Who is planning on bailing out of the stock market or raising a significant amount of cash in their portfolio when the DOW hit 14,000?
Bailing at DOW 14,000?
By E-man Follow Wed, 2 May 2012, 7:55pm 9,005 views 28 comments
In San Jose CA 95131
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Davis, CA
Nope.
IMO trailing stops make timing your exit pointless.
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As a fundamentals-driven investor it is irrelevant to me that some index score passes 14000. However, it is true that as the stock market gets higher, it tends to become more compelling to sell off the positions I have and more difficult to find new deals that I think are cheap, so I may reduce total stock ownership for those reasons.
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According to this chart, the poor bastards that have been contributing to the Dow since at least 1996, the Dow should be 35,000 by now. And you folks are excited over 14K. I bet we'll see 11K before 14K. It's just too damn easy, and crooked bastards have been getting away with pump and dump for far too long. Besides it's not like Elizabeth Warren in any position to do anything about it. Aye Iwog! Aye?!?
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Well, the chart indicates that the DOW topped out at around 1,000 since 1966 to 1981 & finally broke out in 1983.
The loft-sided bottoms in 2002 & 2009 are very similar to the loft-sided bottoms in 1970 & 1976. In addition, this cyclical bull run has lasted more than 3 years already. I believe the market has a good chance of going down after the November election. My intention is to raise 1/2 of my portfolio in cash. The rest will be in dividend paying stocks. I may hedge a small portion of my bet in DXD or similar ETFs. I'd rather be 1/2 wrong instead of completely wrong. Hate to be on the wrong side of the bet.
With respect to some idiot calling DOW 35,000. Where the hell is that guy now? Didn't he just become a bear now? :)
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drtor says
It has nothing to do with the number 14,000. It just coincides with a double top at approx. 14,000. I didn't have any issue with the DOW passes 12,000, 13,000, etc.
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E-man says
Me.
Stocks are overvalued on a long-term basis:
http://www.multpl.com/
I think people are putting money into stocks because there's simply nowhere else to put it: safer investments yield far too little.
There's too much money chasing too few investments. Thank you, ultra-low interest rates.
If interest rates (REAL interest rates) rise, stocks and bonds will drop.
Right now I think cash is the worst asset class, except for all the others.
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Some stocks I'll sell as soon as I get it into capital gains territory. Just the gambles.
Most I'll hold on to for either dividends or long term.
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ATK's website
everything else is still down except the stock market... not good... yes, safe investments are not good either...
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Santa Cruz, CA
Bail out to buy WHAT?
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clambo says
Exactly.
There's too much money in stocks because all of the alternatives suck.
Cash? Being eaten away by inflation.
Gold and Silver? They're already high.
Bonds? They'll go down if interest rates rise, rates are at record lows.
Real Estate? That's not exactly an "investment" unless you plan on becoming a landlord.
Beer and Hookers? Hey, you only live once...
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CaptainShuddup says
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Few people make out like bandits who pull their money based on gut reactions.
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clambo says
Damn good question. Buy and hold (if possible forever) AAPL. It is a growth stock that pay dividends, what not to like. As pointed out by wthrfrk80, other asset classes are not good.
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clambo says
Of course bail to buy AAPL. :)
edvard2 says
Actually, it's not based on guts. It's based on technical analysis and market timing. Don't know what to do until we get there, and will have to evaluate the A/D ratio and some other indicators before pulling the trigger. It's hard to take watching the DOW drop to 10,000 then 8,000. :)
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Cash? Being eaten away by inflation.
I don't know... Beef is the only commodity I'm worried about right now
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EBGuy says
Tell me about it, I told my favorite Butcher the other day...
"You used to have reasonable prices, but now you're boutique Man!" Then I walked.
But then I realized as I drove away, I'll probably regret that after the prices come back down. He always humors me, by bringing several loins out and allowing me to meticulously inspect each one.
I keep telling people the great thing about cash is, it's yours and nobody can take it away from you. Sure they quip about inflation and the devaluation of the dollar. But I pulled of something by just saving my money, and paying my bills, before the ink dries. Built good credit and bought a house. I'm pretty sure I can parley that technique into buying a business eventually.
I'd like to see 401K'ers be so lucky, they'll do good just to retire with what they put in it, let alone what the employer matched.
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E-man says
If you say so. "Double top" is as irrelevant to me as "14000" :)
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Santa Cruz, CA
RE: that big chart above. Does it include dividends?
I remember the days when everyone was freaking out that the Dow was too high at 4000.
Depending which index they put Apple in, that index will not fall much I bet.
Oh, that means the Wilshire 5000 index is now gonna stay up forever :)
Don't worry. The people in the other parts of the world have found TV and watch it in every corner of the earth today.
They have Discovery and the other channels in 100 languages and people see stuff. They then want to have it.
When the blissfully ignorant learn that other people have iPads, cars, clothes, and whatnot they all WANT the same junk for themselves.
The ladies will goad their men into toiling endlessly to help them acquire the junk of their dreams.
You'd be amazed but in places like Shanghai, girls all go nuts buying a Louis Vuitton bag for $2500, even though this represents about 6 months savings.
Remember the Flintstones? Wilma and Betty are going to go shopping and they each have a credit card. They run out yelling "CHARGE it!"
Men of course all want a BMW or simliar.
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Not if we get a depression or big recession.
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Corning, NY
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Cash is the worst asset class right now. Except for all the others.
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E-man says
Then if the decision were based on technical analysis then everyone would leave their stocks in place- assuming they had invested broadly. If they did so then historical technical analysis would show that they would basically expect a 7-10% annual long-term return and that pulling their money would be a dumb move.
* not financial advice.
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technical analysis is voodoo
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rockyroad says
Bwra Ha Ha Ha(gulp)(swallows my skoal) cough cough cough hack! Ha ha ha ha...
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I have a feeling that we will see 12000 before 14000.
Anyone here want buy DOW 30 at 14k from me?
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xenogear3 says
Feeling........ Nothing more than feeling........:)
wthrfrk80 says
True. Technical analysis is nothing more than a probability game. Kind of like...do you go all-in with pocket aces, or with a 4 and a 5 suited? There is no guarantee that you'd win with the pocket aces, but your chances are higher. That's it.
I did some technical analysis with the housing market in the recent years too. So far, I'm very happy with the result. :)
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edvard2 says
Ed,
You're assuming that one would exit & never re-enter the market again. That's not how technical analysis work. Just like the housing market, you sell when you believe it's over-valued, and buy when you believe it's under-valued. It's just an educated guess, and you pay for it when you're wrong.
Kind of like you now. You've never thought of buying a house during the peak, but now you're looking at it because you believe it's getting closer to parity.
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San Leandro, CA
Simple answer.
All you need to know is SELL when the masses show FEAR and BUY when they show CONFIDENCE.
Unless some knucklehead prints trillions, bails out banks with taxpayer funds and offers that money with NO INTEREST !!