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FYI: 1. Excellent Earnings Estimates For Both S&P 500 & 400 Going Forward Through 2015. 2. Unemployment Is Down. 3. Gas Prices Are Coming Down 4. Fed. To Continue Buying Bonds Well Into 2014 5. Piles Of Cash Sitting On Sidelines. (Both Corporate & Individual) Regards, Ted
Ted, I think #5) is the key here. Lots of cash (fear) still on the sidelines. But as the equities markets melt-up, greater retail investment amounts will funnel in.
#4) Fed stimulus has been a key driver, but if the markets are truly "forward thinking", then this support will dissipate very soon.
#1 and #2 are debatable. And any real macro issues can be ignored.
so what are you looking at buying that's most likely to take advantage of a so-called melt up? what works in that scenario? i just hate buying into new highs!
1. Is there ever a time when earnings estimates aren't excellent? Everything that I've ever read suggests that analysts are invariably over-optimistic and that their estimates inevitably come down the closer we get to reporting time.
2. Given that employment growth has been minuscule, loads of what we have gotten has been part-time and wage growth is virtually non-existent, I doubt this is a reason for the stock market going up. Actually, since drops in unemployment signal to many market participants that the FED will be less accommodative, a strong drop in unemployment would likely be bearish.
3. The fracking revolution appears to be the one unabashed positive for the economy over the last few years.
4. Lord knows the FED buying $85 billion worth of bonds every month (is that the latest number?) has propped up the stock market. After all, it goes straight to the wealthy (especially bankers), who are far more likely to put it into the stock market than are the less well-off. And, of course, keeping borrowing costs so low tends to increase profit margins for corporations.
5. All that cash is largely a function of the FED's bond-buying as well.
Alas, with the exception of fracking, all this means that the nexis between a healthy stock market and a healthy economy has been broken. The rich can do very well, indeed, the rest, not so well. I should add that in a free market, the rich can do well only by actually creating value which benefits the society as a whole; in a manipulated market the rich do well by way of rent-seeking, a less-than-zero-sum game which damages the entire society.
Reply to @linter: I've purchased what I call a "mental hedge" - I bought some "SH" (Proshares short S&P 500). Its a trade, not an investment.
It allows me to continue to buy more long positions, but with the knowledge that I can clip some gains if we get a heavy pullback (i.e. sell SH after we've had a correction).
I've been leaning on MFLDX, GRSPX, VWELX. BPRRX (at Fido) and WAFMX. But my largest position is RPHYX (closed to new investments).
My portfolio is extremely boring, but I like to limit downside at the expense of large gains.
Comments
I think #5) is the key here. Lots of cash (fear) still on the sidelines. But as the equities markets melt-up, greater retail investment amounts will funnel in.
#4) Fed stimulus has been a key driver, but if the markets are truly "forward thinking", then this support will dissipate very soon.
#1 and #2 are debatable. And any real macro issues can be ignored.
Regards,
Ted
1. Is there ever a time when earnings estimates aren't excellent? Everything that I've ever read suggests that analysts are invariably over-optimistic and that their estimates inevitably come down the closer we get to reporting time.
2. Given that employment growth has been minuscule, loads of what we have gotten has been part-time and wage growth is virtually non-existent, I doubt this is a reason for the stock market going up. Actually, since drops in unemployment signal to many market participants that the FED will be less accommodative, a strong drop in unemployment would likely be bearish.
3. The fracking revolution appears to be the one unabashed positive for the economy over the last few years.
4. Lord knows the FED buying $85 billion worth of bonds every month (is that the latest number?) has propped up the stock market. After all, it goes straight to the wealthy (especially bankers), who are far more likely to put it into the stock market than are the less well-off. And, of course, keeping borrowing costs so low tends to increase profit margins for corporations.
5. All that cash is largely a function of the FED's bond-buying as well.
Alas, with the exception of fracking, all this means that the nexis between a healthy stock market and a healthy economy has been broken. The rich can do very well, indeed, the rest, not so well. I should add that in a free market, the rich can do well only by actually creating value which benefits the society as a whole; in a manipulated market the rich do well by way of rent-seeking, a less-than-zero-sum game which damages the entire society.
It allows me to continue to buy more long positions, but with the knowledge that I can clip some gains if we get a heavy pullback (i.e. sell SH after we've had a correction).
I've been leaning on MFLDX, GRSPX, VWELX. BPRRX (at Fido) and WAFMX. But my largest position is RPHYX (closed to new investments).
My portfolio is extremely boring, but I like to limit downside at the expense of large gains.