Hello,
Is the market peaking? Is there more upside? What are you thinking?
Here is my take, my thoughts and what I might do. I have been following several indicators with the market's recent upward march. I am now seeing a peaking process taking place and it also seems some are now starting to take profit within the past few days. At this time, I am still with my special equity investment positions that I made in the early part of the summer when the S&P 500 Index was back of 1340. Heck, form the 1340 mark to current ... That's at least a good six pecenter for me.
My late father use to say ... "Nobody goes broke by booking profit." So, "If you are happy with what you have made, book it ... Don't be greedy."
Some good advice from dad for me to think on as I feel there are headwinds ahead as we move into and throuh September and October.
Have a good day ... and, Good Investing.
Skeeter
Comments
I think whatever the market does, I do think there's some themes that may continue to do well, such as ag, water, infrastructure and aspects of mobile.
If the market does take a serious slide I will be increasing some positions, and maybe even adding a few new ones, such as DWGIX.
Added: - In light of your response to OJ farther down, appears you are actually short the S&P or some other index. Wasn't aware retail investors could do so other than through some Rydex funds and the like. Actually, something I might want to give a try on a small scale some day - as long as trading fees don't eat you alive, since I'd find such a position most helpful if it could be both increased and decreased quite often.
I remain considerably invested, as there's things that I just think are long-term plays (ag, infrastructure, etc) and the majority of them pay nice dividends, so I'm happy to continue to reinvest. I also have positions in a handful of flexible funds.
Personally - few charges to a pretty balanced position. Went slightly overweight equities during the spring "funk" and than slightly underweight after Dow crossed 13,000 recently. In honesty, the market's moves this year have been in a pretty tight range & not enough to make "a killing" - unless you employ some type leverage (or maybe play sectors).
I want to thank all that made comments and also to those that visited and read the post.
After giving some more thought to this ... I have decided to start the sell off process soon on only my diversified special equity "spiff" investment positions. These "spiff" positions are a small part of my overall portfolio. So, I am selling down my equity position not completely out of them because of overall market valuation and anticipated headwinds.
I have a good representation of long term core investment equity positions within my portfolio that account for about half of the portfolio so I will still be at the investment party with skin in the game no matter what happens. So, even if I am exiting early from these special positions I am currently making a good profit at the current market level ... and, if my belief is correct and the pull back of ten, fifteen and some say even perhaps 20% correction comes that many I have talked with feel is brewing over the next 30 to 60 days then I can reposition back in and ride the market back up again after we get past the November election.
Another thing, by my math, I compute the S&P 500 Index trading on a trailing P/E Ratio of 15.8. And, folks this is at the top range of the normal range number of 14 to 16. On a forward P/E Ratio, I compute the Index to be selling at around a ratio of 13.1. This maybe one of the reasons for the August rally with most of Europe being on vacation.
Believe me, I still feel Europe has many fires still burning that need attention.
And, finally another thing, one of the indicators that I follow shows money is currently leaving ... This means selling pressure and lower prices are most likely ahead in the near term.
So, in short words ... I have decided to book profit on my special equity positions and then sit back and watch while I await the next set up.
Have a good evening ... and, good investing.
Skeeter
If selling pressure evolves the way you anticipate, at least we should have a bit of warning as a slide gathers steam... I mean, it shouldn't be a two-day flash-crash unless there is a major triggering event of some kind.
I'm thinking that if it does go down radically it might be a long, hard slog back up.
Probably good idea for you to take selective profits at this point... Can't see any harm in that.
Regards-
OJ
Yep, I know 20% most likely is not going to happen ... but, I feel a 10% pull back is reasonable. That would put the Index in the 1280 range ... And, I believe it did get to the 1260's range back in June on an inner day low. A fifteen percent pull back would put the Index back to around 1205 and if it gets to there ... I'll wish I have lightened up more.
Remember electronic trading ... it seeks and keys on market direction. Perhaps Knight's program mishap in early August with its buying spree primmed the market for its upward direction and was a good part to do with the August rally. I am not saying that it was but it is indeed possible.
Something to think on ...
Skeeter
We all have our own methods we use for attempting where our own portfolio mix should be placed at any given time; and you have written previously about some of the tools you have used for many years, including data from charts.
You noted: " Another thing, by my math, I compute the S&P 500 Index trading on a trailing P/E Ratio of 15.8. And, folks this is at the top range of the normal range number of 14 to 16. On a forward P/E Ratio, I compute the Index to be selling at around a ratio of 13.1."
>>>>>Not unlike any investment tools one may use; I have never been able to "fall in love" with the P/E ratio. Today, I am even skeptical as to whether this measure has meaning for our house's investments. I surely am not picking on you for your value placement for this indicator; and you surely know this. Might you provide a brief as to why you value this particular indicator?
Final note: As we have kept our head (just barely) at this house with the recent bond price reversals starting on July 25; we will maintain our bond positions at this time, as we still don't see a lot of equity strength, barring any major funny business via the Fed. kids; which would keep the big trading houses happy. Related to some of this thought regarding global markets and their interweaves; are some of the recent reporting data about exports going to the negative. Wish I had a link for data, as I don't choose to just blow some smoke into the air without proof; but ISM data reports provide some of this info.
As always, Skeeter; thank you for your continued contributions.
Catch
Thanks for your comments and inquiry about my use of the P/E Ratio. This probably rambles a little as I am writing it without much time to edit it.
In applying the P/E Ratio on a stock to me has little value … but, in applying it on a basket of stocks such as a sector etf or an index does provide value to me as it is one of many gauges that I use to measure the market. To me a lower P/E Ratio offers value and a higher P/E Ratio is telling me be cautious as you are now going to have to step up and pay more for a dollars worth of earnings. The P/E Ratio is a measure of what earnings are selling for at a given point in time.
Are you not concerned about what you are willing to pay to upgrade your transportation?
Seems to me you were. Same with the stock market … Be shrew, buy where you find value.
Success with investing in equities, to me, has a lot to do with my point of entry more so than my point of exit. Buy low, sell higher. I can better control my point of entry because I know the point I am buying in at … At the buy in point in time I don’t yet know what conditions will be on my exit and I am buying on belief that is based upon research that the market will be higher at some point in time form where I entered it. This is where the P/E Ratio on the S&P 500 Index comes into play as I use it as an aid to measure value and how much I am going to have to pay for anticipated earnings. At times, investors are willing to pay more for earnings than other times … so the P/E Ratio moves around some. Many say a P/E Ratio of 14 to 16 is the normal range. Perhaps, but, we both know it has been well above this and at times below it too.
Look, you are an automotive guy. An auto of the performance type has a speedometer to measure vehicle speed, a tachometer to measure engine RPM, an oil gauge to measure oil pressure, perhaps an oil temp gauge as well, an temperature gauge to measure cooling system and engine operating temperature, a volt meter to monitor the alternator and perhaps even more gadgets, such as stability control, etc. Don’t forget the fuel gauge … No fuel … No go.
Well, I have done the same with the market and have come up with some simple indicators that aid me in monitoring the market.
MJG came up with some things he felt important for investors to consider and investor sentiment was one of them. The P/E Ratio to some extent is a vote of investor sentiment as it expresses how much and investor is willing to pay for earnings. If investor sentiment is high, most likely, investors will pay more for earning thus a higher price for stocks.
Simply stated … The P/E Ratio is one my gauges on stocks.
And, another thing that I have found and has been somewhat of a big factor in my success in equities is to buy them when others are selling them (downdrafts) and to sell them off when others are buying them (updrafts). Naturally, I follow my gauges as an aid to my entry and exit points on these special investment positions that are not core holdings that I move in and out of form time-to-time.
Hope this helps.
Gotta get as today is an office day for me … Well, until 2:00 anyway and then it is tee time … not tea time.
A one final thing. The market has been said to be a voting machine. And, if this is so, where do you think the market will be to get the sitting President voted out of office? To me it sure isn't up ... It's gotta be down. So if Wall Street wants the current President out of office then most likely the vote on stock prices and market valuations will be down.
It will be interesting to see how this plays out over the next 30 to 60 days or so.
Have a great day … and, good investing.
Skeeter
Thank you for your time and the explanation. I do see where one would use this with other data sets to help obtain a bigger picture.
I used to place some value in watching the yield curve and I recall a few discussions about this at FA. The curve may be of value again in the future; but with the overwhelming intervention of the Fed. since 2008, it is most difficult to place a reliable guage to this measure, at this time. I watch rates in various sectors for some help with the yields/pricing. Not that this and other areas have not been fiddled with over many years to help push in one direction or another.
There is just so much debt, in too many places.
Take care down there.
Catch
It appreas the market as represented by the etf SPY peaked in the week of August 20 and has now started a downward move. Notice the MACD is in decline along with the Slow Stoch. With the MFI indicator set for a three day period one can better see the decline in money flow. This indicates selling presure as money seems to be leaving. Notice the price line has now started to follow.
The charting of same is linked below for your easy referance.
http://finance.yahoo.com/echarts?s=spy#symbol=spy;range=3m;compare=;indicator=dividend+split+sma(21,65,260)+macd(27,12,9)+mfi(3)+stochasticslow;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;
Hey for some reason all of the link detail did not transfer. When the chart loads, click on tech and set MFI at 3 then save, then click slow stoch and save and finally click on MACD and save. The chart should now present and be representative of the above blurb.
Note: I look for continued downward movement if the Fed does not come thorough with strong words for QE3. Just the same past talk want do it ... and, I think that is what we are going to get seeing that we are now in the Presidential election and campaign period.
By the way, I booked profit on my special equity spiff positions ... and, I am now awaiting the next buy in set up.
Have a good day ... and, Good Investing.
Skeeter
Edited to add: the Bullard comment - "The committee has talked about lowering interest rates on excess reserves. We have gone round and round on this issue. I think this might be a time to try that out."
You know, I was really a skeptic of all the Idevices, but for those who don't have one, an IPod touch is a good way to start and not have to have a data plan or anything like that (it is wifi only). There are a lot of great financial apps, and to have news pop up when it comes across is nice.
However, if the tax rates go up next year, budget sequestering happens, Europe blows up, QE3 might me needed then.
I also think lowering interest rates paid on excess reserves that banks are depositing at Fed is a good think to ease lending conditions.
As for iPod Touch, I agree with you. You can run most iPhone apps on these device over WiFi and pay nothing. And with iTunes you can subscribe to your favorite podcasts and listen to while exercising, walking, gardening etc.