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Nothin new here, but might help explain recent activity. Heck, Santelli on cnbc predicted today that unemployment will drop below 8% just a few days before the election - throwing more fuel on the already hot markets.
I recognize that my forecast of a pull back greater than five percent sometime before the November election might seem cavalier to some but in retrospect with all that abounds us I think it is quite possible. From the current level of 1438 on the S&P 500 index that would put a five percent correction at the 1365 range and a ten per center would mark it at the 1295 range.
For instance, it seems some entity is propelling this market upward beyond what one would seem normal valuations given the current investment climate. It seems to have been driven and is currently being driven on talk from the US Fed and ECB. I ask you … What has changed? Oh yes, the employment rate is dropping percentage wise … Could it be that less unemployed people now qualify for unemployment insurance form the government? That seems self serving in touting this eight percent number when the “real” numbers I have read about are north of twelve percent. It is just another way the government is cooking the number much like they cook the inflation number. We all know what it cost to go to the store for groceries and to fuel our autos. Give me a break … I work hard for my money, I watch how I spend it and I know what things I buy have cost me over the years. My former insurance agent tried to explain away my increased premiums due to infaltion. I told him I felt it was more like NASCAR with his insurance company's sponsorship of the Nationwide Series. Takes bucks to do that ... and, the policy holders are paying for it. But, not me anymore. Somebody else is going to have help throw that party.
I remember, back when the recession started … The Fed’s forecast was that it would be contained to the housing sector and would not spread to the rest of the economy. Remember? What happened? The great financial crisis where many banks were going burst if it had not been for special action by the US Treasury and Federal Reserve. Thank you Hank Paulson. Then there is government motors … I mean General Motors. If it had not been for special government action one of our country’s largest industries would have been vaporized. And there is more … AIG the annuity insurance company, we can’t let them fail … look at all the folks that have bought annuities.
Seems to me there has been a lot of hoodwinking going on. And, form my thoughts, it will take quite an effort by some to keep the market at it current level and beyond without a pull back soon coming.
Let’s just hope the stock market storm formation that I see building stays off shore. My portfolio will be worth a lot more if it does … but, should it make land like I think it will and the markets pull back five to ten percent (possibly more) … I could be buying some special spiff investment positions during this pull back.
Enough of my rant!
Have a good weekend … and, I wish all good investing. Skeeter
Hi Skeet. Nice to see both of your recent posts. Wholeheartedly agree that equity markets appear to be defying numerous economic indicators and valuation models. Don't follow that stuff nearly as well as you do, but still get the "scent in the wind" - if may be forgiven one more cliche. No predictions here! It could all come crashing down Monday. I think Obama, Bernanke, and Geithner to be among the brightest, but to expect even them to keep this wobbly ship afloat until November is a bit of a stretch. The "outlier" few may be considering is that all the global monetary stimulus (past & present) may be setting the stage for significant inflation ahead. In that case, currently high valuations would catch-up with reality - in depreciated dollar terms. Being primarily in "balanced" products, I don't feel the need to get in and out as others might. Not going to sell half of my OAKBX or PRWCX and than climb back aboard later - not necessary with these type funds. As for the traditional equity-heavy funds, few in number, I'll tweak occasionally. Suspect many of those moves similar to yours this year - albeit on a smaller scale.
Any implied criticism of the "Sell-in-May" doctrine stems from a belief that it over-simplifies the investment process and might lead some into being out of equities over prolonged, potentially costly, periods. We all like simple answers: Lose pounds with this pill. Increase gas milage with this stuff in your tank. Rinse wrinkles away with this amazing cream. Set it and forget it. ... Investing - as your responses demonstrate - is much more than a "set it and forget it" process. And, neither "Sell in May" nor the "Election Year Cycle" should be blindly followed. Each has its place among the multitude of factors one might consider in making investment choices. I echo MikeM's comments and look forward to your continued updates and insights.
Comments
Thanks for posting this. I enjoyed the read.
I recognize that my forecast of a pull back greater than five percent sometime before the November election might seem cavalier to some but in retrospect with all that abounds us I think it is quite possible. From the current level of 1438 on the S&P 500 index that would put a five percent correction at the 1365 range and a ten per center would mark it at the 1295 range.
For instance, it seems some entity is propelling this market upward beyond what one would seem normal valuations given the current investment climate. It seems to have been driven and is currently being driven on talk from the US Fed and ECB. I ask you … What has changed? Oh yes, the employment rate is dropping percentage wise … Could it be that less unemployed people now qualify for unemployment insurance form the government? That seems self serving in touting this eight percent number when the “real” numbers I have read about are north of twelve percent. It is just another way the government is cooking the number much like they cook the inflation number. We all know what it cost to go to the store for groceries and to fuel our autos. Give me a break … I work hard for my money, I watch how I spend it and I know what things I buy have cost me over the years. My former insurance agent tried to explain away my increased premiums due to infaltion. I told him I felt it was more like NASCAR with his insurance company's sponsorship of the Nationwide Series. Takes bucks to do that ... and, the policy holders are paying for it. But, not me anymore. Somebody else is going to have help throw that party.
I remember, back when the recession started … The Fed’s forecast was that it would be contained to the housing sector and would not spread to the rest of the economy. Remember? What happened? The great financial crisis where many banks were going burst if it had not been for special action by the US Treasury and Federal Reserve. Thank you Hank Paulson. Then there is government motors … I mean General Motors. If it had not been for special government action one of our country’s largest industries would have been vaporized. And there is more … AIG the annuity insurance company, we can’t let them fail … look at all the folks that have bought annuities.
Seems to me there has been a lot of hoodwinking going on. And, form my thoughts, it will take quite an effort by some to keep the market at it current level and beyond without a pull back soon coming.
Let’s just hope the stock market storm formation that I see building stays off shore. My portfolio will be worth a lot more if it does … but, should it make land like I think it will and the markets pull back five to ten percent (possibly more) … I could be buying some special spiff investment positions during this pull back.
Enough of my rant!
Have a good weekend … and, I wish all good investing.
Skeeter
Any implied criticism of the "Sell-in-May" doctrine stems from a belief that it over-simplifies the investment process and might lead some into being out of equities over prolonged, potentially costly, periods. We all like simple answers: Lose pounds with this pill. Increase gas milage with this stuff in your tank. Rinse wrinkles away with this amazing cream. Set it and forget it. ... Investing - as your responses demonstrate - is much more than a "set it and forget it" process. And, neither "Sell in May" nor the "Election Year Cycle" should be blindly followed. Each has its place among the multitude of factors one might consider in making investment choices. I echo MikeM's comments and look forward to your continued updates and insights.