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Cautionary Words Regarding Stock Purchases

Wednesday, July 31, 2013 - 7:50 PM
From finance.yahoo:

     "...The real message at the moment is that the average stock in
      the market – and specifically small-cap stocks – appears fully
      valued at best and is unlikely on average to reward buyers at
      today’s prices over the next few years.   ...

Read more:
5
cumuluscumulus359 posts since
Jan 16, 2010
Rep Points: 1,678
1. Wednesday, July 31, 2013 - 8:00 PM
From the article...

"Sure, some will quibble that all stock valuation or market-handicapping efforts are being fouled by ultra-easy Federal Reserve policy and low interest rates. Even to the extent those things are driving stocks skyward, they won’t likely be in place over a five-year horizon."

We know Bernanke's ZIRP is inflating the stock bubble but does one go against the trend? If the Fed keeps their current easy money policy in place for the next five years the markets will continue being addicted and may rise significantly in reaction. Is "the trend your friend" or is it a sucker bet at this time? No one really knows.
2
ShorebreakShorebreak2,683 posts since
Apr 6, 2010
Rep Points: 14,546
2. Wednesday, July 31, 2013 - 9:04 PM
SB: Your point of no one really knowing is well-grounded. Still,
I like the track-record of this guy's VLMAP as a market predictor;
combined with my own (amateur) take on things I'm more comfortable
as an onlooker to this.
2
cumuluscumulus359 posts since
Jan 16, 2010
Rep Points: 1,678
3. Wednesday, July 31, 2013 - 9:06 PM
(1) Don't fight with the Fed,

(2) Enjoy the ride while it lasts, just remember:

(3) Never be the last one to leave the party and has to turn-off the light/take out the gabage:D
3
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
4. Thursday, August 1, 2013 - 11:45 AM
(1) Don't fight with the Fed,

(2) Enjoy the ride while it lasts, just remember:

(3) Never be the last one to leave the party and has to take out the gabage:D

And therein lies the problem.  When is it time to leave?  I'm semi-young so feel I could weather a drop.  But, I am also quite conservative so I have about 65% in Fixed Income.
3
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
5. Thursday, August 1, 2013 - 2:52 PM
I have had 100% in cash since Dec 1999. 
2
Ally6770Ally6770937 posts since
Jan 16, 2010
Rep Points: 2,727
6. Thursday, August 1, 2013 - 4:38 PM
It is time in the market; not timing the market.  When is time to leave the market?  Nobody knows; but here are some principles:

(1) The strategy has to be indpendent of human emotions (greed/fear); e.g., today should be a day without any action since it will be greed that motivates people to buy and it will be counter-humanity (impossible) to sell.

(2) The strategy should be tolerant of human errors and buyer's regret; i.e., small and gradual moves only.

(3) The strategy has to be tracking market movements in real-time. 

The last one is very important to avoid being the last group to leave the party.  Hope this helps.

Rosie: Dec. 1999 was an excellent time to bail out of the tech bubble, mind to share how you did that?  TIA.
2
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
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