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is the DOW going to burst at some point?

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Old 05-21-2013, 03:43 PM
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is the DOW going to burst at some point?

is the growth sustainable? isn't this what happened in the past?

anxious to hear your thoughts, what can we do to prevent a crash?
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Old 05-21-2013, 04:20 PM
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Originally Posted by CLovis View Post
what can we do to prevent a crash?
You don't seriously think any of us can prevent a market crash, do you?
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Old 05-21-2013, 04:44 PM
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Im asking what were the causes of the last crash, can we make effort to prevent one
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Old 05-21-2013, 04:47 PM
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Originally Posted by CLovis View Post
Im asking what were the causes of the last crash, can we make effort to prevent one
Housing bubble fueled by insolvent debt instruments.

That, however, is very much NOT likely to be the cause of this bubble.
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Old 05-22-2013, 02:35 PM
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Originally Posted by CLovis View Post
Im asking what were the causes of the last crash, can we make effort to prevent one
Who are "we"?
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Old 05-22-2013, 03:52 PM
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Crash=Correction

Will it hurt? Yes. But if you sell now and buy back in right after the eh-um "correction" You'll be sittin' pretty in the next 5-6 years.

Japan is pretty much fucked though.
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Old 05-23-2013, 02:05 AM
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Tomorrow?






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Old 05-23-2013, 10:44 AM
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Old 05-23-2013, 11:03 AM
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I'm not worried. Clovis is on the case. There will be pictures of earnest-looking celebrities all over Facebook with thought-provoking slogans and text that will lead directly to the prevention of any and all market corrections forever.
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Old 05-23-2013, 04:30 PM
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There is no way Clovis is 34 years of age.....not with thread like this.

Trolling much?
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Old 05-23-2013, 06:39 PM
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Can't we just make it illegal for a stock's value to go down?
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Old 05-24-2013, 04:26 PM
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I think things will change if/when the Fed stops QE. I actually don't believe the Fed will stop QE, but the Fed wants us to believe it can and will some day.

I learned recently that an old friend died of an ulcer bleeding out. She was addicted to pain killers and never felt this ucler apparently. Once she got the DUI and had to prepare for 30 days of detox by being in jail, that was when the pain was felt but it was too late and she died.

What does that story have to do with this thread? Well the Fed's multiple years of QE is like the pain-killer addition of my old and now dead friend. Parts of the economy will feel pain when QE ends and it won't feel good. Now whether the economy will die or not is subject to debate. If you listen to Bernanke speak it sounds like the economy will die now without QE, so there's a good argument for a death after QE.

The economy now is like a patient who has a bad fever but feels good because of a massive dose of aspirin. Take away the aspirin and the patient won't be nearly as lively as it was with the aspirin. It will feel tired and want to go to bed and rest.

The other problem is most major player countries are drinking the same cool-aid now and doing the same thing. Japan has tried this crap for even longer than the U.S. and is going on an even grander scale now- that won't end nice. At least Australia/New Zealand are playing the game right. Interest rates are higher than ours and they seem to be functioning too- imagine that.

As for the Dow, I think something is going to happen to either the Dow or the price of gold to bring things back to an equilibrium state. This could happen in a couple of ways, the dow can go down or gold can go back up. My money is on both happening. There's about a 50% shift that I would expect to see happen at some point because things are a little out of whack at the moment with a 11.05 Dow/Gold ratio we have today. Dow=15,303 and Gold=1384.71 for future analysis.
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Old 06-05-2013, 10:37 PM
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Things are looking a little different now and the Dow is showing signs of weakness along with most other indices I track. At 14,960, the Dow is now testing support at the 50 day Exp Moving average of 14,918- just another 45 points and this will be broken.

For those of you that follow Point & Figure charting, the Dow is already at a dreaded triple-bottom pattern and there is LOTs of air between its current value and the next P&F support level of 14,450.

The SP500(1,608.9) has a P&F double bottom and has lots of air between its current value and support at 1540 and then farther down at 1490 if this hits the Triple-Bottom state as the Dow is now in.

The Nasdaq (3,401.48) is perhaps scariest of all because it has yet to revert and is very extended. I have support for that one at 2850. I just started shorting the QQQ this morning because of this.
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Old 08-01-2013, 12:30 PM
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The Dow will burst many times. It will also recover many times. Long term, if you don't keep trying to guess what will happen, you'll be happy with the results. This has held true since there was a stock market.
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Old 10-09-2014, 11:46 AM
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Old 10-09-2014, 01:54 PM
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But AAPL is up
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Old 10-09-2014, 09:22 PM
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It goes up and it goes down.
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Old 10-10-2014, 06:11 AM
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As a young investor this is great news to me.

I wish I had started my career in....oh say Feburary 2009

I've been very annoyed at this bull market. I am looking for a better fire sale on equities. Let it crash more so I can buy up more stocks on the cheap!
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Old 10-10-2014, 09:07 AM
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Originally Posted by nist7 View Post
As a young investor this is great news to me.

I wish I had started my career in....oh say Feburary 2009

I've been very annoyed at this bull market. I am looking for a better fire sale on equities. Let it crash more so I can buy up more stocks on the cheap!
QE "ends" 10-28-14
Goodbye POMO: Normalcy Returns On October 28 | Zero Hedge

engage "crash" so that the powers that be can come "saves us " again.
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Old 10-10-2014, 07:03 PM
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Originally Posted by 03SSMTL-S View Post
QE "ends" 10-28-14
Goodbye POMO: Normalcy Returns On October 28 | Zero Hedge

engage "crash" so that the powers that be can come "saves us " again.
Very interesting.

Let the QE end I say. These artificial life support is pretty stupid. I'm in the camp that the market has been overpriced for a while now. Looks like we may be getting another correction soon.

Personally not a fan of the TARP and would've like a REAL recovery, not a sham job with this band-aid QE crap. Ah well time will tell.

But for me and my 38 years of invetsment horizon, this will not faze me one bit. When the crash starts I'll be slowly ramping up my investment contributions.
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Old 10-15-2014, 08:44 AM
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Old 10-15-2014, 08:53 AM
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So each new Ebola case is worth 250 points?
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Old 10-15-2014, 08:59 AM
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Originally Posted by doopstr View Post
So each new Ebola case is worth 250 points?
Was wondering the same thing and what the fear of further spread of Ebola will/might do to the skittish market.
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Old 10-15-2014, 11:23 PM
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^ Today's action was strange- particularly the first 5 minutes of the market. Never seen so much volatility on an open. Now that the Dow,Nasdaq, and SP500 indices are below 200 day Exp. Moving average, I think things might go down a little farther.

My revised support levels are:
Dow (16,141 now) : first support of level 16,016; 2nd support level of 15,350
Nasdaq (4215 now): first support=3946 2nd support=3300
SP500 (1863 now): first support=1815 2nd support=1740

Random Thoughts:
- the Fed seems to be clamoring on a reason to extend or increase QE despite talking the talk of raising interest rates. How much farther will the indices go before Yellen and FOMC feel they need to react with another round of QE? Remember QE1? That was suppose to end as well until the markets went down and we got QE2.

-as mentioned the Ebola news can freak people out from traveling and going in public in general. A weekly increase in health care workers getting infected in the U.S. with
advanced protective wear and procedures could freak out the market- especially if these infected health care workers wind up spreading the virus.

- the strong dollar is going to start impacting earnings for multinational companies that get a lot of revenue overseas or margins will get squeezed

- if the U.S. economy is so good, why is the Russle 2000 index down 150 points from year start? This index isolates things to U.S. companies and should be doing much better if things were so rosy here. These are some of the companies that might not have the deep pockets to buy back their shares like the larger cap companies can and have done by taking advantage of almost zero percent interest rates. The problem with buy-backs is that these companies are not investing as much into their operations as they would do normally.
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Old 10-17-2014, 12:52 AM
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Dow was only down 0.15% today. Come on man, we can do better than this!

Let's continue with the sale of stocks please. I'd like to see a 50% off sale pretty soon.

As a young investor, I would like to quote Warren Buffett:
A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
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Old 10-17-2014, 08:36 AM
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WASHINGTON (MarketWatch) — A comment from a hawkish Federal Reserve official on Thursday that central-bank bond buying should continue beyond its scheduled end lifted stock markets and surprised many observers.

The Federal Reserve should consider extending its bond-buying program beyond October due to the market selloff to see how the U.S. economic outlook evolves, said James Bullard, the president of the St. Louis Fed, on Thursday.

At the moment, the Fed is buying $15 billion in securities each month, having tapered the so-called QE3 plan by $10 billion at each meeting this year. The U.S. central bank has said it expects to end its quantitative easing at the end of October, but Bullard noted that the timing was always data-dependent.
Bullard?s surprise suggestion of continuing QE lifts markets - MarketWatch

it's not even a 10% correction yet and they are already pushing for qe-4, dow 20K or bust
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Old 10-18-2014, 11:30 AM
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^ Yep- that has been my main concern about the market. Things are done to interfere with the normal workings of the market.

The market is now addicted to the cheap money and goes down when it feels rates are going higher and goes up when it thinks rates are going lower. Everybody should realize that while the short-term may seem great for bolstering stock and real estate prices, it's the long term that will be a killer when rates eventually need to go up.

The cheap money has cause many corporations to buy back stock instead of spend money on the business. That helps share holders but won't help the corporation if the stock really does get 'cheap' enough in the future.

The U.S. is a deficit spender and needs to sell debt to finance this spending habit- what will happen when entities (other than the FED) stop buying the bonds?

The following things will happen:

1) U.S. may cut spending to balance the budget and reduce new deficits- which seems easier said than done in actuality because of item # 3 below.

2) Interest rates will rise to the point that entices investment- which explains why Greece pays 7.8% for a 10 year bond .vs. the 2.19% that the U.S. pays today.

3) U.S. outstanding debt service payments will sky-rocket because the added interest to service debt will become much larger because of #2.

4) The dollar will weaken like currencies of other debtor nations.
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Old 10-29-2014, 09:29 PM
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Originally Posted by 03SSMTL-S View Post
Bullard?s surprise suggestion of continuing QE lifts markets - MarketWatch

it's not even a 10% correction yet and they are already pushing for qe-4, dow 20K or bust
QE done. (for now???)

Fed Closes Chapter on Easy Money - WSJ - WSJ

Fed Closes Chapter on Easy Money

Benefit of Bond-Buying Experiment Remains Unclear as Central Bank’s Focus Returns to Interest Rates

The Federal Reserve said it would end its long-running bond-purchase program, concluding a historic experiment that stirred disagreement among policy makers, economists and investors about its impact even though the central bank said it helped accomplish its goal of reducing unemployment.

The program ends with mixed reviews. While it clearly didn’t cause the inflation outbreak some predicted, it also didn’t clearly lead to a surge of economic output or hiring.

If all goes as they expect, officials will now turn their attention in the months ahead to discussions about when to start raising interest rates and how to signal those moves to the public before they happen. For now the central bank stuck to an assurance that it will keep short-term interest rates near zero for a “considerable time.” Many investors and Fed officials expect no rate increases until the middle of next year.

Plenty could go wrong and drive the Fed to tear up its plans. Twice before officials declared they would stop printing new money to buy bonds, only to restart the process when growth, hiring and inflation appeared to sag. One official, Minneapolis Fed President Narayana Kocherlakota, dissented from the Fed statement Wednesday because he wanted to keep the bond program going.

Underscoring its own uncertainty, the Fed’s official rate assurance included a new qualifier about the economic outlook: If the job market improves more quickly than expected or inflation rises, rate hikes could come sooner, and it could wait longer if the job market or inflation slow.

The inflation and employment backdrop now is subtly pulling the central bank in two directions. Officials noted “solid job gains” and said labor-market slack is “gradually diminishing,” signs of economic vigor that might spur early rate increases. Since July the Fed had been saying it saw “significant” slack, a phrase it struck this time around.

But Fed officials also noted falling energy prices and downward pressure on market expectations of inflation, signs of low inflation that give them leeway to wait before raising rates. Inflation has been running below the Fed’s 2% target for more than two years.

The central bank’s holdings of securities, loans and other assets have increased from $2.825 trillion when the program started to $4.482 trillion. The Fed has said it plans to maintain this level of holdings until after it starts raising short-term interest rates. Eventually, officials expect to reduce the holdings gradually by letting securities mature without reinvesting the proceeds.

The worst fears about bond buying haven’t come to pass. Inflation, as measured by the Commerce Department’s personal consumption expenditure price index, has been unchanged at 1.5% since September 2012. The dollar, as measured by the Fed’s broad dollar index, is up 6.7% in value compared to the world’s other currencies. Meantime, the price of gold, which some investors believe should rise when inflation fears pick up, has fallen from $1730.60 per ounce to $1229.20, a 29% decline.

Yet clear demonstrations of QE’s benefits are elusive. Though the jobless rate has declined from 8.1% before the latest program was launched to 5.9% in September, this is in part due to people leaving the work force and the ranks of those counted as unemployed. Job growth was 2.2 million in the 12 months before the Fed launched the latest round of bond buying and 2.6 million in the past 12 months, but it is hard to prove the faster growth has come even indirectly from the Fed’s efforts.

Fed officials say they are prepared to use bond buying again, but disagree about the circumstances that would warrant it. In addition to Mr. Kocherlakota, who called for continuing bond purchases at the latest meeting, St. Louis Fed President James Bullard said before the Fed meeting the central bank should consider continuing the purchases in light of falling inflation expectations.

John Williams, the San Francisco Fed president, said he would have no reservations about returning to bond purchases, but only if the economy is clearly taking a turn for the worse. For now, he and most other officials don’t think it will be needed.
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Old 10-31-2014, 01:04 PM
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New high for Dow/S&P today. Keep pumping.
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Old 11-01-2014, 09:32 PM
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Just got back from a 3 week trip to S.A. today. No TV or news of any kind; I like what I see. I think I should go away again and see if it keeps going up!
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Old 12-26-2014, 05:37 PM
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Originally Posted by doopstr View Post
New high for Dow/S&P today. Keep pumping.
***wonders if you will be so happy when the long over due correction comes and the market tanks like it was 1929 all over again***

the pumping needs to stop asap so we can get over this sooner rather than later....
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Old 12-28-2014, 11:27 PM
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As I write this, the Dow is at 18,053.71 and in record territory. There's media reports of a Dow 20k next year and things look great on the surface. The Nasdaq and SP500 have had an even better year than the Dow with double digit percent increases year-to-year.

The easy money Fed policy causes stocks to rise the way they have. Stocks really have been the best game in town compared to other investments but how long will that continue? Everything has cycles. Stocks are showing signs of faltering and this shows up when the market thinks a rate increase is close as we saw in mid December before Yellen spoke and buoyed the market again with talk that a rate increase is not for a while longer.


Eventually the Fed is going to lose control of the situation and that's when things are going to change abruptly and in a negative direction. Interest rates will rise not because of Fed intent, but because of market intent instead. Eventually the market will demand a higher return on loaning money to the U.S. government and the Fed won't be able to stop that because the Fed doesn't buy all the bonds issued by the treasury- especially with a taper that has completed.

Q4 2014 U.S. GDP will probably be (unexpectedly?) down when reported in 2015. I'm basing this opinion on some of the data that has been overlooked of late (new home starts, existing home sales, manufacturing, etc). I think it's hard to have a growing economy when construction and manufacturing is not humming along. Obamacare's affect on GDP can only go so far now that we have had it for a year- Obamacare won't have a big positive impact on a year-to-year comparison like it did last year.

Will the party continue through 2015? Possibly, but not without more volatility.
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Old 12-29-2014, 03:13 PM
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As long as the P/E ratio is fine, no problem.

But I think that stock market will plunge 50-70% in the next years...
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Old 12-29-2014, 05:30 PM
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Originally Posted by Saintor View Post
As long as the P/E ratio is fine, no problem.
It's on the high side now.
Shiller P/E Ratio: Where Are We with Market Valuations?
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Old 12-29-2014, 11:53 PM
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^ take a look for the SP500 PE ratio since 1871: S&P 500 PE Ratio

The estimate for today is 20.27. You'll see that we're on the high side based on past history. The PE ratio has ranged from 5.32 (1917) to 123.73 (2009) and has an average of 15.53 and median of 14.57. A graph shows that the first 100 years fluctuates from 5 to 20 typically and when it hits 20+, it will tend to go below 10. Most of the downtrends last years but some can be shorter and abrupt. The last 20 years has been very volatile.

Sure the PE can go higher but it could also get much lower too.

As for the Schiller PE Ratio, a chart of that metric shows 27.45 now and Black Tuesday in 1930 had a value of 30 while black Monday in 1987 had a lower value of 17ish. Based on this history, we're in extended territory as well since the mean is 16.58 and median is 15.95.

What do you think these indices will do if there is a 'surprise' drop in GDP in 2015?
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Old 12-30-2014, 10:59 AM
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Show me someone who says he can consistently "time the market" and I'll show you a liar
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Old 12-30-2014, 09:46 PM
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^ I don't think anybody is saying they can time the market. These are just observations that the market is kind of extended using historically sound methods. It seems a safe bet that Q4 GDP is not going to come in as good as Q3 did. It's also a safe bet that Q1 2015 GDP may also be stressed compared to Q4 with the drop in energy company corporate spending as well as no year-to-year tail wind from Obamacare.

Whether the GDP numbers makes the market go down is anybody's bet, but these probabilities may impact how much the market might go up. There was a CNBC interview of Art Cashin on Monday that mentioned how years ending in 5 have rising indices 12/13 times (i.e. one down year in 130 year span). Art did not talk about volatility so I could see 2015 be higher than 2014 come year end, but it could be a rocky time early to mid-year possibly.

Here's the Art Cashin interview link: http://video.cnbc.com/gallery/?video=3000342180
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Old 12-31-2014, 03:18 PM
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IMHO when this correction comes, it might be the one that causes people to literally jump out of windows and start killing themselves because they lost a significant portion of their wealth.
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Old 12-31-2014, 06:08 PM
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Originally Posted by YeuEmMaiMai View Post
IMHO when this correction comes, it might be the one that causes people to literally jump out of windows and start killing themselves because they lost a significant portion of their wealth.
You only lose money if you sell. The market has always come back without fail.

More than half of the loss from Black Monday was gained back in 2 days and all losses were gained back before the end of that year.

Recovery from 2002 took longer: ~2 years and 2008 took ~2.3 years.

But those who did not sell didn't lose a thing....
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Old 12-31-2014, 07:53 PM
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^ What about the dot.com bubble and Nasdaq stocks? The Nasdaq has yet to exceed where it was in 2000 and it's been 14 years. Also when the 1929 crash happened, it took 25 years to recover losses.

I don't remember 1987 like you seem to. 1987's high was 2722, yet the year ended at 1938 having opened at 1895.95. So yes, 1987 was a positive year for longer term holders, but it proved to be a problem for people investing in the market that year. It took 2+ years for some people to break even on their investments made in 1987. So a measly 44 point YTD gain probably wasn't worth the volatility for people swing-trading the market that year.

While 1987 is a good example for not abruptly getting out of the market AFTER the crash happens, there were signs of problems long before that crash happened. I happened to liquidate 401k funds in December of 1986 to buy a house (when you could do such a thing)- that was the smartest thing I could have done at that time. Yes, I liquidated early but as you know nobody can time the market. The house appreciate much faster than the stock market did those next few years.


There's something to be said about avoiding taking losses where there are indications of trouble down the road. As with everything, you don't do things all-in or all-out but instead slowly get in the market and slowly get out.

I have about 25% in cash for most of my accounts at the moment so I'm by no means completely out of the market.

Anyway, happy New Year to all. I look forward to more stimulating discussions on these topics in 2015!

Last edited by LaCostaRacer; 12-31-2014 at 07:56 PM.
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Quick Reply: is the DOW going to burst at some point?


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