[carlsbadworker]

[quote=kev374]yeah the market fell today but considering the insane news in past years the market would’ve probably fallen 10-15% in a single day but instead it’s down 1%… this tells me the bull market is alive and well.[/quote]

Which bear market has stock falls 10-15% in a single day?

Edit: I got my answer. https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index

The only real bear market for this to happen was in Great Depression. The great dotcom bust doesn’t have a single day drop ranked in top 20. That’s why I asked the original question because I remember bear market is usually characterized by slow decline instead.

[carlsbadworker]

[quote=scaredyclassic]
seems best for lawyers, too. lots of rules to argue. [/quote]

Of course, because God was a lawyer.

A surgeon, an engineer, and a lawyer were arguing about which profession was the oldest, and the doctor said, “Well, on the fifth day of Creation, God took a rib from Adam, so surgery is the oldest profession.” The engineer said, “But, before that, God created the heavens and earth from chaos, so engineering is the oldest profession.” And the lawyer said, “Yes, but who created the chaos?”

[carlsbadworker]

[quote=flu]I think I’m going to pick up some qcom shares now that it’s below $60…lol.[/quote]

Why? What’s the hurry? Isn’t it a low 50s stock before the Broadcom drama?

[carlsbadworker]

[quote=flu]Dow down another 500+pts… getting close to 10% correction….how are folks feeling now? housing doesn’t even correct this fast.[/quote]

There are a few individual stocks that are dropping close to my buying range after today. Index still seems too expensive for me.

[carlsbadworker]

[quote=flu]Dow down another 500+pts… getting close to 10% correction….how are folks feeling now? housing doesn’t even correct this fast.[/quote]

500pts is a tiny blip in the long view:

http://www.multpl.com/shiller-pe/

We are about 50% over-valued according to the chart above, so wake us up when you have 20 days like this in a roll.

[carlsbadworker]

Obviously because they think their return on cash/equity in their core business is higher than the rental yield.

Peter Thiel for example has argued along the same line of logic that large tech companies such as Google, Apple, Facebook have run out of tech innovation ideas and that’s why they sit upon an enormous amount of cash reserve. Only Amazon seems to continue to have an unlimited streams of ideas on where to invest in their core technology business.

[carlsbadworker]

[quote=scaredyclassic]I think im ready to move to hawaii.[/quote]

So missile from Kim Jong-un is not on your scaredy list?

[carlsbadworker]

It doesn’t look like it will go through. QCOM stock price is actually down today after BRCM raises the price. However, if they refuse the offer, they will still have to do some layoff to show that they are streamlining their internal operations and prepare it for growth.

[carlsbadworker]

Enjoy very much the book of “Sapiens” by Yuval Noah Harari this weekend.

As far as we know, only Sapiens can talk about entire kinds of entities that they have never seen, touched, or smelled. Legends, myths, gods, and religions appeared for the first time with the Cognitive Revolution. Many animals and human species could previously say ‘Careful! A lion! Thanks to the Cognitive Revolution, Homo sapiens acquired the ability to say. ‘The lion is the guardian spirit of our tribe.’ This ability to speak about fictions is the most unique feature of Sapiens language…You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.

…

Any large-scale human cooperation — whether a modern state, a medieval church, an ancient city, or an archaic tribe — is rooted in common myths that exist only in people’s collective imagination. Churches are rooted in common religious myths. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe God was incarnated in human flesh and allowed Himself to be crucified to redeem our sins. States are rooted in common national myths. Two Serbs who have never met might risk their lives to save one another because both believe in the existence of the Serbian nation, the Serbian homeland and the Serbian flag. Judicial systems are rooted in common legal myths. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they both believe in the existence of laws, justice, human rights, and money paid out in fees.

The value of the stock and its associated “corporation” is entirely a common belief system, a story that you could say, that helps the society functions.

Ants and bees can also work together in huge numbers, but they do so in a very rigid manner and only with close relatives. Wolves and chimpanzees cooperate far more flexibly than ants, but they can do so only with small numbers of other individuals that they know intimately. Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That’s why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories.

[carlsbadworker]

These two charts tell the story:

[img_assist|nid=26524|title=1990|desc=|link=node|align=left|width=366|height=300]

[img_assist|nid=26525|title=2000|desc=|link=node|align=left|width=376|height=283]

Obviously, it is super nice in the 20th century to invest in the U.S. stock market, which is the rosy picture of the returns that investment advisers want you to believe in. But it is definitely the exception rather than the norm.

[img_assist|nid=26527|title=stock-market|desc=|link=node|align=left|width=466|height=314]

[carlsbadworker]

[quote=scaredyclassic]what if the future is nothing like the past?[/quote]

Actually, as long as the future deviates from American’s past, we are toasted. The belief that “buy and hold” is a sound strategy has strong survivor-ship bias, since they focus on successful America and Europe returns. Back in 1900, an investor might have believed Russia and China to be good long-term bets, only to see his savings completely wiped out by revolution. And in almost any other countries, you often see stock market takes more than 10 years to recover from its peak bubble price (which is arguably where we are right now), and often it could take 30-70 years.

However, which asset class is risky free? You have to put money somewhere. Diversification would certainly help.

[carlsbadworker]

[quote=ltsdd]
Today’s stocks market reminds me of the dot com and housing bubbles where the mantra is “buy high, sell higher”.[/quote]

Unfortunately, correctly spotting bubble does not make anyone a single cent richer than he otherwise would be.

Hence this is a discussion of the trading strategy under the current valuation (which we all know is high, albeit supported by low interest rates). The problem that we faced is that there is no reason for the stock market to tank NOW just because the valuation is high. The history taught us again and again on that (although the higher it becomes, the more likely it will tank due to gravity)

Here are a few possible strategies:

1. All-in now. This is what kev374 decides to do. It feels risky but it was risky for the last couple years and it has kept climbing. Who said it won’t climb more? The drawback is that if it indeed tanks, you are out of bullets to buy more at lower price when the dotcom busts kicks in.

2. Take money off the table. But you will be punished if your timing call is wrong. This is the strategy a lot piggs have employed in the last few years with dismal outcomes so far.

3. Underweight stocks but use a small percentage of the cash to buy high growth potential. This is basically what ltsdd is doing. 2 shares of gbtc but some money off the table.

I find the last trading strategy interesting. So if the stocks keep climbing, because you are invested in “hot” stocks, they will climb more therefore even though you underweight stocks, your outcome may not be bad at all. But if it tanks, you only lose a tiny amount of money set aside for speculation and you reserved the cash to buy at the bottom. The drawback, if the dotcom bubbles is any guide, the tech stock tanks earlier during the bust when S&P formed the head & shoulder pattern.

The best trading strategy of course is to all-in but to find early warning signal to get out, but I don’t know if anyone knows a good early warning signal, but the performance of high growth tech stock did decline full 6 months earlier than the S&P 500 in the last bubble.

That’s why I felt bitcoin bubble very interesting. That may be exactly the form of earlier warning signs that we need to form the best trading strategy under the current market condition.

[carlsbadworker]

[quote=harvey]Yeah, except this time it’s different.

Maybe Piggington should re-brand. Real estate is boring these days. It doesn’t get the clicks.[/quote]

This time is different, as we are witnessing the biggest bubble of all in history (although only in scale, not in size of financial assets).

[img_assist|nid=26508|title=bitcoin|desc=|link=node|align=left|width=678|height=329]

Enormous amount of money can be made with a bubble of this size.

[carlsbadworker]

[quote=flu][quote=harvey][quote=flu]
I am not one to comment about it. [long paragraph of comments…][/quote][/quote]

whatever.[/quote]

Media makes no distinguishment between block-chain technology and bitcoin. My view is that buying bitcoin or any other crypto-currency is like buying dotcom names in the 1990s. Investing in block-chain technology is also like investing in e-commerce companies in 1990s. One of these will be Amazon, others will be like pets.com or webvan.com. But the technology will spread due to this bubble.

[carlsbadworker]

[quote=harvey]

I’m not sure what you mean by “healthy profit margin” but S&P500 is expensive by historical standards:

http://www.multpl.com/shiller-pe/

What that chart means that if you buy now you don’t get a lot of income, relative to historical returns, for what you pay. I would label that the opposite of a “healthy profit margin.”

The only tangible aspect of the “business friendly political atmosphere” is some reduction of tax expenses for a limited timeframe. Returns on equities cannot be sustained long-term by a tax break.

As for the OP question, you only asked half a question. Investment decisions need to be made in the context of a holding period.[/quote]

No, I meant real profit margin (https://www.yardeni.com/pub/sp500margin.pdf). It has nothing to do with the tax cut but everything to do with the fact that governments now allow monopoly to exist in almost everywhere.

When a company has monopoly, it is much easier to maintain profit margin (Cox just raised price on almost all tiers in the new year, despite the tax cut). Well, what are you going to do about it?

[Author]

Posts