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Fading this 'rally'. Raised cash here and there around the edges and on the margin. Captured some tax losses.
I don't like anything about this market at this particular time and place. The political situation appears to be morphing into a Black Donald event. I've gone to the mattresses.
Thanks for sharing your perspective. I second your comment about Mattis. His resignation letter says a lot.....Hopefully he will speak out after his resignation becomes effective.
M* says the market is 10% undervalued? For me, that's not enough margin of safety to increase my equity allocation in light of what I see as political risk
The rapid fire sequence of troubling events emanating this week from Washington DC that has culminated in Mattis's decision to resign and a possible partial government shutdown is causing me think that expatsp's approach is probably the right one. Waiting to see how the dust settles out is sounding more and more like a good idea....
If I were 45 or 55 I’d already be buying in increments. At 72, Discretion is the better part of valor. Already at my high side for cash. Haven’t felt inclined to raise more. Am rapidly exiting OAKBX through some Roth transfers. Not the same fund it was 10-15 years ago. The $$ will be divided among RPGAX, DODBX and PRWCX. All 3 pretty nice options.
David commented positively on RPGAX in the Chuck Jaffe interview. I suspect one reason he didn’t mention PRWCX is that it’s closed to new investors.
Hi Ron, We've maintained our health and tech funds that was about 30% of total a month ago.....not as much today.....for such. However, especially with health; the sector as expected has still held fairly well with the 50 day just breaking below the 100 day line. Most of the other international and U.S. equity has long since had the 50 day line move below the 100 day and now the 200 day moving averages lines. The remaining of monies (about 70%) remains in money market accts. paying about 2.1%. Beginning about 1 year ago, as interest rates bumped up more; we began a slow unwind continuing into the spring of this year. The sells were real estate, and foreign sm/mid cap. early. More recent was etf type of ITOT, broad-based U.S.; although containing a big percent of tech. and health, the other sectors that had already began failing were beating the hell out of such a holding. I fully agree about the "smelly" times right now.........but there will arrive a point when the large money folks just can't stand being on the sidelines. 'Course, this is barring an even more serious melt in our government functions at the D.C. level. Will there be a time soon when those in support of POTUS and who are puking in private actually puke in public. WE'RE a seriously torn country. ADD: You and I, and others here recall the serious society tears during our younger days. Take care of you and yours, Catch
Howdy, Ron. I'm sure that it will be no surprise that I agree with you right down the line. Being 80, I've done more than tinker around the edges- I've eliminated a few weak sisters entirely, and reduced all of our other funds to approximately 2k each. This will maintain easy access to those funds in the future, when the time comes (and it will, if I'm still around.)
If the liar-in-chief thinks that he is going to dominate the military by putting yet another hack in charge, he's in for a rude awakening. The pentagon has no problem working under and with intelligent and knowledgeable civilians, but they are also quite adept at sandbagging dummies. Losing Mattis is a huge problem, but he went out with class. The liar-in-chief would have us believe that Mattis "retired". No such thing: he resigned, and left no doubt as to why.
Truth. .....Today, my biggest holding--- by quite a lot--- is TRP global bonds PRSNX. When I was contemplating getting OUT of PRSNX, @Catch22 gently suggested that I not do so. I thank him, and am glad. My next biggest position now is PRWCX. Other stuff is much less of a presence in the portfolio. So, I'll get paid to wait for a better day. GAWD, I'm ready for the criminal clown-show in Washington to end! I suppose the courts will have a lot to do with it. Dare I hope for an EARLY termination to the Trumpster's madness? The Emperor's wearing no clothes. Can the SENATE see that yet? YET!!!???
GAWD, I'm ready for the criminal clown-show in Washington to end! I suppose the courts will have a lot to do with it. Dare I hope for an EARLY termination to the Trumpster's madness? The Emperor's wearing no clothes. Can the SENATE see that yet? YET!!!???
If you read the New Yorker article davidmoran linked yesterday, you would not hold out much hope.
Just to clarify. I agree with @rono that the general tenor stinks. Even CNBC’s Ron Insana was recommending Friday that those near retirement raise some cash. He strikes me as a sane individual.
Where I may have screwed up a bit in my positioning was in assuming for the past two years that the approaching “Individual #1” disaster had been pretty much discounted by the markets. Geez - Did anyone really believe this was going to end well? So, maybe should have raised even more cash than I did.
So far, the sell off has been “contained”. 15% drops are nothing to write home about. But - Who the ## knows?
I've been raising cash over the past few years. Now, I'm thinking some equities are looking attractive. In review, I'm finding that the forward P/E Ratio for the S&P 500 Index is around 14.2 and I compute the TTM P/E Ratio (trailing twelve months) to be around 17.1. For the earnings yield I compute this to be on the forward basis at about 7.0% and on the TTM basis about 5.8%. In compairson the yield on the 10 US Treasury closed Firday (12/21/2018) at 2.78%.
As interest rates rise it cost more for leverage to invest in the markets on margin. With this, a good bit of the selling centers around the reduction of leveraged investments by a good number of investors both big money and retail.
The distribution yield on my master portfolio is looking to finish this year pretty close to the 5% range. With this, and for me, stocks continue to look attractive; and, I plan to remain invested within my current all weather asset allocation of about 20% cash, 40% fixed income and 40% equity securities.
By some accounts the major indexes thus far in December have suffered the biggest one-month loss since the Great Depression. I can’t confirm that. But December has been rough.
Curious how that affected your barametric reading. I ask, because 2-3 weeks ago I think it was already showing an “oversold” condition. I’d think the ol’ barometer needle was really spinning this past week. Is the market now very cheap according to your metrics?
I’m curious because a rapid 5-10% decline coming right on top of an already “oversold” condition should make the market even more oversold (ie: an even better buy).
I’m curious because a rapid 5-10% decline coming right on top of an already “oversold” condition should make the market even more oversold (ie: an even better buy).
I would stay put since not all the bad news have unfolded yet. Dollar average in for the next 6 months if you are convinced the market is oversold. Otherwise, focus on CD ladders and short term treasury for your cash and bond allocations.
@hank, I have moved away from posting weekly barometer readings and suggested that those who wanted a valuation tool use Moringstars Market Valuation Graph. But, when I get a request for my barometer's reading such as you just made I do not mind making comment.
Old_Skeets market barometer that follows the S&P 500 Index as of Friday's market close had a reading of 195. My investment matrix is driven by the barometer and suggest, for me, to raise my equity allocation to the 65% range. And, I may increase my equity allocation by opening a special investment position (spiff) sometime in the near future. However, I'd like to see a falling barometer reading which suggest, to me, money is now returning to the stock market and not leaving it. Remember, the barometer has three main data feeds. They are an earnings feed, a breadth feed and a technical score feed. A higher barometer indicates there is more investment value in the Index over a lower reading. So, the barometer is saying, to me, that there is good investment value in the 500 Index, at the present time, for the long term investor (which I am).
I'm viewing this as a long term buying opportunity and may soon open a spiff position through a position cost average approach. Know though, the stock market could (and most likely) continue to go lower should the FOMC continue with its rate increase campain as many investors continue to deleverage their margin positions due to higher borrowing cost associated with margin investing. Naturally, other factors may be at play as well.
ITOT is not a perfect reflection of U.S. equity; but is 76% large cap with the remainder mixed into med., sm. and micro cap. 19% IT, 14% health, 13% financial and down the list through the normal other sectors. The chart indicates the path of the 50 day average as it has been moving. Also, although I won't strictly bet the bank on this, is that the 14 RSI is about 21 on this fairly short time frame. But, not much different for longer time periods. This number is a strong oversold. I do not suggest that one use any charting functions as a sole method of observation to determine buys and sells, I do suggest that past all of the "other"; being wars, trade wars, political finger pointing, market gurus and any other real time observable values; that at least in real time, be it a month or two or 3 years backwards, the price charts do indicate where there may exist a weakness or strength of any given sector. These chart prices are real money flow from someone and somewhere. We all know that within the U.S. equity sectors, not all travel the same path all of the time. Favorites for whatever reasons exist. To the recent melt in the past few months, we have maintained our largest area of equity in health related. Two samples within Fidelity provide evidence of were money was and remains to some extent; regardless of many sectors having attained negative numbers YTD. FSPHX YTD = +3.8% and FSMEX YTD = +11.6%. I'm sure other vendor health related funds have similar returns. I make no judgement about decisions, thoughts or conclusions about such items that are technical, but I do take an overview of any of these regarding any final thoughts on buys and sells.
Fox News is reporting on Sunday that Mattis’s departure has been accelerated to January 3 by Presidential Tweet (instead of his planned February 28 date). Fox’s Howard Kurtz attributes the change to the President’s displeasure with Mattis’s resignation letter.
@hank: The barometer's scale has a range from a low of 105 to a high of 195 with a midpoint of 150. As the market continues to pullback as measured by the barometer's metrics the S&P 500 Index recorded a barometer reading of 195 on Friday inicating that the Index was extermely oversold. The barometer has three main feeds. One being an earnings feed, a breadth feed, and a technical score feed. So as market conditions change so do the data feed inputs. When combined these data feed inputs produce a reading. A higher barometer reading indicates there is more investment value in the Index over a lower reading. Currently, we are in a falling market and before I put some new money back into the market I am wanting to see a rise in the technical score feed indicating market conditions are improving. I have also been watching the industrials sector as I'm thiking it will be one of the sectors that needs to also rebound before I put any new money to work. And, last but not least I'd like to see interest rates level out. As interest rates rise it cost more for leveraged investors to maintain their margin positions. I'm thinking that as interest rates have been rising the leveraged investor has been trimming back their equity positions due icreased loans cost. At the moment short interest in the Index is not very high with 1.9 days to cover although it has risen over the past month, or so, from 1.3 days.
With all this said Old_Skeet has been thinking of opening an equity spiff position once I feel the stock market starts a upwards turn which needs to be driven not by just fundamentals but technical support and related aspects as well. Naturally, there are many other things that I have not addressed that influence stock market valuation.
I hope this helps answer your question(s) but I've pretty well covered that things that I am looking at before I open the equity spiff.
Thanks for both responses. I think it’s important for everyone to have some sort of plan and you certainly have one.
I have no barametor. I don’t pay too much heed to moving averages and p/e ratios either. When I was younger and traded in and out a bit I kept my eye on the averages (DJ, SP, NASDAQ, Russell, etc.) Generally when markets were screaming hot and sentiment high it was a good time to sell some. And, conversely, when things looked darkest was a good time to buy. For lack of a better term, one might think of that as some kind of “technical” indicator.
The problem was: I reached my maximum selldown point 1-2 years before the last top. Got to the highest cash weighting my plan allowed for and yet markets continued to rise. Either my indicator was no longer meaningful or the markets were badly out of whack. Something seemed very different this time around - going back to early 2017. It’s unusual for markets to go straight up like that. (I don’t think they’ve retraced all of that last leg up yet.)
Last summer I made an age-related decision not to vary equity exposure based on my own technical observations as in the past. That’s because with markets at such an elevated level and public euphoria so high the next bear market could be a brutal one and might last longer than I do.
I adhere to a simple allocation model that provides limited exposure to equities primarily through moderate allocation / balanced funds (40% of holdings). Also have exposure to various diversified income funds, cash, some real asset funds and a couple alternative investment type funds. (Everything but the kitchen sink).
I’ll rebalance quarterly. At this point looks like I’ll be adding a couple % to the equity weighted (balanced) funds and pulling a bit out of both cash and alternative investments which have held up well early next year. It’s far from a perfect system. But it fits my risk profile and isn’t too much different from how I’ve invested for years. I monitor TRRIX (40/60 balanced fund) which I consider a suitable boggy against which to measure progress. First part of the year I lagged. But past month or so have pulled ahead of it.
Good luck with your baramotric readings. I’ll say it’s reading is a bit more positive that my own feelings / observations. I still think there’s quite a bit more downside. Thanks for sharing. I wish more would share whatever approach - if any - they use. And nothing wrong with just holding 2 or 3 good funds “til death do us part”. However, that type of investor mightn’t see much need to follow a board like this.
How long is the sell offs/sideways...another month or two, DOWS down another 15%% ...anyone know
I am now standing on the side looking it. still 80/20 in TSP though may look at different corp bonds or add more to energy/oil/energy bonds [if start slightly uptrends, oil/energy similar prices in 2008-2009 so cheap]
As of market close of Dec 24th I have the S&P 500 off its 52 week high by 20%. By my math at a 2940.91 (high) - (minus) a 2351.1 (low) = (equals) 589.81 (product) / (divided by) 2940.91 (high) = (equals) a 20.05% decline. This puts the Index in bear market territory. Incidentally, 20% is how much cash I am now holding within my portfolio. Should the Index continue its downward movement then I'll continue to raise my cash level. On the flip side ... should the Index begin an upward movement then I'll put some money to work in a spiff position most likely in an equally weighted S&P 500 Index fund. I'm finding only about 1% of the stocks within the S&P 500 Index are above their 50 day moving average at this time. With forward earnings estimates of about $170.00 per share this puts the Forward P/E Ratio at 13.8 with a forward earnings yield of 7.2%. In comparison, the US 10 Yr closed Monday with a yield of 2.74% which is down from a recent high yield of 3.23% as investors buy up Treasuries. With this, it appears, to me, stocks look attractive. But, investors are not buying this as they continue to deleverage and sell positions due to higher borrowing cost. In addition, there are other things that have influences on the markets, at this time, beside earnings and interest rates.
Interestingly, this sets the stage for the FOMC to continue to unwind (flush) its balance sheet as investors seek cover in cash and US Treasuries as stocks falter.
I remain on target in throtteling my asset allocation to 20% cash, 40% bonds & 40% stocks by year end. If this investment mess continues I'll be moving to an allocation of 30% cash, 35% bonds & 35% stocks.
I wish all ... "Good Investing" and "Happy Holidays!"
Comments
Don't know when is real bottom but slowly trading in small amount
Maybe we are in middle or staring recessions already.
2020 will be very interesting for compadre trump and Russians gang... lol
Think we may have a real boxing match in DC backyard bw Biden trump
@expatsp recently commented that The rapid fire sequence of troubling events emanating this week from Washington DC that has culminated in Mattis's decision to resign and a possible partial government shutdown is causing me think that expatsp's approach is probably the right one. Waiting to see how the dust settles out is sounding more and more like a good idea....
David commented positively on RPGAX in the Chuck Jaffe interview. I suspect one reason he didn’t mention PRWCX is that it’s closed to new investors.
We've maintained our health and tech funds that was about 30% of total a month ago.....not as much today.....for such.
However, especially with health; the sector as expected has still held fairly well with the 50 day just breaking below the 100 day line. Most of the other international and U.S. equity has long since had the 50 day line move below the 100 day and now the 200 day moving averages lines.
The remaining of monies (about 70%) remains in money market accts. paying about 2.1%.
Beginning about 1 year ago, as interest rates bumped up more; we began a slow unwind continuing into the spring of this year. The sells were real estate, and foreign sm/mid cap. early. More recent was etf type of ITOT, broad-based U.S.; although containing a big percent of tech. and health, the other sectors that had already began failing were beating the hell out of such a holding.
I fully agree about the "smelly" times right now.........but there will arrive a point when the large money folks just can't stand being on the sidelines. 'Course, this is barring an even more serious melt in our government functions at the D.C. level.
Will there be a time soon when those in support of POTUS and who are puking in private actually puke in public. WE'RE a seriously torn country.
ADD: You and I, and others here recall the serious society tears during our younger days.
Take care of you and yours,
Catch
Howdy, Ron. I'm sure that it will be no surprise that I agree with you right down the line. Being 80, I've done more than tinker around the edges- I've eliminated a few weak sisters entirely, and reduced all of our other funds to approximately 2k each. This will maintain easy access to those funds in the future, when the time comes (and it will, if I'm still around.)
If the liar-in-chief thinks that he is going to dominate the military by putting yet another hack in charge, he's in for a rude awakening. The pentagon has no problem working under and with intelligent and knowledgeable civilians, but they are also quite adept at sandbagging dummies. Losing Mattis is a huge problem, but he went out with class. The liar-in-chief would have us believe that Mattis "retired". No such thing: he resigned, and left no doubt as to why.
ET 2nd class, USCG
https://d3i6fh83elv35t.cloudfront.net/static/2018/12/mattis-letter2.pdf
If you read the New Yorker article davidmoran linked yesterday, you would not hold out much hope.
“On this, Donald is right. I agree with him," https://www.politico.com/story/2018/12/20/putin-applauds-trump-syria-decision-1070946
@davidmoran I prefer to harvest my losses. I was never one for chasing after wild critters!
Where I may have screwed up a bit in my positioning was in assuming for the past two years that the approaching “Individual #1” disaster had been pretty much discounted by the markets. Geez - Did anyone really believe this was going to end well? So, maybe should have raised even more cash than I did.
So far, the sell off has been “contained”. 15% drops are nothing to write home about. But - Who the ## knows?
But you chose to do an “end-around”.
As interest rates rise it cost more for leverage to invest in the markets on margin. With this, a good bit of the selling centers around the reduction of leveraged investments by a good number of investors both big money and retail.
The distribution yield on my master portfolio is looking to finish this year pretty close to the 5% range.
With this, and for me, stocks continue to look attractive; and, I plan to remain invested within my current all weather asset allocation of about 20% cash, 40% fixed income and 40% equity securities.
By some accounts the major indexes thus far in December have suffered the biggest one-month loss since the Great Depression. I can’t confirm that. But December has been rough.
Curious how that affected your barametric reading. I ask, because 2-3 weeks ago I think it was already showing an “oversold” condition. I’d think the ol’ barometer needle was really spinning this past week. Is the market now very cheap according to your metrics?
I’m curious because a rapid 5-10% decline coming right on top of an already “oversold” condition should make the market even more oversold (ie: an even better buy).
Thanks in advance for any thoughts.
Here is the link to the Morningstar graph. https://www.morningstar.com/tools/market-fair-value-graph.html
Old_Skeets market barometer that follows the S&P 500 Index as of Friday's market close had a reading of 195. My investment matrix is driven by the barometer and suggest, for me, to raise my equity allocation to the 65% range. And, I may increase my equity allocation by opening a special investment position (spiff) sometime in the near future. However, I'd like to see a falling barometer reading which suggest, to me, money is now returning to the stock market and not leaving it. Remember, the barometer has three main data feeds. They are an earnings feed, a breadth feed and a technical score feed. A higher barometer indicates there is more investment value in the Index over a lower reading. So, the barometer is saying, to me, that there is good investment value in the 500 Index, at the present time, for the long term investor (which I am).
I'm viewing this as a long term buying opportunity and may soon open a spiff position through a position cost average approach. Know though, the stock market could (and most likely) continue to go lower should the FOMC continue with its rate increase campain as many investors continue to deleverage their margin positions due to higher borrowing cost associated with margin investing. Naturally, other factors may be at play as well.
ITOT is not a perfect reflection of U.S. equity; but is 76% large cap with the remainder mixed into med., sm. and micro cap. 19% IT, 14% health, 13% financial and down the list through the normal other sectors.
The chart indicates the path of the 50 day average as it has been moving.
Also, although I won't strictly bet the bank on this, is that the 14 RSI is about 21 on this fairly short time frame. But, not much different for longer time periods. This number is a strong oversold.
I do not suggest that one use any charting functions as a sole method of observation to determine buys and sells, I do suggest that past all of the "other"; being wars, trade wars, political finger pointing, market gurus and any other real time observable values; that at least in real time, be it a month or two or 3 years backwards, the price charts do indicate where there may exist a weakness or strength of any given sector. These chart prices are real money flow from someone and somewhere. We all know that within the U.S. equity sectors, not all travel the same path all of the time. Favorites for whatever reasons exist. To the recent melt in the past few months, we have maintained our largest area of equity in health related. Two samples within Fidelity provide evidence of were money was and remains to some extent; regardless of many sectors having attained negative numbers YTD. FSPHX YTD = +3.8% and FSMEX YTD = +11.6%. I'm sure other vendor health related funds have similar returns.
I make no judgement about decisions, thoughts or conclusions about such items that are technical, but I do take an overview of any of these regarding any final thoughts on buys and sells.
ITOT, 6 month, daily pricing
Take care,
Catch
Fox News is reporting on Sunday that Mattis’s departure has been accelerated to January 3 by Presidential Tweet (instead of his planned February 28 date). Fox’s Howard Kurtz attributes the change to the President’s displeasure with Mattis’s resignation letter.
NYT: https://www.nytimes.com/2018/12/23/us/politics/trump-mattis.html
Ominous / Utter Chaos ... The markets? I was expecting a brief rebound Monday. But now it’s: Look out below!
With all this said Old_Skeet has been thinking of opening an equity spiff position once I feel the stock market starts a upwards turn which needs to be driven not by just fundamentals but technical support and related aspects as well. Naturally, there are many other things that I have not addressed that influence stock market valuation.
I hope this helps answer your question(s) but I've pretty well covered that things that I am looking at before I open the equity spiff.
Thanks for both responses. I think it’s important for everyone to have some sort of plan and you certainly have one.
I have no barametor. I don’t pay too much heed to moving averages and p/e ratios either. When I was younger and traded in and out a bit I kept my eye on the averages (DJ, SP, NASDAQ, Russell, etc.) Generally when markets were screaming hot and sentiment high it was a good time to sell some. And, conversely, when things looked darkest was a good time to buy. For lack of a better term, one might think of that as some kind of “technical” indicator.
The problem was: I reached my maximum selldown point 1-2 years before the last top. Got to the highest cash weighting my plan allowed for and yet markets continued to rise. Either my indicator was no longer meaningful or the markets were badly out of whack. Something seemed very different this time around - going back to early 2017. It’s unusual for markets to go straight up like that. (I don’t think they’ve retraced all of that last leg up yet.)
Last summer I made an age-related decision not to vary equity exposure based on my own technical observations as in the past. That’s because with markets at such an elevated level and public euphoria so high the next bear market could be a brutal one and might last longer than I do.
I adhere to a simple allocation model that provides limited exposure to equities primarily through moderate allocation / balanced funds (40% of holdings). Also have exposure to various diversified income funds, cash, some real asset funds and a couple alternative investment type funds. (Everything but the kitchen sink).
I’ll rebalance quarterly. At this point looks like I’ll be adding a couple % to the equity weighted (balanced) funds and pulling a bit out of both cash and alternative investments which have held up well early next year. It’s far from a perfect system. But it fits my risk profile and isn’t too much different from how I’ve invested for years. I monitor TRRIX (40/60 balanced fund) which I consider a suitable boggy against which to measure progress. First part of the year I lagged. But past month or so have pulled ahead of it.
Good luck with your baramotric readings. I’ll say it’s reading is a bit more positive that my own feelings / observations. I still think there’s quite a bit more downside. Thanks for sharing. I wish more would share whatever approach - if any - they use. And nothing wrong with just holding 2 or 3 good funds “til death do us part”. However, that type of investor mightn’t see much need to follow a board like this.
I am now standing on the side looking it. still 80/20 in TSP though
may look at different corp bonds or add more to energy/oil/energy bonds [if start slightly uptrends, oil/energy similar prices in 2008-2009 so cheap]
slowly.....very slowly DCA small portions in
Interestingly, this sets the stage for the FOMC to continue to unwind (flush) its balance sheet as investors seek cover in cash and US Treasuries as stocks falter.
I remain on target in throtteling my asset allocation to 20% cash, 40% bonds & 40% stocks by year end. If this investment mess continues I'll be moving to an allocation of 30% cash, 35% bonds & 35% stocks.
I wish all ... "Good Investing" and "Happy Holidays!"
Old_Skeet