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maybe selling in May, or before, will be a good idea (?)
Yet another Paul Krugman polemic. The current target of his invective rage is Donald Trump. Krugman's transformation from a respected economist and economics book author to an extreme liberal policy advocate has been complete for a number of years. His wife, economist Robin Wells, made for an easy transition. She is very aggressive and formidable in that same direction. She critiques most of his writings before publication.
Consequently, reader beware. Krugman's observations and conclusions might be prescient, but they are not fairly balanced or formulated from unbiased research.
The markets have been very generous since our last election. Krugman concludes that " Maybe the markets are getting this all wrong." That might be true, but it is more likely that the markets are getting it just right. History shows that markets prosper, at least initially, when a new President comes to power.
Krugman is letting his political bias and anger overwhelm his economic judgment. That's a mistake that we should avoid. Let's wait and see what happens asTrump and his team begin their governing duties. Change will happen. The impact of that change on the marketplace escapes me. I will patiently wait for the data to develop.
Sorry, but my memory failed me. I assumed my memory was spot on target. It was not. I'm a victim of ATTBW, Assumptions Tend To Be Wrong.
When I posted initially I believed that the strongly positive markets occurred in the President's first year in office. That is wrong. The very positive equity returns are delivered in the election year itself. Here is a Link that summarizes the data:
I'm looking for a pullback in 1Q, and am positioned appropriately. Fortunately, the runup over the last few months has triggered a few haircuts on current holdings...quite a nice run of luck.
@MJG: How very easy to dismiss Krugman's comments as a "polemic", because that neatly fits your long predetermined and highly biased opinions.
@JohnChisum: "The demented Krugman." A typically acidic personal attack, but refutesnothing in Krugman's commentary.
Why don't we take a close look at some of those comments:
"On the fiscal side... people talking about a huge infrastructure push. But there’s no indication that Republicans in Congress are at all eager to get moving on this push."
True:WASHINGTON (AP) December 20, 2016 — "It's not at all clear that President-elect Donald Trump's plans to spend massively on infrastructure are going to unfold as he promised... Reince Priebus, who will be Trump's chief of staff, said in a radio interview that the new administration will focus in its first nine months with other issues like health care and rewriting tax laws. He sidestepped questions about the infrastructure plan."
"their priorities seem to be repealing Obamacare and tax cuts for the rich, perhaps especially the estate tax."
True.
"So what we’re really looking at is a combination of tax cuts and spending cuts."
True.
"the tax cuts will go to the wealthy, who won’t spend much of their windfall"
True.
"the spending cuts will fall on the poor and struggling workers"
A bit overly dramatic, but certainly not false.
Then follows a section discussing some aspects of incoming financial personnel. The information presented there may or may not be accurate- I have no idea. However, Krugman then says:
Put this together, and you get a picture of a crew that isn’t at all inclined to pursue the expansionary policies the market seems to be counting on.
A reasonable observation, based on the above, likely more true than not.
A recitation of facts: hardly a polemic. And certainly not "demented".
"When I posted initially I believed that the strongly positive markets occurred in the President's first year in office. That is wrong. The very positive equity returns are delivered in the election year itself."
"Krugman is letting his political bias and anger overwhelm his economic judgment"
Perhaps it was not Krugman who was letting his assumptions overwhelm his judgment (or memory)?
To give credit where credit is due, you did correct your factual error (though not your conclusion). Going further, the Schwab data says not only that election year performance is superior, but that the stock market performance in the post election year is the worst in the presidential quadrennial cycle. The market has gone down almost as often as it has gone up.
Without rationale, this would all be statistically meaningless (not enough data points). A common theory offered is that presidents try to do the hard stuff early in their terms. Perhaps because they have more support then, or perhaps to get it all out of the way so that they can look good the last couple of years before election. Whatever. http://www.nytimes.com/2010/10/10/business/10stra.html
Mr.Trump is about to find out that the real world has little resemblance to his smugly secure little private operational arena, where he can call all of the shots, and the minions tremble for their jobs.
The real world has, in addition to lots of people who are as smart or smarter than Mr. Trump, a whole lot of built-in variables that are well beyond the ability of anyone, no matter how powerful, to control.
I can't see the likes of Paul Ryan and Mitch McConnell opening up the flood gates, ripping apart their purse strings, borrowing massively, and sending torents of money flowing down to the lower income folk - whether indirectly through massive public works spending or directly through social welfare programs and better educational opportunities. Doesn't make sense. That ain't their mantra.
Just because I can't see it doesn't mean it won't happen. Call me skeptic. Hey, davidmoran, let me know when you start selling. Might be right behind you.
Will do. Can't decide. Can't time. Preach against it. blah blah. I just have had such good outcome with over half in DSEEX / DSENX that I think I should be prudent and not greedy and dial it back to cash in Jan or Feb. Just recently tracked CAPE vs SPHD over the last 4y too, in small increments. CAPE seems an awfully good system, and Gundlack's bond sauce has not really erred yet, which I cannot say for my other bond holdings. What to do.
I am optimistic on equities here, especially small and mid caps. The probability of businesses getting tax rate cuts is the spur for this recent market bump. Also, the likelihood of renewed government spending on the military will be good for the companies that depend on those contracts. Shipbuilding, aircraft manufacturing, etc will all benefit.
Is anyone else worried about lots of selling to lock in gains after Jan first? Regardless of what the tax rates are, not paying taxes until 4/15/18 will drive a lot of people who have significant cap gains
Most of the ideas we have about which sectors will do well are already factored in I think. No one really knows. The Repubs may have refused Obama his fiscal stimulus out of spite, but that doesn't mean they will give Trump green light.
And even if they do we have the "Yellen call" to tap down things.
I plan to ride the Trump rally until I detect a breakdown in its technicals. By my market valuation matrix it scores well into overbought territory. But, with most bonds (or bond funds) in decline ... What's an investor to do? For me, that leaves the equity train ride! However, I am taking most all my yearend mutual fund distributions in cash. This will in efect be a rebalance of sorts by reducing my equity allocation while raising my cash allocation. I'm thinking my equity allocation value could fall by as much as 2% while my cash allocation value would increase by about 6%; because, I hold about three times as much equities as I do cash. Bonds would remain about the same.
The Trump rally has already given me thus far what I thought I'd receive through May based upon the fall seasonal investment strategy that I usually play. So, why not book some of the gains early?
Re the Krugman piece, consider if history had unfolded differently:
a) If DJT had been elected on 11/8, but the stock market fell persistently and deeply.
OR
b) if HRC had been elected on 11/8 and the stock market soared.
Would Krugman be similarly so non-chalant about the stock market's verdict? I doubt it.
Krugman is supposed to be an economist isn't he (wasn't he). Perhaps I missed it, (I just skimmed the link), but if DJT ONLY reduces the nominal corporate tax rate to 15%, that will have the effect of validating the repricing of (many) equities -- as more economic profits will be retained by enterprises, rather than sent to D.C. Finance 101 suggests (under one theory) that the value of stocks is the sum of their discounted cash-flows. Lower taxes (generally) means higher retained cash-flows, hence a higher capitalized value of those flows (i.e. higher stock prices).
My general sense just following the campaign and the aftermath (and subject to error of course) is that many investors truly expect some kind of stimulative public works program funded by debt ("I love debt") to be ennacted.
Go back and read the rhetoric - be it about highways, bridges, airports or the 2,000 mile wall. And a logical extension many investors are making is that this will lead to faster growth and eventually an overheated economy, rising wages and higher inflation (as the bond market is clearly signaling). IMHO that's the single biggest impetus behind the recent moves upward in stocks, energy and commodities. The bond market, conversely, has reacted in understandable fashion by tumbling.
Now - if we perform a nice pivot here (love that word) and end such speculation (i.e. no deficit spending for PW projects) than we're left with tax cuts, mainly at the higher income/corporate level. We saw how well that worked under GWB. Dow 6500 anyone?
Edmond's point about what tax cuts for corporations can do to corporate earnings is pretty undeniable. It's basic math.
It also seems hard to miss that the recent rhetoric coming out of Trump's team and Congress is far more about cutting upper income taxes and rolling back Obamacare than about infrastructure spending, which Ryan and McConnell have never much liked anyway. Oh, and they also want to roll back all sorts of regulations.
If that second graph sounds bullish for the economy and the stock market, well, there's a school of economic thought that supports you. I don't agree with it, but plenty of smart people do. Me, I'm with Hank and Krugman: it sounds like a recipe for a redux of Bush II, except maybe more so, which will eventually overcome the benefits to the market of lower corporate taxes.
I also don't think the market is pricing in a greater risk of international confrontation, both because Trump seems to think confrontation is how you get things done, and because he personally owns soft targets all over the world. What's going to happen when ISIS hits his hotels?
I'll be selling down equities in the spring. I've been all in for years and had a good ride. I won't be all out, but I intend to get my equity allocation down to around 50% from its current 80+%.
Yep, and for what it is worth, I think it wise to adjust one's asset allocation not only to one's risk tolerance but also use some adaptive allocation strategies that incorporate global and domestic dynamics as well.
I began to reduce my equity allocation, at a measured pace, about five years ago which was then in the 60% to 70% range to the present 45% to 55% range with a neutral position being 50%. Equities are currently richly priced, by my thinking; and, with this, I want to leave some room to play the swing during a major stock market pullback or correction.
With age I too have gone in that direction as to ratios, closer to 60-40, but have done the opposite as to equity types, dialing down SC and foreign and putting those moneys into SP500 (in the CAPE rotation) and RE. I looked hard at what value SC and foreign add for their risk and did not see enough.
As the self-anointed critic of MFO, you sure have been consistently hostile to my postings over a period that extends to the old FundAlarm days. Some folks would question why the antagonism?
My answer to that question is Monte Carlo advocacy. I favored it; you hated it. I favored it for retirement planning while you argued that a couple of spreadsheet analyses would suffice. When I claimed you were really doing an overly simplified Monte Carlo by guessing at the annual returns, you had no reasonable reply. That simple disagreement prompted your antagonism that continues today. That's totally a waste of time.
I am not anti-Krugman. He is a thinking man. Although I do disagree with some of his conclusions and predictions, I respect them for their detailed research. I would note that even Paul Krugman does change his mind. Although Keynes is falsely credited with "when the facts change, I change my mind. What do you do, Sir?", it is an appropriate bit of wisdom. I practice that flexible concept.
I did not independtly conclude that Krugman has been polemic for some time now. That same assessment appeared in a rather long New Yorker article a number of years ago. Here is a Link to that fine article:
Early in the referenced work is the following very positive judgment: "In his columns, Krugman is belligerently, obsessively political". In that same 2010 reference, the author relates how Krugman supported Clinton during the 2008 Democractic primary contest, yet immediately reversed his assessment of Obama after he became the Presidential candidate. We adjust our opinions and priorities to conform with reality.
By the way, Krugman has a very extensive recent piece that reflects his current interpretations of the economic and political environment along several dimensions. Here is a Link to that work that might interest all MFO participants:
...and because he personally owns soft targets all over the world. What's going to happen when ISIS hits his hotels?
.
Oh my gosh, I did not think about that, but what a likely target for terrorists exploiting their pathetic deeds. Will he react emotionally which is his personality or with thought-out reason?
I will not be going into a Trump facility for the next 4 years... not that I could have afforded to anyway.
@SW, Did you read the very short article? Recent runup is based on assumptions that look very likely not to pan out and/or are based on faulty thinking. PK foresees actual reduction in demand, which is almost never a good thing. See pg2 para2.
So I was posing the question whether after DT has been in office for a month or three the downside of his policy bunk will be sinking in or have sunk in. A truly unwarranted runup, in other words.
@MJG, You are confused and confusing. PK is of course polemical (I do not really think anyone, even OJ, would dispute that), and you do not care for his column mandate, but then you go on to claim
>> Krugman's observations and conclusions ... are not ... formulated from unbiased research. ... Krugman is letting his political bias and anger overwhelm his economic judgment.
I would be interested in your evidence for these assertions. Anything. Many find PK extremely evidence-based, zealous about being accurate, and the evidence, so far as I have read him for years, is hard data from a wide range of gov and private sources. Some would argue that his politics has sharpened and focused his econ judgment (I myself would argue the causality goes in the other direction). So some substantiation, other than your personal dislike and whatnot, for the verb 'overwhelm' is called for.
@MJG: Sir: The above is an exact copy of your statement earlier in this thread. I believe that my response, above, adequately demonstrates that you are wrong, yet again, in your judgements and conclusions.
Your typical deployment of misdirection, smoke and mirrors makes no attempt to refute my point-by-point analysis of the specifically referenced Krugman article. Your blather about my being "consistently hostile" to you is in error. I am consistently hostile not to you, but to any posting of this dismal caliber.
@SW, Did you read the very short article? Recent runup is based on assumptions that look very likely not to pan out and/or are based on faulty thinking. PK foresees actual reduction in demand, which is almost never a good thing. See pg2 para2.
So I was posing the question whether after DT has been in office for a month or three the downside of his policy bunk will be sinking in or have sunk in. A truly unwarranted runup, in other words.
@davidrmoran In the future if I ask a question or post a comment you can be assured that I read the link. Also, my reading comprehension is very good. The month of May is not mentioned in the article. The closest word to it is "maybe". So my question remains: What is the link between the article and selling in May or before?
In yet another fine example of the argumentative misdirection for which you are justifiably notable, you have chosen to suggest to "some folks" that I have been "consistently hostile" to your postings because of an alleged antipathy to Monte Carlo advocacy.
You claim that I argued that "a couple of spreadsheet analyses would suffice". For those readers whose experience may not extend back to FundAlarm days, I note that my retirement planning did in fact depend largely upon a fairly sophisticated spreadsheet analysis, used for some twenty years, well before the availability of Monte Carlo analysis via the internet.
To repeat my "reasonable reply": the home-brew spreadsheet was capable of a sufficient number of variables so as to prepare us very well for our retirement. One of those variables was a market meltdown occurring at various times, including just before, during, or immediately after retirement. This worst-case situation presented itself in 2008. The fact that we have survived that in decent condition is testimony to the adequacy of that spreadsheet.
Your denigration of my retirement planning as "an overly simplified Monte Carlo" is just another of your gratuitous insults, and pretty well defines your smug dismissal of any opinion contrary to your own. On one point we certainly agree: taking your postings seriously has pretty much been "a total waste of time".
I am very happy for your successful retirement, and truly wish for that to continue forever.
Doing a few spreadsheet analyses is a fine way to plan for retirement. Reinforcing that type of analyses with supplemental Monte Carlo analyses is an even better way to help make crucial retirement decisions.
If you choose not to do a Monte Carlo analyses, that's perfectly okay from my perspective. Each person has his own way of getting into a comfort zone, and count me among the last to disagree. On this site, I simply like to offer options that some others might not know exist.
I try very hard not to make specific investment recommendations. A rare exception may exist, but I can not recall ever recommending a specific mutual fund to any MFOer seeking such advice.
You are always free to accept or reject whatever commentary I post, especially with regard to the merits of Monte Carlo studies. That's always your choice.
I have a very simple suggestion for you. Since you concluded that "taking your postings seriously has pretty much been 'a total waste of time'", I suggest you just stop reading them. I'm sure some MFOers agree with you, but some will not. That's the nature of all investment discussions.
I remain committed to my purpose on MFO. I just want to introduce options that some MFOers are not familiar with when making difficult investment decisions. I never say do as I do because I don't define exactly what I do under various market conditions. To each his own.
I really do extend Best Wishes for your health and continued investment success.
@SW, 'selling in May' is among the hoariest of investing tropes; I was attempting the little joke on it. Other than that, I cannot explain any more clearly than I have why one might consider doing some lightening of equity holdings over the next few months, given the recent runup. That is all. I was trying to give you the benefit of the doubt concerning your inexplicable query; sorry.
@MJG: Only someone with your self-limiting perspective would deprecate twenty years of spreadsheet work as "a few spreadsheet analyses".
"If you choose not to do a Monte Carlo analyses, that's perfectly okay from my perspective."
Since we have been happily and successfully retired for some twelve years now, we appreciate your permission, however reluctant, in this matter.
"You are always free to accept or reject whatever commentary I post"
Again, I appreciate your tolerance in yet another aspect of my life. However, as far as I am aware, no one is obligated to accept your commentary, with or without your permission.
"Since you concluded that "taking your postings seriously has pretty much been 'a total waste of time'", I suggest you just stop reading them."
Since we are successfully retired (admittedly inexplicable without using a Monte Carlo analysis) I fortunately find myself with ample free time. This allows me the freedom to indulge in observation of humanity, with all of it's foibles, and thankfully you provide much fodder in this area.
Similarly, I also extend best wishes for your health and continued investment success.
To all the writers of the extensive commentary above, with my best wishes, just remember this classic quotation/curse (passed on from your lowly "dweeb"):
Comments
Yet another Paul Krugman polemic. The current target of his invective rage is Donald Trump. Krugman's transformation from a respected economist and economics book author to an extreme liberal policy advocate has been complete for a number of years. His wife, economist Robin Wells, made for an easy transition. She is very aggressive and formidable in that same direction. She critiques most of his writings before publication.
Consequently, reader beware. Krugman's observations and conclusions might be prescient, but they are not fairly balanced or formulated from unbiased research.
The markets have been very generous since our last election. Krugman concludes that " Maybe the markets are getting this all wrong." That might be true, but it is more likely that the markets are getting it just right. History shows that markets prosper, at least initially, when a new President comes to power.
Krugman is letting his political bias and anger overwhelm his economic judgment. That's a mistake that we should avoid. Let's wait and see what happens asTrump and his team begin their governing duties. Change will happen. The impact of that change on the marketplace escapes me. I will patiently wait for the data to develop.
Best Wishes.
Sorry, but my memory failed me. I assumed my memory was spot on target. It was not. I'm a victim of ATTBW, Assumptions Tend To Be Wrong.
When I posted initially I believed that the strongly positive markets occurred in the President's first year in office. That is wrong. The very positive equity returns are delivered in the election year itself. Here is a Link that summarizes the data:
http://www.schwab.com/insights/stocks/how-do-stocks-perform-during-presidential-election-cycle
I apologize for my error and the confusion that it may have caused. It's always good policy to verify memory, especially when you're north of 80.
Best Wishes.
@JohnChisum: "The demented Krugman." A typically acidic personal attack, but refutes nothing in Krugman's commentary.
Why don't we take a close look at some of those comments:
"On the fiscal side... people talking about a huge infrastructure push. But there’s no indication that Republicans in Congress are at all eager to get moving on this push."
True: WASHINGTON (AP) December 20, 2016 — "It's not at all clear that President-elect Donald Trump's plans to spend massively on infrastructure are going to unfold as he promised... Reince Priebus, who will be Trump's chief of staff, said in a radio interview that the new administration will focus in its first nine months with other issues like health care and rewriting tax laws. He sidestepped questions about the infrastructure plan."
"their priorities seem to be repealing Obamacare and tax cuts for the rich, perhaps especially the estate tax."
True.
"So what we’re really looking at is a combination of tax cuts and spending cuts."
True.
"the tax cuts will go to the wealthy, who won’t spend much of their windfall"
True.
"the spending cuts will fall on the poor and struggling workers"
A bit overly dramatic, but certainly not false.
Then follows a section discussing some aspects of incoming financial personnel. The information presented there may or may not be accurate- I have no idea. However, Krugman then says:
Put this together, and you get a picture of a crew that isn’t at all inclined to pursue the expansionary policies the market seems to be counting on.
A reasonable observation, based on the above, likely more true than not.
A recitation of facts: hardly a polemic. And certainly not "demented".
"Krugman is letting his political bias and anger overwhelm his economic judgment"
Perhaps it was not Krugman who was letting his assumptions overwhelm his judgment (or memory)?
To give credit where credit is due, you did correct your factual error (though not your conclusion). Going further, the Schwab data says not only that election year performance is superior, but that the stock market performance in the post election year is the worst in the presidential quadrennial cycle. The market has gone down almost as often as it has gone up.
Without rationale, this would all be statistically meaningless (not enough data points). A common theory offered is that presidents try to do the hard stuff early in their terms. Perhaps because they have more support then, or perhaps to get it all out of the way so that they can look good the last couple of years before election. Whatever.
http://www.nytimes.com/2010/10/10/business/10stra.html
Here's a whole slew of articles if you want to see how the data's been sliced and diced to death: https://blogs.cfainstitute.org/investor/2016/07/29/effects-of-elections-predicting-the-markets-response-to-clinton-or-trump/
Me, I'm just waiting to see who wins the Superbowl
This is worrisome, in the same vein:
https://www.aei.org/publication/which-trump-will-the-world-see/
(note the source!)
https://www.washingtonpost.com/politics/why-a-stronger-us-dollar-could-hinder-trumps-economic-plans/2016/12/19/e6b2a11c-c613-11e6-acda-59924caa2450_story.html
I may be selling equity fund portions soon.
The real world has, in addition to lots of people who are as smart or smarter than Mr. Trump, a whole lot of built-in variables that are well beyond the ability of anyone, no matter how powerful, to control.
This is going to be very interesting to watch.
Just because I can't see it doesn't mean it won't happen. Call me skeptic. Hey, davidmoran, let me know when you start selling. Might be right behind you.
I just have had such good outcome with over half in DSEEX / DSENX that I think I should be prudent and not greedy and dial it back to cash in Jan or Feb.
Just recently tracked CAPE vs SPHD over the last 4y too, in small increments. CAPE seems an awfully good system, and Gundlack's bond sauce has not really erred yet, which I cannot say for my other bond holdings. What to do.
Most of the ideas we have about which sectors will do well are already factored in I think. No one really knows. The Repubs may have refused Obama his fiscal stimulus out of spite, but that doesn't mean they will give Trump green light.
And even if they do we have the "Yellen call" to tap down things.
https://www.bloomberg.com/news/articles/2015-11-19/goldman-sees-yellen-call-limiting-2016-u-s-stock-market-gains
I am waiting for a sizable correction
Here is a yearend rebalance strategy, of sorts.
I plan to ride the Trump rally until I detect a breakdown in its technicals. By my market valuation matrix it scores well into overbought territory. But, with most bonds (or bond funds) in decline ... What's an investor to do? For me, that leaves the equity train ride! However, I am taking most all my yearend mutual fund distributions in cash. This will in efect be a rebalance of sorts by reducing my equity allocation while raising my cash allocation. I'm thinking my equity allocation value could fall by as much as 2% while my cash allocation value would increase by about 6%; because, I hold about three times as much equities as I do cash. Bonds would remain about the same.
The Trump rally has already given me thus far what I thought I'd receive through May based upon the fall seasonal investment strategy that I usually play. So, why not book some of the gains early?
Skeet
a) If DJT had been elected on 11/8, but the stock market fell persistently and deeply.
OR
b) if HRC had been elected on 11/8 and the stock market soared.
Would Krugman be similarly so non-chalant about the stock market's verdict? I doubt it.
Krugman is supposed to be an economist isn't he (wasn't he). Perhaps I missed it, (I just skimmed the link), but if DJT ONLY reduces the nominal corporate tax rate to 15%, that will have the effect of validating the repricing of (many) equities -- as more economic profits will be retained by enterprises, rather than sent to D.C. Finance 101 suggests (under one theory) that the value of stocks is the sum of their discounted cash-flows. Lower taxes (generally) means higher retained cash-flows, hence a higher capitalized value of those flows (i.e. higher stock prices).
Go back and read the rhetoric - be it about highways, bridges, airports or the 2,000 mile wall. And a logical extension many investors are making is that this will lead to faster growth and eventually an overheated economy, rising wages and higher inflation (as the bond market is clearly signaling). IMHO that's the single biggest impetus behind the recent moves upward in stocks, energy and commodities. The bond market, conversely, has reacted in understandable fashion by tumbling.
Now - if we perform a nice pivot here (love that word) and end such speculation (i.e. no deficit spending for PW projects) than we're left with tax cuts, mainly at the higher income/corporate level. We saw how well that worked under GWB. Dow 6500 anyone?
It also seems hard to miss that the recent rhetoric coming out of Trump's team and Congress is far more about cutting upper income taxes and rolling back Obamacare than about infrastructure spending, which Ryan and McConnell have never much liked anyway. Oh, and they also want to roll back all sorts of regulations.
If that second graph sounds bullish for the economy and the stock market, well, there's a school of economic thought that supports you. I don't agree with it, but plenty of smart people do. Me, I'm with Hank and Krugman: it sounds like a recipe for a redux of Bush II, except maybe more so, which will eventually overcome the benefits to the market of lower corporate taxes.
I also don't think the market is pricing in a greater risk of international confrontation, both because Trump seems to think confrontation is how you get things done, and because he personally owns soft targets all over the world. What's going to happen when ISIS hits his hotels?
I'll be selling down equities in the spring. I've been all in for years and had a good ride. I won't be all out, but I intend to get my equity allocation down to around 50% from its current 80+%.
I began to reduce my equity allocation, at a measured pace, about five years ago which was then in the 60% to 70% range to the present 45% to 55% range with a neutral position being 50%. Equities are currently richly priced, by my thinking; and, with this, I want to leave some room to play the swing during a major stock market pullback or correction.
Old_Skeet
As the self-anointed critic of MFO, you sure have been consistently hostile to my postings over a period that extends to the old FundAlarm days. Some folks would question why the antagonism?
My answer to that question is Monte Carlo advocacy. I favored it; you hated it. I favored it for retirement planning while you argued that a couple of spreadsheet analyses would suffice. When I claimed you were really doing an overly simplified Monte Carlo by guessing at the annual returns, you had no reasonable reply. That simple disagreement prompted your antagonism that continues today. That's totally a waste of time.
I am not anti-Krugman. He is a thinking man. Although I do disagree with some of his conclusions and predictions, I respect them for their detailed research. I would note that even Paul Krugman does change his mind. Although Keynes is falsely credited with "when the facts change, I change my mind. What do you do, Sir?", it is an appropriate bit of wisdom. I practice that flexible concept.
I did not independtly conclude that Krugman has been polemic for some time now. That same assessment appeared in a rather long New Yorker article a number of years ago. Here is a Link to that fine article:
http://www.newyorker.com/magazine/2010/03/01/the-deflationist
Early in the referenced work is the following very positive judgment: "In his columns, Krugman is belligerently, obsessively political". In that same 2010 reference, the author relates how Krugman supported Clinton during the 2008 Democractic primary contest, yet immediately reversed his assessment of Obama after he became the Presidential candidate. We adjust our opinions and priorities to conform with reality.
By the way, Krugman has a very extensive recent piece that reflects his current interpretations of the economic and political environment along several dimensions. Here is a Link to that work that might interest all MFO participants:
http://krugman.blogs.nytimes.com
Wow! There is plenty to debate given the many forecasts incorporated into this Krugman work.
Best Wishes.
Oh my gosh, I did not think about that, but what a likely target for terrorists exploiting their pathetic deeds. Will he react emotionally which is his personality or with thought-out reason?
I will not be going into a Trump facility for the next 4 years... not that I could have afforded to anyway.
Did you read the very short article? Recent runup is based on assumptions that look very likely not to pan out and/or are based on faulty thinking. PK foresees actual reduction in demand, which is almost never a good thing. See pg2 para2.
So I was posing the question whether after DT has been in office for a month or three the downside of his policy bunk will be sinking in or have sunk in. A truly unwarranted runup, in other words.
@MJG,
You are confused and confusing. PK is of course polemical (I do not really think anyone, even OJ, would dispute that), and you do not care for his column mandate, but then you go on to claim
>> Krugman's observations and conclusions ... are not ... formulated from unbiased research. ... Krugman is letting his political bias and anger overwhelm his economic judgment.
I would be interested in your evidence for these assertions. Anything. Many find PK extremely evidence-based, zealous about being accurate, and the evidence, so far as I have read him for years, is hard data from a wide range of gov and private sources.
Some would argue that his politics has sharpened and focused his econ judgment (I myself would argue the causality goes in the other direction). So some substantiation, other than your personal dislike and whatnot, for the verb 'overwhelm' is called for.
Yet another Paul Krugman polemic."
@MJG: Sir: The above is an exact copy of your statement earlier in this thread. I believe that my response, above, adequately demonstrates that you are wrong, yet again, in your judgements and conclusions.
Your typical deployment of misdirection, smoke and mirrors makes no attempt to refute my point-by-point analysis of the specifically referenced Krugman article. Your blather about my being "consistently hostile" to you is in error. I am consistently hostile not to you, but to any posting of this dismal caliber.
In yet another fine example of the argumentative misdirection for which you are justifiably notable, you have chosen to suggest to "some folks" that I have been "consistently hostile" to your postings because of an alleged antipathy to Monte Carlo advocacy.
You claim that I argued that "a couple of spreadsheet analyses would suffice". For those readers whose experience may not extend back to FundAlarm days, I note that my retirement planning did in fact depend largely upon a fairly sophisticated spreadsheet analysis, used for some twenty years, well before the availability of Monte Carlo analysis via the internet.
To repeat my "reasonable reply": the home-brew spreadsheet was capable of a sufficient number of variables so as to prepare us very well for our retirement. One of those variables was a market meltdown occurring at various times, including just before, during, or immediately after retirement. This worst-case situation presented itself in 2008. The fact that we have survived that in decent condition is testimony to the adequacy of that spreadsheet.
Your denigration of my retirement planning as "an overly simplified Monte Carlo" is just another of your gratuitous insults, and pretty well defines your smug dismissal of any opinion contrary to your own. On one point we certainly agree: taking your postings seriously has pretty much been "a total waste of time".
I am very happy for your successful retirement, and truly wish for that to continue forever.
Doing a few spreadsheet analyses is a fine way to plan for retirement. Reinforcing that type of analyses with supplemental Monte Carlo analyses is an even better way to help make crucial retirement decisions.
If you choose not to do a Monte Carlo analyses, that's perfectly okay from my perspective. Each person has his own way of getting into a comfort zone, and count me among the last to disagree. On this site, I simply like to offer options that some others might not know exist.
I try very hard not to make specific investment recommendations. A rare exception may exist, but I can not recall ever recommending a specific mutual fund to any MFOer seeking such advice.
You are always free to accept or reject whatever commentary I post, especially with regard to the merits of Monte Carlo studies. That's always your choice.
I have a very simple suggestion for you. Since you concluded that "taking your postings seriously has pretty much been 'a total waste of time'", I suggest you just stop reading them. I'm sure some MFOers agree with you, but some will not. That's the nature of all investment discussions.
I remain committed to my purpose on MFO. I just want to introduce options that some MFOers are not familiar with when making difficult investment decisions. I never say do as I do because I don't define exactly what I do under various market conditions. To each his own.
I really do extend Best Wishes for your health and continued investment success.
That is all. I was trying to give you the benefit of the doubt concerning your inexplicable query; sorry.
"If you choose not to do a Monte Carlo analyses, that's perfectly okay from my perspective."
Since we have been happily and successfully retired for some twelve years now, we appreciate your permission, however reluctant, in this matter.
"You are always free to accept or reject whatever commentary I post"
Again, I appreciate your tolerance in yet another aspect of my life. However, as far as I am aware, no one is obligated to accept your commentary, with or without your permission.
"Since you concluded that "taking your postings seriously has pretty much been 'a total waste of time'", I suggest you just stop reading them."
Since we are successfully retired (admittedly inexplicable without using a Monte Carlo analysis) I fortunately find myself with ample free time. This allows me the freedom to indulge in observation of humanity, with all of it's foibles, and thankfully you provide much fodder in this area.
Similarly, I also extend best wishes for your health and continued investment success.
"May you live in interesting times..."
and here we are....