Stock Market

[ChicagoFats]

Don't look now, but the stock market has been on fire the last few days.

There was a lot of pressure from the Everygrande situation in China that has been aleviated, albeit the problem still exist. A couple banks including Goldman Sachs and i believe JP morgan crushed earnings and sparked a rally.

This morning retail sales came in better than expected giving yet more momentum to the rally.

Snp is trading 4450 right here with sights set on all time highs of about 4540.

Market feels strong at this moment although there are many catalyst out there that could change that at the drop of a hat.

Pain trade feels like market higher, so i anticpate holding positive territory going into the weekend. Could see a late afternoon swoon though with some people taking profits looking to avoid headline risk over the weekend.

 

[America 1st]

Got a couple thousand more shares of ABR last week when it was below 19 cuz it just felt like this thing isn’t slowing down.

With the bipar infrastructure bill still able to be passed I’m feeling pretty good about it.

 

[TopHook]

my rei just shot up.

 

[ChicagoFats]

Bullish sentiment continues. I expect us to test all time highs over the next week or so. only about another 1% higher in the SnP 500 (Current Level 4510)

Stong earning are pushing the market higher along with continued easy money policies.

Volatility seems to be bottoming out with the VIX sitting right at the 16 level, its lowest reading in quite some time.

I continue to think the market as a whole is overvalued and will at somepoint revert to a lower mean. However, you can't fight the momentum nor the fed and both continue to be bullish. For that reason I stay long at these levels and buy more on market pull backs. Once we test the all time highs I would consider taking money off the table or initiating a covered call strategy.

 

[shiv]

Bullish sentiment continues. I expect us to test all time highs over the next week or so. only about another 1% higher in the SnP 500

Stong earning are pushing the market higher along with continued easy money policies.

I do asset allocation and I shifted more conservative around spring time frame. Prob 50 stock / 50 bonds - which is really conservative for my age.

After all the money that was dumped in the economy and all the price inflation I’m not so sure it was the best move

 

[America 1st]

I do asset allocation and I shifted more conservative around spring time frame. Prob 50 stock / 50 bonds - which is really conservative for my age.

After all the money that was dumped in the economy and all the price inflation I’m not so sure it was the best move

The smartest person I know it’s still going super conservative.

I don’t think you made a poor choice. The clown in charge makes every day feel like it could be a 30% correction sorta day.

 

[shiv]

The smartest person I know it’s still going super conservative.

I don’t think you made a poor choice. The clown in charge makes every day feel like it could be a 30% correction sorta day.

Yeah, I'm not real worried about it. It wouldn't be too much of a difference in performance

There is something called the Efficient Frontier that shows the trade off of returns vs. risk.

50/50 is a nice sweet spot where the risk isn't much different than going 100% bonds, but the return is 20% higher

A very interesting point that this curve shows is that 25% stock, 75% bond is LESS risky than going 100% bonds

 

[fschmidt]

Yeah, I'm not real worried about it. It wouldn't be too much of a difference in performance

There is something called the Efficient Frontier that shows the trade off of returns vs. risk.

50/50 is a nice sweet spot where the risk isn't much different than going 100% bonds, but the return is 20% higher

A very interesting point that this curve shows is that 25% stock, 75% bond is LESS risky than going 100% bonds

How would this graph look for the Weimar Republic? Using past US data is a big mistake because the US is no longer the country that it was. I think stocks are much safer than bonds right now.

 

[shiv]

How would this graph look for the Weimar Republic? Using past US data is a big mistake because the US is no longer the country that it was. I think stocks are much safer than bonds right now.

Yeah you make a great point.

I’ve got some inflation hedges. Rental property, and I hold a few individual stocks in energy and mining companies

 

[ChicagoFats]

I do asset allocation and I shifted more conservative around spring time frame. Prob 50 stock / 50 bonds - which is really conservative for my age.

After all the money that was dumped in the economy and all the price inflation I’m not so sure it was the best move

You are too young to have your money in bonds. I think that is a mistake. I rarely tell people they are making a mistake because its really none of my business what you do with your money and you could always be right. However, I do think bonds at your age is a bad bet. You have better odds of making more money being in equities.

 

[ChicagoFats]

Yeah, I'm not real worried about it. It wouldn't be too much of a difference in performance

There is something called the Efficient Frontier that shows the trade off of returns vs. risk.

50/50 is a nice sweet spot where the risk isn't much different than going 100% bonds, but the return is 20% higher

A very interesting point that this curve shows is that 25% stock, 75% bond is LESS risky than going 100% bonds

People like Warren Buffet and Bogle (created index fund) disagree that you need bonds to be on the efficient frontier. Diversification can be important, but there is also such a thing aas over-diversification.

There can be signifigant differences in return with different portfolio constructs. I will do some research but not sure this graph applies in a zero intrest rate environment.

The longer the time horizon, the better off you are holding equities.

 

[America 1st]

You are too young to have your money in bonds. I think that is a mistake. I rarely tell people they are making a mistake because its really none of my business what you do with your money and you could always be right. However, I do think bonds at your age is a bad bet. You have better odds of making more money being in equities.

I need the cock sucker in chief to go ahead and forgive federal loans.

I’m on a hold until he makes up his mind about that.

I’ll honestly be shocked if he doesn’t with the way everything is going right now.

 

[shiv]

People like Warren Buffet and Bogle (created index fund) disagree that you need bonds to be on the efficient frontier. Diversification can be important, but there is also such a thing aas over-diversification.

There can be signifigant differences in return with different portfolio constructs. I will do some research but not sure this graph applies in a zero intrest rate environment.

The longer the time horizon, the better off you are holding equities.


View attachment 54682

I understand this, but Benjamin Graham (that largely influenced Buffer) and William Bernstein (wrote a book called Intelligent Asset Allocator) say otherwise.

There are a couple advantages to having bonds, but there is a psychological aspect when the market drops.

Another benefit is the ability to rebalance at certain time intervals.

In the end though, S&P 500 will just outperform overthink over a long time horizon, but it takes stone hands at times.

 

[shiv]

People like Warren Buffet and Bogle (created index fund) disagree that you need bonds to be on the efficient frontier. Diversification can be important, but there is also such a thing aas over-diversification.

There can be signifigant differences in return with different portfolio constructs. I will do some research but not sure this graph applies in a zero intrest rate environment.

The longer the time horizon, the better off you are holding equities.


View attachment 54682

I missed the part about a zero interest rate environment.

I could be retarded but it says over a long time hozizon Bomds are less risky that stocks? I’m having a hard time understanding that.

Also you see that last highlight it mentions “assuming the stocks are purchased at a sensible multiple of earnings relative to the then prevailing interest rates” - that’s been a really challenging concept to apply over the last few years - basically we are kind of in uncharted territory

 

[shiv]

You are too young to have your money in bonds. I think that is a mistake. I rarely tell people they are making a mistake because its really none of my business what you do with your money and you could always be right. However, I do think bonds at your age is a bad bet. You have better odds of making more money being in equities.

I’ll think about it - I know you have a better grip on financial concepts and economics than I do.

 

[fschmidt]

In the end though, S&P 500 will just outperform overthink over a long time horizon, but it takes stone hands at times.

I guess I have stone hands. But I have VT instead of S&P 500. The S&P 500 is US while VT is global, so more diversified and better protected against the risk of the collapse of America.

 

[shiv]

I guess I have stone hands. But I have VT instead of S&P 500. The S&P 500 is US while VT is global, so more diversified and better protected against the risk of the collapse of America.

You and @ChicagoFats got my wheels turning in my head. Glad to see you back posting over here

 

[ChicagoFats]

I missed the part about a zero interest rate environment.

I could be retarded but it says over a long time hozizon Bomds are less risky that stocks? I’m having a hard time understanding that.

Also you see that last highlight it mentions “assuming the stocks are purchased at a sensible multiple of earnings relative to the then prevailing interest rates” - that’s been a really challenging concept to apply over the last few years - basically we are kind of in uncharted territory

I noticed this also and think its a typo. In the very next paragraph i think it states i t correctly. I think the point is, that OVER THE LONG TERM a portfolio of only equities is less risky than a portfolio of bonds.

So if you are investing for the long term, and thats pretty much what we are discussing, I think you are better off just owning an index fund.

Im 43 and my retirement account is 100% SnP index fund. The earliest I could make a withdrawal from my IRA would be age 59 1/2 which is another 16 years .... that is long term to me so im sticking with my strategy even though i think equities are overvalued.

 

[America 1st]

I noticed this also and think its a typo. In the very next paragraph i think it states i t correctly. I think the point is, that OVER THE LONG TERM a portfolio of only equities is less risky than a portfolio of bonds.

So if you are investing for the long term, and thats pretty much what we are discussing, I think you are better off just owning an index fund.

Im 43 and my retirement account is 100% SnP index fund. The earliest I could make a withdrawal from my IRA would be age 59 1/2 which is another 16 years .... that is long term to me so im sticking with my strategy even though i think equities are overvalued.

CRIMINAL

 

[ChicagoFats]

I guess I have stone hands. But I have VT instead of S&P 500. The S&P 500 is US while VT is global, so more diversified and better protected against the risk of the collapse of America.

I think we are in for tough times ahead, stocks are generally overvalued right now, but I still believe that America is the economic driver for the world. I reserve my right to change my opinion, but for right now thats what I think. Plus, there is the risk of over diversification.