Posted on 03/09/2013 7:44:56 AM PST by blam
The Stock Market Is Looking Like 2000 And 2007 All Over Again
Comstock Partners
March 9, 2013, 7:11 AM
"I have to get into this market; otherwise it's just dragging on me" (A portfolio manager quoted in the Wall Street Journal just prior to the March 2000 peak in the S&P 500.)
"..as long as the music is playing, you've got to get up and dance. We're still dancing." (Citigroup CEO Chuck Prince in July 2007) You know how that turned out.
It's that time again. The Dow surpassed its all-time high and the S&P 500 is not that far from the tops of 1553 on March 24, 2000 and 1576 on October 9, 2007. Just as in 2000 and 2007, the economic, valuation and political background does not support the budding euphoria.
The economy has been limping along at about a 2% growth rate despite the near-zero percent Fed Funds yield and huge amounts of Fed bond purchases. At the same time fiscal policy has become a significant headwind. The agreement to avert the fiscal cliff could slice about 1% off GDP with the sequester reducing it by another 0.5%. A 1.5% hit to a GDP that was only growing at about 2% leaves the economy on awfully thin ice, and very close to recession. Consumers are still in the process of deleveraging their debt, and with wages climbing so slowly, are in no position to go on a spending spree anytime soon. Businesses, sensing a lack of consumer demand, and worried about the dysfunction in Washington, are not likely to step up capital expenditures to any great degree. Unlike the stock market, they are building up their cash in anticipation of the next crisis.
The market has climbed on the basis of an almost childlike faith
(snip)
(Excerpt) Read more at businessinsider.com ...
“If you are slightly less panicky, you could realise that even losing 10%, IF you’ve been in for a couple of years you still come out ahead...”
And that’s the key. No need to panic as long as you have enough in there and it’s been kicking around awhile, even a drop won’t kill you. I feel pretty ok about the trajectory, even if there’s a major correction.
Cash is fine. It just sits there until a buying opportunity comes along. The March, 2009 buying opportunity was the greatest since the early 70’s.
There’s a really bid ***double bubble*** coming, and 94% don’t even see it coming. It’s going to be a big fall and a lot of unsuspecting folks are going to get hurt. Precisely what 0scubag wants.
Devalued with respect to what? Dollar's been strong recently with respect to other currencies -- what, up 20% to yen? Up a few percent to Euro as well.
Now, if the comparison is food, gasoline, other essentials, even precious metals, and stocks, I agree. Takes far more dollars to buy a hundred Dow index shares now than four years ago.
No one can foretell the future. Having said that, I bought Apple when the price was in the teens and twenties. And it split when growing. When the price was approaching 100, it dipped and most people said it would crash to nothing. It's in a dip now, and is a good buy as it is undervalued. Buy on the dips, sell on the highs.
Yes, I’ll say something new when the doomsayers say something new. But until then I will continue to refute the nonsense the same way, until they finally leave the doomsday predictions alone.
As much as I feel miserable when there is a correction, I really need one. Because I’m still in “invest” mode, because I’ve got years until retirement. So it feels good to suddenly have more money, I don’t have more money, because I can’t sell off, I’m still buying every week, and I’ll make a lot more money if the market corrects and comes back, then if it just keeps rising.
I lost a ton of money in 2007, but I made a ton more between 2009 and 2012.
As I said, I want the Dow to be at 20,000 when I retire. And if I could, I’d like it to be at 10,000 the day before I retire.
I can tell the future. If I buy a stock, you should definitely sell it.
I feel pretty lucky about 2009 to now. 2007 definitely stung for all involved but just staying cool and taking advantage of the ebbs worked pretty well. I feel pretty confident about weathering a correction. You have to stay in the game and take the long view, and not pile everything into one basket but I see no reason to panic. I think the sequester will be good for the market, I wish we could have a few more of them actually.
One thing I learned about the stock market, is that it's gambling. Like playing Roulette, or deciding whether to put your money on black or red. You can bet based on emotion, it makes no difference. You can calculate odds, it makes no difference. You can follow analyst's reports, and often that makes no difference.
The only thing you can count on, is that over time it grows, and eventually it has a severe dip and then recovers to grow larger than before. I put money in after the crashes, and the market recovered. I lost big on a couple but that didn't matter as I spread it around to others that made more. Now is not a good time to jump in. Wait for the next severe dip, and spread it around.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.