Anybody Buy the Recent Dip in the S&P 500 Index?

Old_Skeet

I did not buy this recent dip as I felt I'd take all my yearend mutual fund distributions in cash and wait for something bigger than the recent dip which by my definition is a decline of up to five percent. I think we will be seeing a pullback (a decline that has a range of 5% to 10%) or perhaps even a downdraft (a decline that has a range of 10% to 15%) to come sometime during 2015. Hopefully, we want get something beyond this that might lead into a recession … but, I indeed feel a good decline in the markets is on the horizon.

I wish all ... "Good Investing."

Old_Skeet

Derf

@Old_Skeet I'm thinking you put a (play) on less than 30 (?) days ago? I was wondering how it was working out? Or was I just dreaming this?
As for myself, I'm caught in the headlights so to speak. This oil situation has me on the guard. I'd like to start DC averaging into oil, on the products produced by this cheap oil, not the MLP's Refineries,rails,drillers, etc..

Good Investing,
Derf

scott

In terms of oil: pondering going back into GBNXF.PK (Gibson Energy), a Canadian diversified oil infrastructure/services co. Unique company (both pipelines and services) and pays a nice dividend. And it's down huge. I could have added to VET in the upper 30's a few days ago, now back to almost $50.

LLJB

I bought one stock, Ford, and wish I had done more, but I was getting beaten up so bad that I just wasn't willing to put the cash I had to work until and if the decline became more serious. I did sell the strength in the Euro and Yen on the futures market a few days ago and at least for now I view them as longer term investments, expecting both currencies to weaken, not necessarily in a straight line, but for quite some time.

hank

Buy the S&P 500 Index? No. I don't do indexes. I've been buying energy producers through a diversified natural resources fund. There's some S&P 500 companies among the refiners it holds. I though by just one measure - gas at the pump for under $1.50 (after taxes) - oil prices had gotten a bit distorted. At those prices half the population would be crusin around on our deteriorated highways in big fuel guzzling Hummers in a couple years. Just can't forsee that happening.

Albeit, my "bottom up" perspective (from the pump) is just one take. There are larger issues affecting oil prices than what Joe 6-pack pays for a gallon of gas. I do also read about those larger global issues - many of which are discussed here.

Am not ruling out the dire predictions here and elsewhere that we're heading into some type of global deflationary collapse. However, it's an "outlier" IMHO. I'd give it no more than a 35% chance of happening anytime soon. So, I don't invest to protect against deflation, but rather, to hedge against inflation.
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*The $1.50 after-tax pump price cited is probably a little lower than today's actual prices. Remember that oil "leads" (comes down faster than the price of retail fuels) during periods of falling prices.

scott

" So, I don't invest to protect against deflation, but rather, to hedge against inflation."

I'd completely agree with this - I feel exactly the same way.

davidrmoran

I bought a lot more REXX, no broad vehicles.

Old_Skeet

Hi Derf,

Thanks for asking …

The spiff that you might be referring to is the one I put in place back in October. And, yes as I write I am up about 7% with the S&P 500 Index price reading at about 2040. The more recent dip that I was referring to was the December price decline that I did not take a position in. Perhaps a better wording of the title would have been "Anybody Buy the Recent December Dip in the S&P 500 Index?"

Now, I did start opening positions, a while back, for diverficiation purposes within my portfolio in a commodities fund, JCRAX and a gold fund, SGGDX. Currently, I am a little underwater in these positions, combined, by about four percent. I most likely will wait until the middle of January before I do any buying as I want to see what happens the first couple of weeks in the New Year. And, I also, want to see how my portfolio's asset allocation bubbles at year end.

Hope this helps … and, answers your question.

Old_Skeet

Additional Comment ...

For those that would like reference, I have copied and pasted my post of October 14th comment under a thread started by Junskter titled "Catching Falling Knives." Below is what I wrote ...

Hi Junkster,

Nice to see you posting again. About catching falling knifes ... I don't look at my current special strategy in that light. But, one that uses market money to make new purchases at discount prices. Below is my thinking, my strategy, what I am doing and my anticipated outcome.

I am hoping the 2100 comes to be for a year end close for the S&P 500 Index as forecasted by Birinyi. This would equate to just short of a 12% gain from current levels of 1878. Which is indeed possible should forward earnings estimates materialize as anticipated.

Anyway, I now have my marker on the bet line that it will as I bought again today. With this I have recently bought at the 1970's, the 1920's and the 1870's. My next buy step is the 1820's and then beyond that at the 1770's should we reach these levels on the Index.

Keep in mind that year end mutual fund capital gain distributions are expected to be on the heavy side this year. Since, I take all my distributions in cash I have decided to put these anticipated distributions to work early and use the forth coming distributions to restore the cash position within my portfolio used to make these purchases.

With my average cost on amount invested currently at about 1920 and should the Index reach the forecasted 2100 year end closing mark then this will equal about a 8.5% gain. Should I buy again at the 1820's then this will lower my cost on amount invested to about 1895 and increase the gain to 10.8% should the 2100 mark be reached. With another buy at the 1770's and if the 2100 year end closing mark be reached then this would equate to about a 12.3% gain.

For me it is risk on for the traditional fall stock market rally. After all, the way I look at this is that I am using market money derived from investment distributions to make more market investments which from my thinking is kind of clever by using market products that generated the cash that will, in the end, fund these special purchases.

Should my strategy not play out by year end; I believe it will over time and besides the funds I invested in have a history of paying out good distributions.

Since this is being played in a tax deferred account there are no taxes to pay until withdrawals are made and I am investing in funds that are nav purchases for me.

Old_Skeet

Note ... For tracking purposes my actual average cost on the October spiff equals a reading of about 1905 on the S&P 500 Index. Since, the recent December dip did not reach back of my average cost, I did nothing.

Charles

Bought OXY and added to GE and SCHN.

slick

Added to CRM

Mark

No, but I did buy oil stuff down here.

Charles

One of those years where it's been very hard to beat the S&P 500 index.

Kaspa

Right, but beating the S&P 500 index each year need not be your target. Depending on your risk tolerance you can select an alternative diversified index portfolio (e.g., one of the lazy portfolios) as a benchmark.