patrick.net

Vicente says

TODAY the market is just spinning it's wheels. Instead of feel acrophobia, I feel the need for a NAP.
ZZZZzzzzzzzz........

I don't think there's going to be some kind of major "crash" or anything. I just think there's enough "headline risk" over the whole european debt fiasco that could result in lower prices in the coming months.

wthrfrk80 says

Vicente says

TODAY the market is just spinning it's wheels. Instead of feel acrophobia, I feel the need for a NAP.

ZZZZzzzzzzzz........

I don't think there's going to be some kind of major "crash" or anything. I just think there's enough "headline risk" over the whole european debt fiasco that could result in lower prices in the coming months.

Yup. I feel that at sometime in the future between now and 100 years from now there 'could' possibly be something that could occur that 'might' cause the market to react. I dunno... I just feel that something is going to happen someday.

Case-Shiller has an index for U.S. stocks too:

http://www.multpl.com/

That's my main reason for thinking stocks are just a bit too high relative to long term earnings. I think a lot of money has flowed into the markets simply because interest rates are so low. It's "yield chasing." If interest rates gradually start going up again, I think stocks will slowly decrease. Or they'll just stay flat with earnings growth and buybacks balancing the effect of money outflow.

edvard and vicente, the only reason you see more tax refunds of your OWN money is most politicians were chicken to increase taxes. What's the mystery?
Ben Bernake however is still able to punish savers and benefit debtors which is another subtle form of meddling with distribution of wealth.
Democrats want to take our investment returns after we save and risk our own sweat and blood and postpone chicks and cars to have it.
I fear taxes, not the stock market. Balls to the wall, because 1. interest rates are low 2. the world keeps growing.
Travel some developing economies and see what's happening out there.

clambo says

Ben Bernake however is still able to punish savers and benefit debtors which is another subtle form of meddling with distribution of wealth.

True that. And it has the added "benefit" of being much sneakier than an actual tax increase.

clambo says

edvard and vicente, the only reason you see more tax refunds of your OWN money is most politicians were chicken to increase taxes. What's the mystery?

But I thought folks on your side didn't want to raise taxes. EVER. Thus if you are in agreement that we are paying less taxes because politicians didn't raise taxes... isn't that exactly what you all want? What's the complaint then?

wthrfrk80 says

That's my main reason for thinking stocks are just a bit too high relative to long term earnings. I think a lot of money has flowed into the markets simply because interest rates are so low.

I'm no economist but there's a lot more going on then that. The global economy is becoming more global all the time. A LOT of major us companies are now all doing a ton of business overseas and particularly in the growing Asian markets. Thus they are making a lot of money.

Simply "guessing" that the stock market will crash doesn't really make a whole lot of sense. Will it crash? Yup. Its crashed before and it will crash again. That's not what is important. What's important is what you can make overall, crashes and booms.

edvard2 says

I'm no economist but there's a lot more going on then that. The global economy is becoming more global all the time. A LOT of major us companies are now all doing a ton of business overseas and particularly in the growing Asian markets. Thus they are making a lot of money.

That graph is relative to earnings. The increased earnings are taken into account.

Obviously I can't reliably predict short-term market behavior. That chart won't predict it either. Short term movements are anyone's guess.

My point is that future returns are poorer when stocks are richly valued, and visa versa. Also, interest rates are at historic lows (there's a link to a chart of interest rates as well).

http://yhoo.it/FOQXoA

Look at the 5 year chart and you can see the correction pattern. Seems like we have a bit more upside.

DOW is probably going to 14k

clambo says

Lefty Democrats scare me because they'll turn the USA into Argentina.

Isn't the current house republican by something like 240-190 and the senate democrat 51-47 with 2 ind? I believe the house has been R since Clintons first term except the 111th congress and the senate has been R 10 of the last 14 years. So what lefty democrats are creating the laws that scare you so much? Almost all legislation for the last 17 years except obamacare has come from a republican majority.

I'm getting a bit of a nosebleed, but...

The market could be high for a couple other reasons:

1) So many assets in the world are now toxic that money is going into the market in search of safety

2) With assets shaky, and a potentially ruinous inflation waiting for the M2 cork to pop, the market might justify even higher values in nominal future dollars, as the value of the dollar drops precipitously.

SChaser says

1) So many assets in the world are now toxic that money is going into the market in search of safety

Exactly. Banks are no longer risk averse enough to invest in real estate.
They are putting ALL your bailout money on AAPL.
No wonder they passed THEIR stress test.

clambo says

edvard and vicente, the only reason you see more tax refunds of your OWN money is most politicians were chicken to increase taxes.

Translation: My reflexive garbage about "income redistribution" and ruinous taxes was called out, and I'm too chicken-shit to say MATH PROVES ME WRONG LET ME RETRACT. Time to change the subject instead of admitting a lie.

You guys are something else. When Obama wanted to allow taxes to rise he was opposed not by Pelosi and her ilk.
The truth is that the danger to my future net worth is TAXES not the stock market.
What do you need, links to youtubes of various democrats like Obama saying we need to spread the wealth? That's income redistribution.
If you like that fine. You are a liberal. Join the ranks of the others who want to pick my pocket to give it to someone else.
You will have the opportunity to vote to raise taxes on California yet higher. Meanwhile, smart businesses like Apple are expanding to non tax states, like Texas for instance. Apple is going to spend $310 million on some center in Austin and hire about 4,000 people. (that was what the golden gate cost by the way, but in more valuable dollars)
I am not lying. Democrats created another sneaky tax on wealth in many states called the "annuity premium tax". Some people bought variable annuities because the IRA contribution limit was so small, just $2000.
This clever "premium tax" is a straight tax on the TOTAL in your annuity after it has had decades to grow with its sub accounts like mutual funds.
Of course, you are taxed on the increase in value as income when you eventually spend your annuity.
I predict that the Democrats will seek clever ways to tax our 401Ks, IRAs, and other investments.
The rationale for the new annuity taxes was: "We did a study, and we found that the average owner of an annuity was richer than the average dumpster diving loser. They can afford this new tax."
The rationale you guys give for taking another guys money is always the same: "He can afford it, he's rich."
Having over $1million in investments will make us the rich targets.
So, I fear taxes more than the stock market.
I also fear ignorant people who think that taxes won't matter to their investment returns and future well being.

clambo says

The truth is that the danger to my future net worth is TAXES not the stock market.

Inflation-adjusted stock-charts shows retail investors are gaining little or nothing there for over a decade.

Your determination that taxes are the single and only threat to your real long-term wealth building, is plainly wrong. Some people have had money sitting in CSCO waiting for the NASDAQ to hit 4,000 again since 1999 and sadly never heard of "opportunity cost".

My taxes are lower than ever, if yours have risen within the same bracket you quite plainly are making a huge mistake and need to have your taxes professionally prepared next time.

clambo says

You guys are something else. When Obama wanted to allow taxes to rise he was opposed not by Pelosi and her ilk.
The truth is that the danger to my future net worth is TAXES not the stock market.
What do you need, links to youtubes of various democrats like Obama saying we need to spread the wealth? That's income redistribution.

... and once again, as repeated earlier, if one wants to go on about "Wealth distribution", well I can't think of a better example of this than when Republicans decided 30+ years ago to start putzing around with the tax system, and trying "Trickle-down" economics via tax cuts for the wealthy. If that's not a redistribution of wealth then I don't know what is.

Secondly, do you folks who complain about taxes realize that as of now Taxes in the US are the LOWEST they've been since the 50's? That's right. We are currently paying less taxes than anyone has in over half a century and doing so with a Democrat in the office.

Anything else?

edvard2 says

We are currently paying less taxes than anyone has in over half a century and doing so with a Democrat in the office.
Anything else?

But I heard Obama hung around with Bill Ayers.

vicente, you are constantly changing the subject and changing what I have written. That's not allowed.
I don't fear the gyrations of the stock market.
I fear the future attacks on my investments in the form of TAXES.
It is a known fact that taxes did not go up recently, but that was because Obama met resistance.
Apple agrees with me, they are building a huge place in Austin Texas, which will mean their employees will automatically avoid paying up to a 10% California income tax.
You do pay California taxes also don't you? Do you plan on paying them in retirement?
My investing history predates your graph, which is also completely meaningless because you picked recent history. I don't fear what happened in the past. My portfolio started in 1982 and is doing fine.
Tax the rich, tax the rich, tax the rich. Later when you need to spend some of your investments, you will be considered "rich" because you saved your sweat and blood money, and had the balls to invest it when everyone else spent it on chicks, cars, club med trips, etc.
You guys make me want to puke. You don't get to take my money from me to give away. You wouldn't dare try it in person, but you want to do it with liberal lefty politics.

I love this site ...lot's of creative people..... Stocks are the best and the fastest game in this casino... You want 2% on the 10 year? Hell no... It's time to gamble in a ____ stock ... What have the Banks done lately? You get your money in 3 days

clambo says

I fear the future attacks on my investments in the form of TAXES.

Provably irrational fears can be resolved with counseling these days. Choosing to remain in irrational fear state when it is counter to reality, is of course a personal choice, as long as you are not stripping your clothes off on the street or climbing a clock tower. Taxes are at historic lows therefore your worries are misplaced.

clambo says

Apple agrees with me, they are building a huge place in Austin Texas, which will mean their employees will automatically avoid paying up to a 10% California income tax.

I wouldn't read too much into that. The California jobs are extremely well paid engineering and design positions. The Texas jobs are call center, sales and accounting jobs. Better than nothing, but not like what we have here.

http://www.nbcdfw.com/news/tech/Apple-to-Build-New-Austin-Facility-142076693.html

I suspect it is more of a concession to California real estate costs than state income taxes.

Vicente says

Taxes are at historic lows therefore your worries are misplaced.

They are going up at the end of the year, assuming no congressional action, and no congressional action is a pretty safe bet with this Congress. Most alarming is that tax rates on dividends are looking to nearly triple from 15% to 42%+ for high income investors. Other taxes will rise in the 3-10% range, which might be 10-30% larger tax bill for some.

If you believe in Modern Monetary Theory, it probably seems all a bit unnecessary.

clambo says

I predict that the Democrats will seek clever ways to tax our 401Ks, IRAs, and other investments.

They are so clever, it's already a done deal! (I don't want to rain on your parade, but you're paying tax on those things.) 401Ks already are taxed when you take the money out. IRAs are taxed before you put the money in. These are vehicles to encourage responsible saving and Democrats are likely to be solidly behind that. It helps keep social programs solvent by keeping wealthier people off their roles.

Now, *means testing* before you get social security benefits, that is something that the Democrats are likely to try! I'm sure they don't see much sense in making monthly social security payments to millionaires.

clambo says

I also fear ignorant people who think that taxes won't matter to their investment returns and future well being.

Bah. It's not the end of the world. If you want, you can structure your investments into small cap / growth stocks that don't pay dividends. Your returns will then be entirely capital gains. You don't have to pay any tax until your sell, which is entirely under your control. You can curmudgeonly refuse to sell a single share for years until an administration you like comes into office. Even when you do pay taxes, it will be 20%, which is fairly modest.

Besides, I don't get all this hysteria and hostility about taxes. As charities go, the federal government is actually a fairly good one. It is far more effective at preventing murder and mayhem than all other domestic charities combined. It facilitates commerce through roads and rule by law, makes it possible to invest in markets, and gives us (read: prints) all the money that you are grumbling about having to pay taxes with. That's good stuff!

If you want a country with out a government, go look at Somalia. I just don't think that whatever line of business you are in will function all that well there, unless it is piracy. I'm sure you are much better off here, even with the ruinous tax rates.

I noticed that Europe and Asia stock markets always go low in the morning.
After US stock market opens, it pushes the world market up.

Fed must print money like crazy now. Don't even think about short.

wthrfrk80 says

There are still plenty of "Black Swans" around:

with everyone looking for Black Swans, so maybe the Black Swan is no Black Swan?

rockyroad says

with everyone looking for Black Swans, so maybe the Black Swan is no Black Swan?

Bah! You need to hang out on some perma-bear forums like Market Ticker.

Those folks will convince you that every banging noise, is the thunder warning you of a hurricane about to wipe your town right off the map.

Yes, I have been thinking this way. I'm primarily invested in stocks, so I've seen their value go up enough to think it might be time to realize some profits. I want to do some calculations first, but last did this during Summer of....2007? when DOW hit 14000 and I squirreled away a little money into investments that hopefully will outgain inflation.

I was a perma-bull until the unemployment rate hits 10% and loses 50% in the stock market.

Here is something that should get everyones attention

http://www.senseoncents.com/2010/01/blueprint-for-government-takeover-of-iras/

If history has proven anything, its shown that government is the most dangerous entity in existance. Dangerous to life, liberty, happiness and now your retirement account.

Honest Abe says

If history has proven anything, its shown that government is the most dangerous entity in existance. Dangerous to life, liberty, happiness and now your retirement account.

Are you a bot? I mean really it's like you post without regard to thread content.?

So, someone says that double taxing me at 20% is nothing to be afraid of, and another says I have an irrational fear? No, my fear is very rational.
On KQED while channel surfing they had some "retirement expert" talking about retirement and the #1 threat to retirement he listed was TAXES.
Before Roth you had a few choices: small regular IRA, Vanguard Index funds, and variable annuities. After Roth, they came out with "tax efficient funds".
The problem is you can convert your IRA to Roth to avoid taxes, but you will pay income tax on the principal AND the gains, so you are being double taxed to convert to Roth.
You can choose to never "annuitize" your variable annuity, but you still pay taxes on the gains at income rates.
The index and tax efficient funds are about the same, so you are going to suffer the whims of the market fluctuations. Some managed funds are more defensive and better for your old age.
I don't accept that the choice is between the USA govt. and Somalia. I prefer the idea of Switzerland's attitude to taxes. It seems to work well. I have been there and it's pretty nice too.
Stocks balls to the wall boys.

clambo says

The problem is you can convert your IRA to Roth to avoid taxes, but you will pay income tax on the principal AND the gains,

I don't think this is completely true. If I did not take the traditional IRA deduction when I put the money in, I don't think I have to pay the tax when I take it (the principal only) out. At least I hope not.

I don't think it will be going through a price correction anytime soon.

With helicopter Ben out there, markets will stay pretty high as long as all the unused liquidity is directed at the stock markets like it is now.

There are many who OBSESS over Heli-Ben.

So much so, they fail to see anything outside the USA.

ECB actions of late are far more relevant than the Fed's "stay the course" meaning it's only action is remaining at ZIRP.

Vicente says

There are many who OBSESS over Heli-Ben.

Vince,

It's because his policy drives markets up. Banks are given loans that are practically free. Since banks aren't loaning most of the money out, instead they use them to buy up stocks which causes an upward movement on the stock market.

B.A.C.A.H. says

I don't think this is completely true. If I did not take the traditional IRA deduction when I put the money in, I don't think I have to pay the tax when I take it (the principal only) out. At least I hope not.

If you contributed to a traditional IRA but didn't take the deduction...you may be entitled to a tax refund from the government, but I don't think you can decide to not pay taxes when you withdraw the principal portion of the money...If you didn't take the deduction, you ought to have used a Roth, in which case all withdrawals are non-taxable...

FortWayne says

It's because his policy drives markets up. Banks are given loans that are practically free. Since banks aren't loaning most of the money out, instead they use them to buy up stocks which causes an upward movement on the stock market.

Yes, but Federal Reserve is not doing any special QE right now.

Therefore stock market moves upward likely due to something else. I can postulate all sorts of other things, but European Central Bank moves tops my list of suspects.

Anyone else getting market acrophobia now?

Seems like a minor correction to me at this point.

*RING* RING

Hello, Ben Bernanke's office, for a liquidity injection press 1. To speak to an operator press zero.

That said, I liquidated today some options contracts and a few stocks. I had already harvested dividends on them a time or two and had some gain. Still holding AAPL.

In S&P500 companies, worker productivity is at an all time high. In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls. Last year, that figure rose to $420,000. Hiring is up as well, though a lot of it is overseas. Bullish for S&P500 funds, but that does not necessarily translate into jobs here. Some feel that companies will have to start hiring soon as they've wrung as much as the can out of the existing workforce with efficiency gains.