OT: DJI Prognosticators

[Jeffreauxdawg]

So, it looks like a long predicted/awaited market sell off is taking place. As a staunch passive investor, I just watch and never try to time markets... At least with real money.

So where does the pack think the bottom is on this dip? Let's put a time window of a month on it...

So what is the lowest DJIA price between now and closing bell March 5th? Closest to the pin, it's not The Price Is Right so over or under, it does not matter.

I will start with $23,895.

 

[Wizard of bulldogery]

25,126.47

 

[Preacher Franklin]

25,126.47

Any dips are mere buying opportunities. Keep buying defense stocks.

 

[jdbulldog]

23,600. Get some Apple, Berkshire, and Boeing or Lockheed.

 

[Preacher Franklin]

23,600. Get some Apple, Berkshire, and Boeing or Lockheed.

HII

 

[She Mate Me]

My opinions on this subject have sufficiently nauseated most here. Don't know if this is the start of the inevitable huge drop, but DJIA sub 14,000 will be seen again.

 

[Wizard of bulldogery]

/

 

[Wizard of bulldogery]

as a young man on the verge of being debt free... i would love to see a 14k dow if i didn't lose my job.

 

[HueFreeze]

that **** won't happen with trump.

Could seriously see it after him, but he is going to spend and inject too much in the economy

 

[Jeffreauxdawg]

My opinions on this subject have sufficiently nauseated most here. Don't know if this is the start of the inevitable huge drop, but DJIA sub 14,000 will be seen again.

Maybe not that low, but the big one will come again. I predict the next bubble involves private equity. The LBO or Corporate Raiders have rebranded and now go by PE. It will scare you to death when you delve into what they have done.

In the down turn, they carved out healthy pieces of corporations that needed cash. They have since burdened the Hell out of these companies with debt. They are playing hot potato selling these companies back and forth and whoever gets caught will just file and come out clean.

I personally worked for a division that was sold for $125 million in 2011. Pre sale revenue was $300 million with around $50 million in debt on the division. The carved out new company has sold twice more in 7 years and less than 10% of capital was used each time. All leverage. Today revenue is up to $500 million with debt greater than revenue. Bonds were AAA then and are Caa1 now.

I quit the company the day of the sale and the few I know that are still left have had huge pay and benefit cuts in the bull market.

I encourage all to read up on this potential disaster. Just Google search private equity bubble.

 

[Wizard of bulldogery]

I think you are paranoid... since this pullback has started the yield spread has increased from 55 bp to 70 bp. That is a good thing... a healthy correction.

 

[Jeffreauxdawg]

I think you are paranoid... since this pullback has started the yield spread has increased from 55 bp to 70 bp. That is a good thing... a healthy correction.

Apples and oranges. What I am worried about is all of the debt burden on companies that are outside of the markets. Bond spreads will never account for the bad debt on private company balance sheets.

You are right about the public market... It's a little zesty, but strong. I am worried about what we can't see.

It's kinda like the MBS bubble, when you take twenty houses and average together their mortgages they all look fine. Nobody on wall street was looking deep enough to see that 3-4 of the 20 were well under water. With the small margins of lending a 1% default rate is a killer.

Same thing with these private equity firms and their portfolios. The firm has 20 businesses, all leveraged. Some are healthy enough to withstand, but a few are not. PE I need companies are way more leverage than public companies and get away with it by offering higher interest rates on debt.

Credit markets have sucked so bad, institutional investors are jumping at a few extra points on PE bonds. There are no SEC regulations so it's the wild west. Right now the carousel is still spinning, but eventually it will stop. Much like the housing market, imagine if 1% of all companies declare bankruptcy in a short period of time.. economy will crash.

Just check out Toys R Us... You will see. Retailers are already getting pillaged.

http://www.businessinsider.com/private-equity-firms-making-fortune-stripping-capital-out-of-companies-2017-10

 

[Wizard of bulldogery]

"when all else fails invest in cryptocurrencies"
-Warren Buffet 1967

 

[UpTheMiddlex3Punt]

I'd buy but all the money I would buy with is already in the market

 

[Jeffreauxdawg]

Damn Wizard... Did you run my PE rant on the ticker at the NYSE? I grabbed lunch and the DJI dropped 400... Tell them I am just a conspiracy theorist.

 

[TheStateUofMS]

Interest rates moved up really fast, which has caused a pretty quick repricing of stocks.

Rates may start to pull back tomorrow and then we have a bottom now possibly. We need rates to stop climbing so fast or at least retrace some. History on the charts show quick up or down moves on rates, then a consolidation period. The consolidation period usually drifts down since rates have headed that way for so long. I'm hoping for a retracement to about about 2.6% because that's where rates broke out and didn't look back. Usually when things break out, they retrace and retest the breakout level.

Here's what's important. The economy appears to be accelerating, so rates have to go up to make sure things don't get too hot. With that said, the risk free rate (10 yr yield) is now close to 3% which gives income investors a choice of where to look for yield. The past several years there hasn't really been a choice. You had to pick good dividend paying stocks. You have a choice now, which is causing the market to reprice.

Sentiment numbers and bullishness street surveys have been extremely elevated, so it's not surprising to see the market pull back.

In my opinion, it's all about the speed of which interest rates have moved. Having said all that, I think the market will be higher going forward, but trying to time that bottom will be hard if next to impossible. I would start buying right here and be prepared to make more buys on the way down.

If you have anything speculative that has gains on it, I would take them now. I took some gains on Square today. Not gonna hold something that risky right now while there are gains to be had.

This is exactly why you want to always be holding some cash and not be fully invested.

 

[TheStateUofMS]

So, it looks like a long predicted/awaited market sell off is taking place. As a staunch passive investor, I just watch and never try to time markets... At least with real money.

So where does the pack think the bottom is on this dip? Let's put a time window of a month on it...

So what is the lowest DJIA price between now and closing bell March 5th? Closest to the pin, it's not The Price Is Right so over or under, it does not matter.

I will start with $23,895.

You need to be in ETFs or mutual funds if you think indices are priced in dollars. I'll give you benefit of the doubt you made a typo.

 

[Jeffreauxdawg]

If you have anything speculative that has gains on it, I would take them now. I took some gains on Square today. Not gonna hold something that risky right now while there are gains to be had.

You need to be in ETFs or mutual funds if you think indices are priced in dollars. I'll give you benefit of the doubt you made a typo.

Yikes. No idea why the dollar sign is there, I know better... Maybe I am used to trading futures contracts on commodities which are priced in dollars? (Former series 3, 7, 66...)

I see I got within 28.88 pts though on my DJI guess... did not expect it to all come today though... Talk about a pull back.

Good advice on the long specs. All of my speculation is in the wife's company options which, of course, are blacked out right now. I tossed around the idea if buying some put options last week, but figured we could make till March. I was wrong.

No worries though, pull back was needed and interest rates are not slowing down the train for too long.

 

[TheStateUofMS]

I think computers triggered Stop losses then ultimately margin calls. Some people sold some really good stocks for stupid low prices.

DO NOT SET STOP LOSSES!

 

[UpTheMiddlex3Punt]

24,867.93

 

[karlchilders.sixpack]

Hell of a Day at Sea!

 

[Moe Cabelle]

A significant drop was bound to happen. I can't speak for others, but that drop only sliced 1/3 or less off the gains I've seen SINCE New Years. Give me 12 months of that performance and I'll be retiring much earlier than I expected.

I'm 52 and I've seen 3 big bust already in my life. When it comes, it's hurts like ****, but investing in the stock market has to always be for long term, regardless of how often you might trade.


My humble advice: Save young & consistently fund your retirement plans without regard to the curernt market. Pay attention but be patient. Always keep near term cash needs out of the stock market.

10 years can be a lifetime to someone in their 20-30s, but the market will inevitably recover, often quite faster than anyone anticipates.

So many people panic and sell or quit funding their 401ks in a down market and miss the rebound that makes a difference. On the contrary, I'm hesitant to continue buying "high" at the current market - but you leave your 401K on auto-pilot.

That being said:

Generically, the technology funds are the the future and I can only see that escalating in this age. I have varying stocks, but saw the value in Amazon years ago. Hadn't been to the mall since .

I personally am a believer in energy funds but you have to get burned a few times to fully understand the ebb and flow of gas & oil.
Fracking technology has been so wildly successful that the US is again the #1 produceer - unfathomable just a decade ago. The Saudis lost market share, got clever and decided to intentionly flood the market sending oil stocks down as much as 90% in some cases. The Saudis made a grave error and after years had to cap production with OPEC. Oil & Gas are not going away my friends and that was a buying opportunity for me.

Obviously these pose more risk, but my personal favs are the sand stocks, ie US Silica, FMSA. The beauty is that in the slowdown - copanies learned to improve their processes to make fracking more efficient. Turns out that more sand in the process produces more yield. These guys have rebounded already but I think will ultimately double again as oil returns above 50-60/barrell. It's just a matter of time.

 

[TheStateUofMS]

Please share with us the stocks that only got 1/3 of your gains taken off through today since New Year's Please.

For me, PSTG has held up well. I bought it on 1/18/18 and was up 18% last week and up 7.3% on that position now after today's close.

I bought some AMAT at the close today, which is one my largest positions.

 

[TheStateUofMS]

A significant drop was bound to happen. I can't speak for others, but that drop only sliced 1/3 or less off the gains I've seen SINCE New Years. Give me 12 months of that performance and I'll be retiring much earlier than I expected.

I'm 52 and I've seen 3 big bust already in my life. When it comes, it's hurts like ****, but investing in the stock market has to always be for long term, regardless of how often you might trade.


My humble advice: Save young & consistently fund your retirement plans without regard to the curernt market. Pay attention but be patient. Always keep near term cash needs out of the stock market.

10 years can be a lifetime to someone in their 20-30s, but the market will inevitably recover, often quite faster than anyone anticipates.

So many people panic and sell or quit funding their 401ks in a down market and miss the rebound that makes a difference. On the contrary, I'm hesitant to continue buying "high" at the current market - but you leave your 401K on auto-pilot.

That being said:

Generically, the technology funds are the the future and I can only see that escalating in this age. I have varying stocks, but saw the value in Amazon years ago. Hadn't been to the mall since .

I personally am a believer in energy funds but you have to get burned a few times to fully understand the ebb and flow of gas & oil.
Fracking technology has been so wildly successful that the US is again the #1 produceer - unfathomable just a decade ago. The Saudis lost market share, got clever and decided to intentionly flood the market sending oil stocks down as much as 90% in some cases. The Saudis made a grave error and after years had to cap production with OPEC. Oil & Gas are not going away my friends and that was a buying opportunity for me.

Obviously these pose more risk, but my personal favs are the sand stocks, ie US Silica, FMSA. The beauty is that in the slowdown - copanies learned to improve their processes to make fracking more efficient. Turns out that more sand in the process produces more yield. These guys have rebounded already but I think will ultimately double again as oil returns above 50-60/barrell. It's just a matter of time.

What do you think of ETP? Huge debt load, but they seem pretty confident they won't have to go back to debt markets or issue any more equity. They just raised their distribution some.

OKE is my favorite in that space, but ETP is that one may have some significant market upside if the debt load doesn't cause any hiccups.

 

[Captain Ron]

A significant drop was bound to happen. I can't speak for others, but that drop only sliced 1/3 or less off the gains I've seen SINCE New Years. Give me 12 months of that performance and I'll be retiring much earlier than I expected.

I'm 52 and I've seen 3 big bust already in my life. When it comes, it's hurts like ****, but investing in the stock market has to always be for long term, regardless of how often you might trade.


My humble advice: Save young & consistently fund your retirement plans without regard to the curernt market. Pay attention but be patient. Always keep near term cash needs out of the stock market.

10 years can be a lifetime to someone in their 20-30s, but the market will inevitably recover, often quite faster than anyone anticipates.

So many people panic and sell or quit funding their 401ks in a down market and miss the rebound that makes a difference. On the contrary, I'm hesitant to continue buying "high" at the current market - but you leave your 401K on auto-pilot..

What this guys says ^^^^^^^

if you are investing in stocks and not just trading them, and you are not in need of the retirement dollars in the next few years, this works to your advantage espically if you are in dividend paying companies.

Now if you are speculating on BTC*****

 

[UpTheMiddlex3Punt]

Funny thing is Bitcoin is having a worse day than the stock market

 

[Moe Cabelle]

Please share with us the stocks that only got 1/3 of your gains taken off through today since New Year's Please.

Full disclosure. I saw people belly aching about the big drop last week and assumed that was the reference. I just checked my TD account - Whammy! I get it. Yeah, today was super bad

I'm still up, but I can see people panicking and driving it down further.

Regardless - I'm not going anywhere.

 

[Wizard of bulldogery]

/

 

[Wizard of bulldogery]

-

 

[RocketDawg]

My opinions on this subject have sufficiently nauseated most here. Don't know if this is the start of the inevitable huge drop, but DJIA sub 14,000 will be seen again.

I think there'd be a worldwide depressison if the market drops that low.

Looks like the Dow dropped almost 1200 points today to 24,345 and the Nasdaq droped 273. What's that ... close to 5% in one day? Pretty severe. My Morgan Stanley website won't even open.

 

[She Mate Me]

I think there'd be a worldwide depressison if the market drops that low.

Looks like the Dow dropped almost 1200 points today to 24,345 and the Nasdaq droped 273. What's that ... close to 5% in one day? Pretty severe. My Morgan Stanley website won't even open.

What's not well understood, or at least not acknowledged by any of the pro sunshine pumpers, is that the global economy is a basket case. It has been artificially levitated for decades now by massive, unprecedented government debt and monetary inflation. We are in a very long term global economic experiment that is very unlikely to end well.

Whatever your job is, think about it a little bit and imagine what would happen to it if we were actually forced to balance our budget and stop acting like runaway national debt won't have an awful end. Government spending drives way too much of the global economy for anyone to be very comfortable with the level of most asset prices these days.

 

[Jeffreauxdawg]

... It has been artificially levitated for decades now by massive, unprecedented government debt and monetary inflation. We are in a very long term global economic experiment that is very unlikely to end well.

Whatever your job is, think about it a little bit and imagine what would happen to it if we were actually forced to balance our budget and stop acting like runaway national debt won't have an awful end...

Where is everyone learning that "leverage" is so kosher? The debt to GDP ratios of developed nation's is skyrocketing. Ours included. What's really frightening us to look at the nation's with low debt..

 

[She Mate Me]

Where is everyone learning that "leverage" is so kosher? The debt to GDP ratios of developed nation's is skyrocketing. Ours included. What's really frightening us to look at the nation's with low debt..

I think the acceptance of this lunacy is a product of it just being the way of the world for multiple generations now. We "temporarily" took ourselves off the gold standard in 1971 because we couldn't control our spending and the world was losing confidence in the dollar. We have just plowed on spending and borrowing for nearly 50 years with no worries and the world has followed us down the rabbit hole. You have to be 60 plus to have any first hand knowledge of life without uncontrolled gov. spending. Nobody knows how this ends, no matter how smart they seem, and I don't see how it ends without a massive global conflict because the politicos won't man up and won't take responsibility.

 

[Jeffreauxdawg]

I guess I am just a little more optimistic, but it's dwindling.

One common element of low debt nations... State controlled oil. Do we go that route? Do we go to war?

We are about 15-20 years from being Japan demographically and that is when our debt will really soar. Everyone will be old and living off of entitlements, with few left working. At a certain point we will have to raise taxes tremendously because of the compounding debt will far outpace potential GDP growth.

There is a solution. 10-20 years of a balanced budget. (It's a pipe dream to consider paying down debt.) The balanced budget won't kill growth, but it will salvage the future. It will stop the debt clock and GDP will continue to slowly grow. If we can get back to 75% or so debt to GDP, We may have a chance if someone can get it done.

It will require a lot of cuts to sacred cows though. And as SMM said, no pols have the sack to do the hard thing.

 

[HumpDawgy]

I just invested heavily in our government last year. Not much left over to invest elsewhere.

 

[Jeffreauxdawg]

Well.. I think we can call it, unless there is a 1000 pt drop in the Dow this afternoon it looks like the low was on February 8th. I was not perfectly clear in that we usually talk about closing bell highs and lows, so I will give credit for the intraday low too.

The closing bell low was 23,860.46 on 2-8-18. I was closest to pin with my *$23,895.00* (still don't know why I put that damn dollar sign up.)

The intraday low was 23,360.29 on 2-9-18. At 23,600.00 ddog was closest on the intraday.

 

[Crazy Cotton]

That seems like a big part of the problem. We basically just did a gigantic stimulus package with the tax cut for an economy that was chugging along at a good clip. The inflation indicators are scary right now, and salaries just went up 3%. That's pointing to an economy that's overheated to me.

 

[Wizard of bulldogery]

all the rain made it drop. sunny days are ahead.