DOW made it’s high.

[img_assist|nid=1811|title=3-month DOW, S&P 500 ETF, Wilshire 5000 ETF|desc=Broad rally – NOT JUST DOW STOCKS|link=node|align=left|width=100|height=57]

[powayseller]

FormerSanDiegan, I disagree, based on what I read from Barry Ritholtz at The Big Picture/ Cash has outperformed since 2000.
“• The Dow has only 10 stocks above their January 2000 highs, and of those 10, four are responsible for dragging the index higher – Boeing, United Technology, Altria and Caterpillar.

• Despite the recent move towards big cap and tech, be aware of the pundits who have been advising you of this for the past 5 years have been very, very wrong. (We made the suggestion to shift to big caps over the summer). The Nasdaq 100, for example, is still down an eye-popping 65% from its 2000 highs.

• The 3 bullet points above are why most investors are not feeling like they are at 6 year highs; Unless they hold only Dow stocks – or the 4 mentioned above – most investors portfolios remain far below their 2000 peaks.

• Cash has outperformed the Dow since January 2000; Even considering reinvested dividends; cash STILL out performs the Dow.

• The Dow’s Real (inflation adjusted) performance, even with dividends reinvested, is significantly below breakeven.” The Big Picture blog, 10/3/06

Chris Johnston has a post about this on his blog: Is there Trouble Brewing in Paradise? “There is a trememdous lag developing between the DOW index and the S&P 500. Notice how we are at new highs on the DOW, yet are quite a ways behind the old highs in the S&P 500.

This is a bearish sign for the indexes. I have been looking for a rally all year and we have finally seen one. I had been expecting it to happen later in the year. Maybe this big divergence means we will see a drop off into the fall setting up the real buy point. Notice how closely correlated all the way up to the 2000 high these two indexes were, which is the relationship that should be in place.” – quote from iamafuturestrader.com, 10/4/06

Chris is talking about “the real buy point” being in the fall. I don’t see where I misquoted anyone. In an e-mail to me on 10/1/06, he said “the blue chips leading a rally is not really what we want. It generally indicates people going into safe things and precedes a decline.” I’m not going to guess what he is expecting.

For me, I’m glad I’m in cash. Soon enough, the housing-led slowdown will lead to a recession, just as it has done every time in 40 years. Car sales are off 5%, another recession indicator. The yield curve is inverted, signaling 80% chance of recession. Nothing has changed to make me recall my recession forecast.

[powayseller]

vrudny, which inverse fund did you buy? Rydex? The ProFunds is a scam; outatthepeak lost money when his fund went down at a time when the market was going down; it does not track the inverse at all as they claim. Rydex’ performance history does seem to track the inverse as they claim. I’m not going to short stocks, instead I will buy inverse funds. Time to load up….this rally is the perfect time to get a good price on an inverse fund, isn’t it?

[sdduuuude]

Hmm. powayseller chased away Docteur a few weeks ago and Chris. Both super sharp guys who added an important perspective on our topics. Thanks alot.

This is a bad trade-off, in my opinion. Keeping powayseller and losing Chris.

This was a really is a bad place for investment advice and now it has gotten worse.

[powayseller]

I’m one of Chris’ subscribers, and have promoted his service here a lot. Not sure why he chose to leave…but I agree, it is too bad.

[(former)FormerSanDiegan]

powayseller –

I am referring to the fact that the 8-9% rally in the last three months is not limited to a few DOW stocks as you said.
I don’t care is there are only 4 DOW stocks that make up most of the gain in the DOW and the point about cash beating stocks over the last 5 years is interesting, BUT …
My point is that the recent rally has been MUCH BROADER THAN JUST THE DJIA.

Look at the chart I posted (You’ll have to click on it to make it larger ands readable).

How can you disagree with the data on the plot I showed that that clearly shows the S&P, wilshire 5000 and DOW all having nearly exactly the same gain over the last three months ?

[(former)FormerSanDiegan]

Cash vs Stocks – Mean reversion

PS is correct that cash has done generally better than stocks since 2000.

Since cash has outperformed stocks over the last 6 years, why shouldn’t we expect some reversion to the mean since long-term stocks have averaged significantly higher returns than cash investments over the last 50 years ?

[powayseller]

FSD, I can’t explain the discrepany between the chart you provided and the chart on Chris’s website. Maybe you can explain it to me. I’m not really sure.

[(former)FormerSanDiegan]

PS –

There is no discrepancy. Chris’ chart is a 13- YEAR chart.
I plotted the currect rally which is THREE months

The current rally is NOT DUE TO A FEW DOW STOCKS.

Furthermore, the underperfomance of S&P 500 verdsus Dow on Chris’ chart all happened between 2000 and 2003. This is OLD NEWS. Since 2003 The S&P 500 and the DOW have tracked nearly identically. GO look at Chris’ chart and see it. The gap between S&P and DOW has remained constant for three years,

If you look over the last FIVE YEARS (chart below), you can see that the NASDAQ has outperformed the DOW and that the DOW and S&P are about even. Go chart it and prove it to yourself. Don’t take some bullshit claim by some analyst that the recent rally was due to a few Dow Stocks. It is not. Click on the chart below to see.

[img_assist|nid=1822|title=FIVE YEAR DOW, S&P and NASDAQ|desc=|link=node|align=left|width=100|height=75]

[powayseller]

Great stuff. I just put my entire Vanguard retirement account into Rydex 200% inverse Dow and S&500 funds (RYCWX, RYTPX). Steve Beebo, these trades will be included in my total return when we compare our performance next spring. Maybe I should have added the NASDAQ inverse fund too, as it is more volatile.

[cabinboy]

PS…is this for real? Did you really stake your entire retirement on a single bet? Why on earth did you do that? Furthermore, are you actually going to suggest that others do this as well via your new investment advisory service? We may not like David Lareah very much, but at least he never publicly said that one should put all of their money into a single asset. You may very well win your bet with Beebo, but the risk profile you are taking on borders on insanity.
Why? Well, your doomsday predictions may be right over the long term, but what if they don’t kick in until summer 2007? The market could go up another 10% before it drops. That will hurt! You’ll be at least 25% behind anyone with a reasonably distributed portfolio. If retail does decently over the holidays (which it will), you are going to get killed.

[(former)FormerSanDiegan]

Diversification does not make sense if you know you are correct about the future direction of given investment alternatives.

[Author]

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