Do you believe in this rally? Or do you believe it will fail and why? What sectors do you believe in and why? What do you believe for the May---summer timeframe and why? What do you believe in after the elections and why? And, finally, do you believe in this great nation and what the future will bring to it? I will answer you this: I will stand with it 'til the end of my time. It's the greatest I've ever seen!
God bless
the Pudd
p.s. I want to see more talking on the board....not just Ted posting all the time----no offense meant. Ted, thank you as always for all you do!
p.s.s. I am non-political.
There are fools in every party. When they reach their peak, it says a lot about a country and its people.
from the Proverbs of Pudd.......yeah, more longneck wisdom--lol
Comments
Because of advances in technology (automation, robotics, artificial intelligence, and simply people buying online rather than going to physical stores), unemployment could increase (or full-time employment in good paying jobs could be harder to come by). Technology can create some jobs, but it could also destroy more jobs than it creates. Company productivity might increase (good for a company's stock), but if 2 people can be as productive as what 3 people were, that 3rd person becomes expendable, and there goes another job (might be bad for the economy and/or stocks in the long run).
The first wave of baby boomers (a huge population) is reaching 70 1/2 this year. By law, people have to start taking distributions from their IRA's at this age. This could result in the selling of stocks? In addition, as people get older, they often get more conservative with their allocation. This could also result in the stocks being sold to go into more conservative investments, from this large population.
I might have no idea what I am talking about. But I thought I would throw these things out there as possibilities.
With all due respect,
If you regularly read the posts of folks like Old Skeet, Rono, Junkster and many others here you will know what they believe. Additionally, Dr. Snowball, Ed Studzinski and others have made their views (forebodings?) known through monthly commentaries. My own views, including funds and sectors that I like, have been too frequent over the past year and I'm trying to cut back. And I recently recapped the views of T. Rowe Price on various sectors as gleaned from a recent reading of one of their allocation fund reports.
Really - I don't think it matters whether someone "believes" in the current rally or not. We won't even remember it 10 years from now. I'll just say don't commit funds to equities or other risk assets if your investment horizon is shorter than 10 years. That's money better suited for cash or short term bonds.
Regards
There's no hard & fast rule that I know of. You'll find a myriad of views, including some who think you should increase your risk allocation in retirement. I was just offering my opinion. Sorry if it rubbed anyone the wrong way. Personally I'm not going to take the money that we're depending on for groceries, medical care and home maintenance over the next decade and dump it into stocks.
Take care
https://www.futureadvisor.com/content/resources/getting-started/portfolio-strategy/long-term-vs-short-term-investing
I am, and have. Not all, so maybe that means I haven't
Gee. Weird stuff with the election year, but what will be will be. I don't think Trump can win the general but stranger stuff has happened. That would be spooky. Otherwise, assuming Hillary doesn't get charged, she should be a lock. What that means? I am not a supporter of Trump nor Hillary, nor really anyone running. I'd love to see Liz Warren.
That said, the president doesn't really have that much power unless he has a super majority in both houses. Than LTF out. That's what we have in Michigan and it's like something out of the danse macabre .
Our economy? Need some demand side economic fiscal policies. $1T per annum on infrastructure build/rebuild = jobs. Raise the min wage to $15.10 and index it. Folks impacted have a Marginal Propensity to Consume of 1.0 [read: they spend every damn dime buying stuff = jobs].
The market? Geez, I don't know, I've still got my momentum play riding with silver junior miners - mostly Silvercorp SVM, with dabs in AG, ASM, EXK, and a new toehold with AGX. SVM has been a nosebleed ride so far. New play in XOM and an older one with SQM.
As for asset allocation in retirement - it depends. You have to safeguard living expenses for 3-5 years at a minimum. You have to secure some reliable cash flow. Within these and other parameters, you need to own some equities just to CYA. At 67, I prefer owning dividend paying stocks that I do business with (e.g. utes, service providers, etc.) or that sort of mutual fund. [note: unless I've got some goofy mo play on like right now].
I still think you need to visualize your retirement as a foot stool. The more legs and the stronger they are, the sturdier the stool is. Count your legs: social security, DB pension, 401(k), IRA, savings, home equity, income property, second career, child that's an MD. How strong are they? Now the nut is to both increase the number of legs and the strength of those your already have. Oh, and you should probably plan on doing this pretty much until you die. Sorry if you had other plans. Make it a game.
and so it goes,
peace,
rono
I also consider social security as my bond fund so 95% or so of my portfolio is in equities. That doesn't work for everybody but this kid is a happy camper.
@Chinfist- amen to that!!
There's Only One Buyer Keeping S&P 500's Bull Market Alive:
bloomberg.com/news
I've noticed that market volume has been low and it seems to me that earnings have been declining for a number of quarters, even with the bar being set low. And don't forget about the Fed casting a large shadow over markets this year. Low earnings, low volume, a potentially hostile Fed and the political uncertainty of an election year all lead me to conclude that this will be a flat to slightly down year. The current rally may continue until end April (after earnings), but at a much slower rate of increase than in the past month.
Europe sucks, Japan sucks, China sucks (as far as what we know of China) and the USA seems to be flatlining. Most of the developing world is in poor shape due to the commodities bust, even if commodities have rallied recently. I can't see a Trump victory in Nov. as anything but negative for equities the world over, although I don't think he'll win the general election.
So I think the ceiling for this market isn't much higher with volatility continuing. It's likely to meander down and potentially go much lower come November.
Oil & gold have had a heck of a run over the past month, along with some resource rich EMs. A pull-back is normal and to be expected. A few months ago there was serious talk of an imminent deflationary collapse of world economies. A lot less such talk now due to the commodities rebound. We're witnessing a really bizarre political season. (And I don't like what I'm seeing). Who knows where this will all end? But markets don't like uncertainty.
Edit: If you think things are nutty now, wait until the Pres. announces his S.C. nominee in a few days and the mud starts flying.
Forecasting is a torturous trap. Losers dominate over winners. I was somewhat surprised that so many MFOers accepted Puddnhead’s gauntlet. I’m further surprised that no responder deployed the Presidential Cycle market data to inform or support his projections.
Markets hate uncertainty and the election cycle contributes to that uncertainty. Markets prefer the devil that they know to the devil that they do not know.
The recorded Presidential Cycle data does offer insights as to just how much the odds are dependent on that cycle. Sure, equities deliver positive rewards 70% of the time globally, but those odds change significantly dependent not only on the Presidential year in office, but also on the first or second term, and the likelihood of a party overturn in that position.
S&P’s Sam Stovall has famously collected and summarized these data on numerous occasions. Here is a Link to a CNBC article that is based on the Stovall data with a few appropriate remarks in its interpretation:
http://www.cnbc.com/2016/01/13/why-markets-tend-to-fall-during-a-presidential-election-year.html
And another reference using the same data source:
http://www.marketwatch.com/story/2016-predictions-what-presidential-election-years-mean-for-stocks-2015-12-29
The statistical equity return data are not too promising for a second term, fourth-year presidency. The likelihood of a positive return drops from 70% down to 44% with average negative expectations. That dismal outlook remains roughly the same considering returns data from 1900 or from World War II to the present. That’s a nice test of the stability of the returns data set.
But statistics are just statistics. They inform us on the probabilities of what could happen, not what will happen. I use them to slightly realign my portfolio holdings, never to completely abandon them. I move in increments when uncertainty is present.
I marginally lowered my equity positions while increasing my short-term bond holdings. I typically hold very little excess cash beyond my immediate needs. I use the Vanguard short-term corporate bond fund as a cash equivalent.
The USA is strong and resilient. It will survive whatever the election year outcome. We always have; we always will.
Best Wishes.
Anonymous Roman citizen, c. 220 AD
(I'll utter not another word on politics here)
I hope your reference to surviving wasn't pointed at me. We (the country) will survive of course. I did not wish to infer otherwise. Beyond that, I've already pledged to make no further politically tinged remarks.
Hank, my post was designed for the general MFO audience. I assure you, it was not directed at anyone. It astounded (surprised) me that with over 250 folks accessing this discussion, the Presidential Cycle data set was not mentioned.
That simple singular, and true, observation was not intended as a group negative; it allowed me to introduce Stovall’s fine work to more fully expand the subject matter. I believe establishing base-rate statistical data into any market discussion advances that discussion.
Old Joe, by referencing the historical fall of the Roman Empire, I suspect that you are attempting to draw some parallelisms with the USA. If so, you are on the wrong side of history. Any perceived similarities are merely in your mind.
Yes Empires expire, and will continue to do so. I believe our Nation’s expiration date is so far in the future that it can not now be defined by anyone. Our institutions in no way resemble those that facilitated the Roman failure.
The Western Roman Empire failed because of a barbarian invasion, because of constant wars, because of geographic overexpansion, because of military overspending, because of major government corruption, and because of slave labor. The USA does not suffer these crippling disabilities.
I remember that you are a Will Durant fan. In his “The Lessons of History” book, he said: “We observe that the invading barbarians found Rome weak because the agricultural population which formally supplied the legions with hardy and patriotic warriors fighting for land had been replaced by slaves laboring listlessly on vast farms owned by one man or a few” (page 54).
None of these conditions and institutions largely exist in the USA now, and none are likely to ever exist. That’s not us. Your intimated (hinted) analogy is wrong.
Thank you guys for reading and replying to my post. I appreciate your considerations.
My posts are very linear with only one straight-ahead objective; to update MFOers on the market statistical database and its analyses that are readily accessible. No deep conspiracies or hidden intensions from this source whatsoever. Never!
Best Wishes.
barbarian invasion
constant wars
geographic overexpansion
military overspending
major government corruption
slave labor
@MJG: Well, some might consider the current presidential contest a barbarian invasion. But I'll give you three out of six, anyway. Still, 50% isn't great, either.
constant wars........... Iraq, Afganistan, ect, ect...
geographic overexpansion...... We ran out of places to expand, we're already there
military overspending..... again, Iraq, Afghanistan. How many trillions added to our debt?
major government corruption.... This seems to be many peoples reason for Trump and Cruz, isn't it? Though the phrase "be careful what you ask for" comes to mind. And then there is Hillary.
slave labor... though not to that extreme - lower wages and the wealth disparity of the 1% seems in that realm.
I'm also not suggesting the fall of the U.S. in my life time. Just thinking your comment MJG is naive.
“I think it would be — I think you’d have riots. I think you’d have riots. I’m representing a tremendous, many, many millions of people.” http://www.nytimes.com/politics/first-draft/2016/03/16/donald-trump-warns-of-riots-if-party-blocks-him-at-convention/?_r=0
FYI: I do not consider this headline from today to be in any way a political comment on my part.
If a major United States business and political figure believes civil unrest and domestic violence may be around the corner here at home, it should have profound implications for anyone investied in a mutual fund owning American companies or holding U.S. government issued securities. I can't imagine civil unrest, rioting, or even the potential for it, would benefit any market except perhaps gold. (Wondering what Rono thinks)
(I guess)
Hey ... speaking of the Devil, gold's now up $21 after being down most of the day.
OK - perhaps the dovish Fed statement had more to do with that.
Thank you for your assessment of the causes that promoted Rome’s fall as transposed to the current USA situation. You suggest some serious parallels. Thankfully you conclude that you don’t project that same calamity for the USA in your lifetime. That must give you great relief since the fear of an eminent demise would rob your life of ease and pleasure.
Yes we have problems and issues that are unhealthy, are eroding, and must be addressed. Every generation is confronted with challenges and difficult decisions. But today, these challenges are, in scope, in complexity, and in magnitude, far less serious and threatening then those of the past.
We successfully handled those earlier challenges, and I’m confident that we have the resources and courage to properly respond to any and all emerging issues. That is our proud historical heritage. We are not only the World’s top Nation now, but we are the most dominant Nation that ever existed.
Overall, the World has become far less dangerous since the end of World War II. Communism has failed. Russia, China, and India have embraced and adopted various forms of Capitalism and have prospered. With just a little discipline and commitment on our part, we can and will mitigate some of the World’s current hot spots. That’s a constant requirement placed on world leadership.
That requirement is most easily seen and measured in the form of our military costs and respect. Our military is acknowledged as the world leader; it is dominant
That dominance is achieved at a decreasing fraction of our GDP. In WWII our defense spending peaked at 41% of our GDP. In the Cold War it averaged about 10% of GDP. Since that time, with a few minor excursions, it has consistently dropped. Today, the USA defense expenditure hovers around 4% annually. That’s not a backbreaker. If needed, it can be easily increased to meet any emergency.
I rest much easier these days than I did during the cold war years.
Best Wishes.
Q 1) I believe the rally will top out after it reaches a new 52 week high before year end. Since, the S&P 500 Index is currently selling on a TTM P/E Ratio of 23 stocks are not cheap and richly priced based upon the Rule of Twenty. Unless earnings catch up with valuation lowering the price to earnings ratio the rally has some short legs. With this, I look for another pull back coming before year end possibly sometime during the summer months. It would be beneficial if the FOMC would govern lightly with respect to rate increases until inflation becomes a concern.
Q 2) I am over weight the traditional defensive sectors of utilities and consumer staples with the exception being health care. In addition, I am overweight communication services, real estate, and energy. I plan to rebalance my equity allocation towards its target allocation as we move through spring and approach summer. Currently, I am equity heavy by a couple of percentage points but still within my allowable allocation to equities. In addition, I am towards the low range within my asset allocation to bonds and the bond funds that I am holding are mostly carrying a short duration along with a good representation to the high yield sectors. I am towards the upper limit in my allocation to cash.
Q3) I believe the elections could possibly be very disruptive to the markets because of the uncertainty that centers around them.
Q4) There are a lot of things that could be better in America. However, one of our strong positions is that we seem to be able to print ourselves out of tough situations when other countries can not. How long this will continue is uncertain.
Q5) The Roman Empire is an example of spreading resources too thin thus leaving the home front exposed. I believe we simply can not fight every front nor try to quell every global hot spot. However, we should let Freedom ring within out capacities and better secure our boarder.