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A Very Bad Day

New Contributor

Re: A Very Bad Day

What maize and ABCD said. Low and slow and buy quality stocks when cheap meaning low multiples to earnings ,cash flow and assets 

Message 11 of 28
Valued Contributor

Re: A Very Bad Day

I had 15 percent in cash and bought a good deal of stock today. Will buy more if prices go down. Unless you planned to leave the market lower prices are better.

Bad thing is government cutting revenue while increasing spending.

The only thing I am upset about is government limiting Wells Fargo ability to grow. I owned a lot of Wells Fargo and a lot of Berkshire so a double whammy.
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Message 12 of 28
Super Contributor

Re: A Very Bad Day

ABCD2199 ... do you hold precious metals? While they are volatile one can make a nice sum from them? May be more work than you usually need for your regular portfolio management but, I keep a little risk in my mix (it has served me well along with some utilities). Will add I live in the middle of mining country both precious and non-precious metals so it is second nature along with being surrounded by wilderness so maybe I am too removed from the Wall Street (didn't used to be).  Smiley Happy

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Message 13 of 28
Valued Contributor

Re: A Very Bad Day


wrote:

ABCD2199 ... do you hold precious metals? While they are volatile one can make a nice sum from them? May be more work than you usually need for your regular portfolio management but, I keep a little risk in my mix (it has served me well along with some utilities). Will add I live in the middle of mining country both precious and non-precious metals so it is second nature along with being surrounded by wilderness so maybe I am too removed from the Wall Street (didn't used to be).  Smiley Happy


Limiting my comment to gold (I don't know if history is the same for silver/platinum/palladium/whatever)...

 

The price of gold has a history of a few sharp and sudden increases and then long, gradual decreases. To make a significant return, you really need to be a timing wizard. And a timing wizard can generally make more money picking stocks, since gold historically has a low return relative to stocks.

 

From 11/30/1973 though 12/31/2009, when gold started to trade freely:

S&P 500 returned 10.5% annually ($10k became $365,200)

10-yr treasury: 8.2% annually ($10k became $174,200)

Gold: 6.8% annually ($10k became $108,300)

 

Source: Ken Fisher's Debunkery

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Message 14 of 28
Established Contributor

Re: A Very Bad Day

I think its hard to look at asset classes over long periods of time. I think real estate and stocks have done well last 7 years due to all the money floating around. If you put your money in the S&P in Sept of 1996 and took out in 2009, you would have made absolutely zero, not taking dividends into account. 13 years the index was flat.

 

I think going forward, maybe next 10 years, stocks will return high single digits maybe. 

Message 15 of 28
Established Contributor

Re: A Very Bad Day


@wrote:

I think its hard to look at asset classes over long periods of time. I think real estate and stocks have done well last 7 years due to all the money floating around. If you put your money in the S&P in Sept of 1996 and took out in 2009, you would have made absolutely zero, not taking dividends into account. 13 years the index was flat.

 

I think going forward, maybe next 10 years, stocks will return high single digits maybe. 


The real takeaway from this statement isn't that equities can remain flat over long periods of time, it's that one should never, ever leave the market during a sharp market downturn, which is exactly what 2009 was. Simply sitting it out until even 2012 or 2013 would have drastically changed the return rate for the better. Similar results if you pulled out in 2008 instead of 2009 as well.

 

The market today is a bit overvalued and the correction was due, but we're hardly moving toward a long-term stagnation and the fundamentals at a lot of S&P 500 companies continue to look sound. The only people who think the market is going flat (or down) over the next 10 years are bears who really, really want another bear market so they can steal stocks at bargain prices from the fools who sell.

 

If someone needs their money in the next 3-5 years, the stock market becomes a riskier asset class. These people should not be heavy into stocks. If one can wait longer, it's about the best place to park money there is.

 

Message 16 of 28
New Contributor

Re: A Very Bad Day

If you look at indicators like market value to GDP and the Schiller CAPE ratio , stocks are greatly over valued by 30 % or so.  In the 50s and 60s when economic grow was 4 to 5 percent and dividend yields were 4 %, you could expect maybe 9 percent a year 

 

now ? Stocks yield 1.5 maybe 2 % and gdp growth maybe 3%  so you are looking 5% or so in equities. Stocks were dead money for 25 years after 1929, 16 years after 1966 and a decade or so after tech bubble in 2000. Some large caps like microsoft and coke were dead money for what 15 years 

 

I don’t know. In a market like this with stocks expensive , bonds in a bubble and rates going up I would rather take profits early and wait for better value. Let other people squeeze out last dollars of profit at top. 

 

A month ago, 100b went into equity funds. Most in history for month.  A good contrarian indicator 

 

 

    

Message 17 of 28
Super Contributor

Re: A Very Bad Day


@wrote:
I had 15 percent in cash and bought a good deal of stock today. Will buy more if prices go down. Unless you planned to leave the market lower prices are better.

Bad thing is government cutting revenue while increasing spending.

The only thing I am upset about is government limiting Wells Fargo ability to grow. I owned a lot of Wells Fargo and a lot of Berkshire so a double whammy.

In the last few days I am sure there was some action by administration to ease the rules related to banking. That said, have to let the smoke clear, dust settle and then release the limiting forces on Wells Fargo. Gads ... good government needs time to play with smoke and mirrors!

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Message 18 of 28
Valued Contributor

Re: A Very Bad Day


wrote:

If you look at indicators like market value to GDP and the Schiller CAPE ratio , stocks are greatly over valued by 30 % or so. Market cap to GDP is a metric I like to use. However, it has limitations. Low interest rates and corporate tax reform favor stocks, but aren't reflected in this metric. In the 50s and 60s when economic grow was 4 to 5 percent and dividend yields were 4 %, you could expect maybe 9 percent a year 

 

now ? Stocks yield 1.5 maybe 2 % and gdp growth maybe 3%  so you are looking 5% or so in equities. Stocks were dead money for 25 years after 1929, 16 years after 1966 and a decade or so after tech bubble in 2000. Some large caps like microsoft and coke were dead money for what 15 years Multiple contraction can definitely be a long and frustrating process.

 

I don’t know. In a market like this with stocks expensive , bonds in a bubble and rates going up I would rather take profits early and wait for better value. Let other people squeeze out last dollars of profit at top.

 

A month ago, 100b went into equity funds. Most in history for month.  A good contrarian indicator But now, some of the "FOMO" investors are retreating and withdrawing funds, having encountered the novel concept that stocks can go down.

 

 

    


 

Perks, purchase protection, and sketchy merchants: Schwab Platinum.....Price rewind and extended warranties: Costco.....Travel insurance: Prestige and Hyatt.....Renewal night: IHG.....Taxes/Misc: SPG.....SD and of limited use: Discover, Freedom, FreedomUn, ED, BCE, Arrival

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Message 19 of 28
New Contributor

Re: A Very Bad Day

WAS

 

30B withdrawn from equity funds last week lol. 

 

it it is hard being a contrarian and have discipline in the market. 2 factors for succeed. Not easy 

Message 20 of 28