I think if the RNC does well in the midterm elections, YUP, time to normalize yields and blame it on the other party. Very similar to past history when bubble deflation started, everyone was pointing fingers in 1929 and 1987.
STEPS TO TAKE NOW:
1. For starters, beef up your buying power. As long as stocks continue to stay near their highs, take some profits from your winners and build a cash reserve. You may also want to unload some clunkers. When the market finally sinks, use the cash to scoop up bargains.
2. And speaking of bargains, you should prepare a shopping list of stocks you’d like to buy at lower prices. If, say, you want to own Apple or Google but think they’re too expensive now, be ready to act if a correction gives you the opportunity to buy them at discounted prices.
3. Use a laddered investment approach somewhat similar to dollar cost averaging. Except you invest at intervals identified with extreme selling pressure and a certain negative OFF % from the highs or from fair value. I propose a negative valuation threshold coupled with a measure of selling intensity such as advance/decline ratio, panic air gaps down levels, whateve, but use decline thresholds instead of time intervals to determine when to buy. And don't use just one general algorithm, base the decision criteria on the industry's history in the last correction, the negative valuation ratios that were reached, and the discount to fair values in a host of variables or criteria to flash a green light to buy.
Finally, turn off the TV. If a decline starts to snowball, you’ll hear about it—over and over. Don’t get caught up in the negative hysteria and do something foolish, such as selling all of your stocks or stock funds during a moment of panic. Use logic, don't get emotional. Example, I was heavily invested in bank stocks and lightened up to cash about 80% but still held 20% of my holdings. When the market really started tanking in bank stocks in December 2008, I was down 30-35% on some and was waiting for the bottom to start buying. I re-analyzed the bank industry and realized it was near collapse, so I sold these remaining 20% all in one day, and took a whopping 42% decline from the high.
HOW LOW CAN WE GO & IT IS STILL NOT TOO LATE TO GET OUT!
The US bear market of 2007–2009 was declared in June 2008 when the Dow Jones Industrial Average (DJIA) had fallen 20% from its October 11, 2007 high.
The DJIA, a price-weighted average (adjusted for splits and dividends) of 30 large companies on the New York Stock Exchange, peaked on October 9, 2007 with a closing price of 14,164.53. On October 11, 2007, the DJIA hit an intra-day peak of 14,198.10 before starting its decline.
The decline of 20% by mid-2008 was in tandem with other stock markets across the globe. On September 29, 2008, the DJIA had a record-breaking drop of 777.68 with a close at 10,365.45. The DJIA hit a market low of 6,443.27 on March 6, 2009, having lost over 54% of its value since the October 9, 2007 high.
It took two years and the first year you had 9 mos to get out at a reasonable % off the high, don't wait to long to wake up and realize what is happening.
Remember, stock price is a long term present value of future stream of earnings and dividends. If the stream is not growing but actually declining annually, then modern stock valuation theory says it is not an investment and is actually worth ZERO. "0", almost like a car when you drive it out of the showroom, it plummets in value every year until it reaches NO TRADE IN VALUE. With the US dollar rising and commodities plummeting, STOCK PRICES including M-REIT's are way over valued. Makes sense to raise cash and wait for the BIG CLEARANCE SALE.
THIS IS IT, THE BIG ONE IS HERE AND IT IS JUST STARTING.
Some advice: I want to be clear, market peaks go through months of top formation, so this will give you time to sell, there will be rallies, use them to get 100% in cash. These are EXTREMELY DANGEROUS TIMES for you principle. Examine all your risk exposures, very very carefully, don't be emotional be very objective. When exteme valuations based on past history, overwhelming sentiment at 100% bullish, and market internals are deteriorating, credit spreads are widening, and trend breakdown is widely apparent. I highly recommend you make certain the long positions you hold are impervious to a STOCK MARKET CRASH. Based on my analysis of the conditions, the likelihood of a STOCK MARKET CRASH of epic proportions, maybe even BIBLICAL PROPORTIONS is very probable within 12 mos.
I am very successful at making alot of money off of market swoons or sell-offs. My concerns presently are those I expressed in 1999 -2000 and 2007-2008 peaks, as again we are at the peak in overvaluation, overbullish sentiment and a clear deterioration in makrket internals, widening creadit spreads, and a breakdown HUGE breakdown in the trend. The TREND is no longer your friend to your wealth if you are long almost every asset class. The TREND is very favorable to cash, US dollars to be exact, so now is the time to park your wealth in cash in the checking account, and watch all you relatives and friends loose 60-90% of their wealth, relatively you will feel richer. My sense is that people who still own stocks are imagining that they can exit the markets when their is some signal or warning flag that is made public. History shows that there is no signal for the speculative masses to exit with paper profits intact. Hence, My Primary Rule for Saving Yourself in any type of emergency, panic before everyone else does, you will be alot richer and better off.
EXIT RULE FOR STOCK MARKET BUBBLES: History shows the the market doesn't offer opportunities for an entire speculative mass to exit with paper profits intact. RULE NO. 1: Panic before everyone else does. Run, be a yellow belly, a chicken, a coward, your banker will love you because you'll stash all your treasure in his bank. Stock certificates in his safety deposit box declining in value every week, month, year in a bear market is no way to get richer or invest.
Rule No. 2: Take advantage of "Dumb Money" rallies like today to unload. This is specialist taking the market down in the morning when the volume was high and then rallying it in the afternoon when volume is much lighter, this is a classic market internals, deterioration of market breadth, leadership and all the other myriad of market internals. This along with a shift toward greater dispersion and weakening price cointegration across specific stocks, industry groups, etc.. add to the widening of credit spreads very similar to the shifts observed in October 1987, October 2000, and July 2007. The same market internals that we observe today, we observed those same in 1987, 2000, 2007........ABRUPT MARKET LOSSES ARE IMMINENT.
Man oh man, as if the paradigm shift in market internals I saw early in the summer and reported here numerous times that when your stock swere making new highs in July, like AGNC at 24 was an easy SELL order to book profits at or near the peak in this bull cycle. Corn back then was already down 50% now down 95% folks. I track all types of variables, including retail "corn on the cob" prices. Jewel Foods in Chicago was selling corn for $1.00 an ear or corn cob in January 2014, it was down to .33-.50 a cob in June, 2014, but in September I got corn for 10 cent an ear, (very large sweet yellow/white kernels) and then just this weekend, corn on the cob with husks for 5 cents and ear while quantities last. I knew back in June that oil and commodities were headed down in unison, THIS IS ONE OF THE EARLIEST WARNING SIGNS OF AN IMMINENT STOCK MARKET CRASH, these commodity observances of 5 and 10 cent an ear corn was also seen immediate months before the great crashes of 1976, 1987, 2008, and now 2014. And now, Jim Cramer comes out late today, to say the same thing I have been saying for two months at least.................
Jim Cramer October 2, 2014.............Quote from his article on the Coming STOCK CRASH !
"Of course every selloff has unique qualities and the plan outlined above isn't written in stone. It does, however, provide an outline that could help you navigate the market if and when stocks decline further.
And if you're in cash already and looking to put money to work, "There is no hurry to buy," Cramer added. "At my charitable trust we are buying very small after selling industrials, including the oils, very big. I believe that everything, I repeat, everything is going down for now. No hurry."
YOUR MISSING THE STOCK MARKET CRASH, very negative market internals, everyone wanting to SELL, VERY little interest in buying long. Jim Cramer sold almost everything and is in cash, he just announced this today. I believe the last time he did this was October 2008.
The odss of a rate increase is 100%, the FED said so, it is the exact date and how much. It could be spring or summer 2015, or it could be early depending on labor numbers coming out later this week. I believe inflation has picked up in labor costs, because everyone I know is getting increases, really big ones in Illinois and Chiciago.
What are you inferring, Santa Claus works for BIG OIL? Fuel prices have risen when cold weather approaches, (supply and demand). At least thats what I thought. I've got to check the charts on this one to see if your inference has any merit. But what I do know with a very very very high level of confidence, that market internals have turned very negative and when all of the indicators turn negative, in passed history a significant correction happens in the following 6-18 mos. I am not predicting one on a specific date, just that all the ingredients for a MASSIVE MARKET CORRECTION are here, the recipe is done, how long it has to bake or stew on the stove is the one question left. We are very close, the ingredients are prepared and mixed, we just need the timing and the temperature to determine the finish. VERY CLOSE. BE VERY CAREFULL, CASH IS PROBABLY THE SAFEST NOW..
I am pretty sure 10 year will got to 4%, all the ingredients are here. It will be a lattered move up, with some backpedaling, like I indicated over a year ago. 10 years will rise from 1.8, to 2.2 then 3.0 in 2013, which it did, on Dec. 31, 2013, 10 yr. was a 3.03%. Then it back pedaled 50% of the rise to 2.2% this late Spring 2014 and now it is rising again, 2.45-2.5% and I believe over next 2015 will hit 3.5-4.00%. This is right on target with my model from over 2 years ago.
My biggest concern here is what the FED will do know the UE is below 6% and jobs have grown 200,000+ for the past 6 mos, and an upward trend is definately has manifested itself, I predicted this to, rememeber, the babyboomers are exponentially trend higher weekly and will so for maybe 10 years, jobs will grow, Grow, GROW.......NO END IN SIGHT AS 90 MILLION BOOMERS SIGN UP FOR Social Security. Lots of change coming, especially in demand and supply, retiree's use alot less and drive alot less than when they were full time workers. Oil and the commodities have no where to go but down, and we have never had a bull market in stocks when oil and commodities drop in price and usage, the stock market always follows. This next downturn will resemble the 1930's alot more. Demand dropped for 11 years straight, while interest rates were normalize from 1931 lows to 1926 highs. Interest actually rose during the 1930-1926, from my recollection of a thesis I did back for my masters at Northwestern.
Correction, 1926 should be 1936, sorry about the grammar and spelling, I am a full professor and I am accustomed to having teaching assistants do my spell checks and grammar. I deal with the theory and analytics and math, I don't have much respect for literatural correctness.
The treasuries are strong and AGNC is due to the flight to safety, it will last only weeks maybe months. Utilites were up too, that is another flight to safety by funds. The only sure thing is the "TREND CHANGE" has occurred, and market internals have detereorated very strongly. This is the start of the cracks in the "Moral Integrity of our Great Hypocrisy called Stock Valuations". Remember, current stock prices were Ponzied with QE and suspension of mark to market accounting and financial engineering. Now it is all ending and stocks over the next two years will go to fair value or lower. I think minimum 50% off the highs and alot of stocks will be 75-90% off, especially all the REIT's and Master Limited Partnerships, that deal with all the financial engineering that makes everything look good to shareholders even though you loosing $2.50-3.00 per share in real losses. The real losses are going to come home to roost.
You obviously made money, but I do not think GM was hurt financially or the recalls hurt their sales. Sales are up double digit with the recalls. They are breaking records. I guess people see a company that stands behind their quality. Ford on the other hand, does everything they can not to take care of your problem, until it is out of warranty. I know my neighbor wish he had bought a Chevy, he is still trying to get his Ford fixed for two years. GM is down 15% because the markets are correcting, more sell orders versus buy orders. But just about every decent stock is down 15%, so relatively speaking GM is in the top 10% again, relatively speaking.
See the correlation of corn prices, oil prices, value of the dollar and the value of the stock markets. IF CORN GOES DOWN, OIL PRICES AND MOST COMMODITIES GO DOWN AND STOCK SOON FOLLOW, WHILE THE MARKET STUMBLE AND FALL UNTIL THEY CRASH.
The market volatility could lead to a 2,500 point down day in the DOW. It is highly likely, I am seeing 20-25% drops in individual stocks daily as the detereorating market internals get even worse. In my view, the stock market remains very over valued, and investors should not rule out a 2,500 point drop in the DOW or the averages trading down 60%-65% in the next two years as very likely. Investors should not be fooled into believing that stock ownership at these price levels represents a sound investment here. Don't be fooled by a 4-5% drop in stock prices as bargains, we will see 20-25% drops like Soda Stream (SODA) today very common as the market fundamentals start to unwind. I just love fundamentals and investment decision making.
Is that a wish or a prayer? REIIT's don't do very well historically when interest rates rise. They do even worst if interest rates were held really low close to zero for really long time, makes matter even worst. Based on historical facts and VERY VERY VERY MUCH MORE NEGATIVE EXTREMES this time, makes the historical inference even more haunting. This could be a bigger wipeout that the early 1930's where the markets lost 60% from the 1929 to 1930 and then went on to loose an addl. 75% from 1930 to 1932. All the ingredients for a 1929 and 1930's meltdown are here. Massive debt on to even more debt due to gov. policy mistakes is making this look like 1929 all over again. History does repeat, life is just a cycle, first half is up the second half is down, and everything averages out if you have a long enough horizon.
What does past FED actions have to do with a CATASTROPHIC STOCK MARKET CRASH right now. The legitimacy of valuations are being questioned right now as we see 20-25% one day losses in highly owned stocks like Soda Stream (SODA) very frequently now. This is evidence that valuations due to the hypocrisy of the FED induced QE bubble in stock prices is legitimate, these valuations are not legitimate, it is criminal and in the market of fair evaluation, price will come down to FAIR VALUATION as individual trials are held by a free market and criminal valuations will receive a fair and just sentence which will range in 50-90% stock price hair cuts.
Your missing something BIG. The FED release today listed that QE has ended, October was the last one. Go read the minutes. That was completely ignored by the engineered short covering rally. The FED's failed policies are slowly being shut down. Europe talked about easing, but no addl. easing was implemented. IT IS OVER FOLK'S. Believe it or not, the economies of the world are all debted out.
The buy on the dip crowd along will short traders were engineered into buying with rumors and selective release of the FED minutes. I would use the Fools Rallies to sell into. Market trend has reversed, stock valuations way too high and big slowdown or bump in world economies now at work through the globe. Dollar will strengthen against every currency and THE GREAT RESET HAS STARTED. Get into cash on every market rally, they will be short lived and based on nothing but speculation, not facts.