mcbockalds

Does that apply to your posts and links too?

My posts and links are all sitting there for anyone to point out any errors of analysis. I welcome it. I can tell you however the job of finding errors in my posts and links won't be as simple as it was for me to find them in Peter Cohan's article. There are honest errors and then there is trash and the difference between the two is usually pretty easy to distinguish. I would also welcome seeing a defense of Cohan's article in light of the criticisms I pointed out about it.

 

Cheers John

Wow Ed,

That guy is seriously out to lunch. But I now see why it is hard to stay on track rather than following fears or being incapable of changing in light of new information that changed the game. I am sure the last maker of buggy whips was the best. But buggy whips were obsolete and irrelevant with the new fact of the automobile.

No RV, the guy who is out to lunch is the author, Peter Cohan. His "analysis" is inept and plainly wrong at a number of points. It is a very good example of the truth of the advice, don't believe everything you read. I do marvel at some of the trash masquerading as economic analysis.

 

Cheers John

John. Are you referring to this Bill Gross,

 

http://www.forbes.com/sites/petercohan/2012/02/25/bill-grosss-bad-call-cost-investors-5-7-trillion/

 

or another one?

 

ed

Oh my. Did you notice a few things wrong with the article? Did Gross actually say to sell all stocks like the author implies with his numbers? Did Gross continue to say sell all stocks over the last 4 years? Did you know that Pimco is not just a bond fund, but manages all types of assets? Did Pimco sell all its stocks back in Feb. 2009? Do you know how well bond funds have done over the last 4 years? This article reminds me of another one you referenced in the past and it too had some serious logical flaws. That said, Bill Gross way underestimated the boldness of Ben Bernanke to inflate the money supply in order to re-inflate the stock market. And so we sure do have a re-inflated stock market.

 

Cheers John

 

 

Edit I thought I would read some of Gross's Investment Outlooks later in 2009, for example August 2009 where he says,

 

So much for selling all your stocks.

Yesterday, in the mail, I got my copy of Bill Gross's June 2012 Investment Outlook and read it before going to bed. As the Sha Na Na song goes, "I couldn't sleep at all last night...."

 

Bill Gross is not your typical ranting, hairshirt fanatic crying, "The world is ending!" He is too smart, too educated, too responsible, too experienced, too controlled... to say that. But he certainly said the next Sha Na Na line, "Baby things weren't right..."

 

Well, of course the Sha Na Na couldn't be expected to include such unhip, uncool lines like Bill's:

 

 

 

 

With lyrics like that swimming around in your sleepy head, how could anyone sleep? Except perhaps for Federal Reserve economists who swim not in the real world (it is much too complicated and messy) but in their computer models of a much simpler world, where by mathematical design, crises and catastrophes never happen because they can't happen. Now that sounds like "Sha Na Na" land to me.

 

Cheers John

Just too much important information in this week's economic analysis by John Hussman to not post it. I also like his comment,

 

 

If you start to get bogged down in some of the more technical stuff in the article then just skim through that section, because more important and easier to understand analysis is "just around the next paragraph."

 

If you get tired reading this article, maybe you would like to watch this video that I would title, "didn't we see this movie a few years ago?"

 

Cheers John

You cannot convince people making money that they are losing money. That's a fact, Jack!

Remember, "you don't ever count your money when sittin' at the table. There'll be time enough for countin' when the dealin' done."

 

So how are things at the Oasis. Is Ben B. still pumping? Hussman has probably never been more negative. Some interesting quotes from his report:

 

 

 

 

Cheers John

I know what will cause the balloon to pop, John. What I don't know is just when.

$200/barrel oil will bring the world economy to a screeching halt. If you like $4 gas, just imagine $10 gas.

What will cause $200 oil? A military attack on Iran's nuclear facilities.

I personally believe it's inevitable but don't know *when* it will happen. My personal, unsupported by any facts or insight, guess is between 12 and 24 months from now.

Until then it's laissez les bon temps rouller. With the very typical peaks & valleys based on the crisis de jour. (Took two years of French in high school.)

 

ed

 

 

 

Could be you will be right. Could also be that it will be Espana.

 

Cheers John

 

 

 

This is fun actually. And John I think you are wrong in this way. If we were sitting at an oasis in the desert and I was drinking from the spring and you said it was dry and refused to try to drink, because you have the background and training in spring science, and since you and all the experts you find to agree and you read say it is dry, then it must be and I am mistaken, then you will have proven yourself right as you die of thirst. And I will have drunk deeply. You cannot convince people making money that they are losing money. That's a fact, Jack!

Fun analogy RV and yet I, of course, see your analogy a bit differently. I am not saying the spring is dry. I can see y'all are drinking some very cool, wet, tasty water, while I refuse to drink and am practically dying of thirst. Why? Because I believe the water is not safe. You see, I'm a light sleeper and each night I see Ben B. pumping tainted water into the spring. I have told you this, but I have no real proof (only theory and a bit of history) that it will harm you. So I don't drink as long as Ben keeps it up, or until someone or something comes along to flush out all the "trillions of gallons" of tainted water. In the mean time, I admit, I am getting pretty thirsty!

 

Cheers and Salud John

Investing or trading? Our entire portfolio is invested with a 403b retirement fund company and two IRA fund companies. All three companies heavily penalize trading of retirement and IRA funds. Balancing is OK, but not trading. Each one penalizes a bit differently, but all make it costly. I don't mind this because I have no interest in trading and their policies discourage other people in the funds from trading and that helps keep the fees down.

 

I have NO interest in trying to persuade people here from trading. None, nada. Only one of my posts, that was poorly worded, sounded like I was bashing traders, but I wasn't and I got that cleared up, I think.

 

My posts are all about whether or not stocks and bonds are in a bubble due to the actions of the FED. Whether or not I am right, has no affect on traders. Smart/lucky/unlucky traders can make/lose money whether or not the markets are in a bubble or not.

 

I have all the education and time I would need to become a trader, but I lack the interest. Simple as that.

 

Good luck to all traders and investors on this site. Your good or bad luck does not affect the value of my portfolio. So again, I wish you buena suerte. (Didn't take high school Spanish - lived in Tucson for 3 years.)

 

Salud John

Did I hear someone requesting a doom and gloom link? I thought so!! Guess what?? I found what some may deem fear mongering......I, however, prefer to call it factual. Funny thing facts..

 

http://theeconomiccollapseblog.com/archives/19-signs-of-very-serious-economic-trouble-on-the-horizon

 

 

OKAY!!!! As I posted this reply, I happened to notice my warn bar had increased. When, I do not know, as I rarely post here anymore, and what I have posted in the past few months, has been no different than others posting here, except I am in the minority. In other words, I don't have money in the stock market and I don't believe we are in a recovery, AND I am not shy about stating so. Someone obviously reported me. Why?? Hmm...no idea. I didn't receive a warning, nor a message. Wow.

Just to give the other side its say, I love this one. It is usually trotted out after the DOW has slid a thousand points or so. It came out really early this time. Do they know something - I doubt it! The FED is so in control of markets at this point in time,...hmmmm, but then again who knows when a balloon will pop or what will cause it to pop? Now that would be a 'smart investor!'

 

 

Cheers John

This is too good not to share. Rick Santelli, today, telling it like it is!

 

http://www.breitbart.com/Breitbart-TV/2012/04/12/MUST-WATCH-Santelli-Crushes-Buffett-Rule-Economic-Plan

Rick has never been known to be shy! But I WONDER, doesn't he know there is, "No reason to just sit and complain about the Fed, Europe, debt, etc."

 

Cheers John

A smart investor will learn to deal with the situation.

 

 

 

I wonder? Just wondering.

 

Cheers John

Best for almost all involved if equity markets go up more than they go down.

 

Not at all. If I were say 50 and younger and in my earning/saving/investing years and looking to retire at say 67, I would love to see financial markets stay low until I was maybe early to mid 60's and then they can go higher. During my retirement years while I am spending my retirement funds is when I want markets going higher. The ultimate 'buy low, sell high' scenario. If only!

 

Cheers john

 

 

Perhaps, it's a good time to buy??

Yeah right. Ha.

 

The problem with cheering this market (or counting returns) - either up or down - is that this market is manic, abnormal, subject to sudden violent mood swings. Why? Many reasons of course. Not the least of which is that the US and world economies have never gone through what we are going through. (The Great Depression was not that similar to today.)

 

The 'super debt cycle' (private and public) that began building perhaps 3 decades ago is a whole new game. It is like a 'game' with two periods: the first period was great fun with everyone getting rich with stocks and ever rising home values. So we consumed like crazy and borrowed like crazy - heck, we were rich and getting richer. Whoops, the first period ended and now the second period is upon us. It is debt pay back time and we are not nearly as rich as we thought, we are not rich at all (well, 1% of us are)! We have many years of debt to pay off and while we try to do that we have less money to spend on stuff and thus fewer jobs are needed to produce less stuff. Depression? Recession?

 

Not if the FED can help it. What can the FED do? Not much except continue what it was doing...expand credit, lower interest rates, print money. Ouch. So the FED and most world wide Central Banks have been flooding financial markets with money (QE1, QE2, Operation Twist, QE3?) to try to delay and soften the pain of foreclosures, bankruptcies, reduced consumption and thus high unemployment. Of course easy money is mostly what caused the super debt cycle 'game' in the first place. Easy FED money can keep financial markets puffed up for some unknown period of time, just like in the past, but not forever - just like in the past.

 

In the first period of the 'game' inflated assets (stocks, houses, etc.) caused us to feel rich and buy lots of stuff and thus generate lots of jobs making stuff. But we are slowly learning that the first period is over. The FED knows it is over, but it is trying desperately to restart the first period, without having to go through the second period of extended debt repayment, reduced consumption, and high unemployment. I don't think they will be successful. I do, however, think they can temporarily soften the second period for a limited period of time. Unfortunately, that will likely extend the second period and may, in the end, simply make it much worse. Just saying.

 

Cheers John

Just to add a little 'alcohol' to the punch bowl.

 

Cheers John

 

Anyone of us non-experts on this forum can write a negative or positive post on why we think the stock market will do 'thus-n-so.' We can also provide links to writers who do have some degree of expertise who write negative or positive articles on the stock market.

 

John, well thanks for letting us know we can provide links to entertainment.

 

Gary North was one of those well known Y2K alarmists who knew the world was ending. I love reading articles about this Chicken Little. Here is a humorous one that may help provide alternate views on his positions.

 

Gary North

 

Some use the market and other investing positions to make money. Jim Rack said it perfectly the other day. If you can't figure out how to make money as the market fluctuates and responds to world events, then just sit on the sidelines and whine. I hope readers of the forum realize that the market does have risks but also great rewards are possible.

 

Thanks for the page on Gary North, I really mean that. I have said in the past that I do not share much philosophically with GN, but I am willing to read his articles because he brings an Austrian-economic perspective to the discussion as does Peter Schiff. I wish the page on GN were more up to date (1998) in order to get some critical insight on GN's more current views on the financial crisis. If GN is out-to-lunch I would like to know.

 

On the negative side, I don't know why people sitting on the sidelines are thought to be whining. What is the reason for the ridicule? Isn't it enough to point out that "sideliners" are missing out on the current bull run in stocks (even if some "sideliners" did not miss the bull run in bonds!) and therefore their investing opinions are suspect? Just asking?

 

Cheers John

Anyone of us non-experts on this forum can write a negative or positive post on why we think the stock market will do 'thus-n-so.' We can also provide links to writers who do have some degree of expertise who write negative or positive articles on the stock market.

 

Since I think the financial crisis which began in 2007 is not over, I tend (always?) to come up with the negative articles (some might say 'the-world-is-ending articles.) Well, here is another one by economist, Gary North. You have to get through the first part which is a bit of history of the crisis in 2007 and 2008. Then he applies this analysis/history (modern day bank run) to what he expects will be another modern day bank run. But this time it will be a run on the US Treasury. Could he be wrong? Of course.

 

If you don't like to read scary, speculative stuff then don't read this one.

 

Cheers John

 

 

I really think there is a lot to be said for his premise that there is a PTSD like experience which for some can be as bad as a combat trauma. .

 

RV, really good explanation of PTSD. I have no problem with the theory of PTSD, although my comment about the author’s “condescending, psychological fluff” makes it sound like I do - I don't. My problem is with the author’s “fluffy” use of the theory and his “doffing his hat” at behavioral finance/economics and with his first premise, where he says, “So why are Americans still too scared to get back in the stock market?”

 

To support this premise he goes on to say, “everyday investors refuse to jump in. They pulled $19 billion from funds that invest in U.S. stocks in December, according to the Investment Company Institute, and $2 billion more in January....Investors seem more than happy to miss the party.”

 

Read that quote again and think about it, do you see the flaw? It simply makes no sense. If people are pulling money OUT of stock funds in December and January, that means they already were IN stock funds. His obvious nonsensical statement is rather telling, but his “fluff” does not end there.

 

After he points out the tremendous gains in the S & P 500 since March 2009 (and since this past Oct. too), he quotes a wealth manager, who says, "Now, people call and ask, 'When is it going back down?' DeMatteo says. "There's a sense of doom." And then the author asks, “What are they thinking? It's a question fit for a shrink.” But wait a minute! Excuse me, but after this tremendous 2 1/2 year bull run is it not a reasonable question? Is it not a reasonable possibility that sane people might be wondering when the market might see a correction or even the next bear market? Of course it is. But, no, not for our author, because he is apparently too caught up in his own story with his questionable premises.

 

So I ask, might PTSD apply to those people who never got back in the stock market? It sounds like a good possibility to me too. BUT so does another possibility…the possibility that this stock market recovery is another bubble, thanks to the FED’s continued easy money policies that in fact lead to the 2007 bubble. The economists that I quoted in my earlier post (Bill Gross, etc.) seem to think so. And be they right or wrong I don't think they need a shrink to point out the error of their ways.

 

Finally, I wish I could ask the author, "with the benefit of hindsight, would you prefer to have bought into this stock market back in 2009 when the DOW was at 7,000 or today at 13,000+?" Perhaps the question will help him see why some people are calling DeMatteo and asking, “When is it going back down?” And maybe some of those people calling DeMatteo are actually shrinks...experts in PTSD...and even smart enough to remember, "buy low and sell high."

 

Cheers John

Like the song says, you never count your money when you're sitting at the table, there'll be time enough for counting when the dealings done.

 

Nicely sung.

 

And you previously said ... "John, Why don't you tell us what you really think? I believe that come December 22 the sun will rise and so will I. "...Yes, as the Brits might say, that article did "get up my nose!"

 

Cheers John

So you or someone you like is saying that if you stayed in the market since 2000, that you have lost 20 percent of your retirement money? What inflation figure is being used? How much would you have lost if you got out of the market the day after it crashed and stayed out?

How about 2008 when it dropped to around 8000. If you stayed in since then, how much of an inflation loss would you have taken? How much again if you stayed out since then?

I think the part about listening only to those you agree with is pertinent here.

As usual, past performance is not a measure of future performance.

The quote is from Paul Farrell , someone I have read about 2 or 3 times. So, no, it is not someone "I like." I have made a similar calculation in a post somewhere on this forum, but haven't tried to find it so I don't remember what annual inflation rate I used. Farrell's comment is based on using a 3% annual inflation rate which is at the high end (not including Shadow Statistics which claims 5%+). If you use 2.5% for the average annual inflation rate you get a 15% inflation adjusted loss instead of 20%

 

This does not mean that everyone who stayed fully invested in stocks from 2000 until now has lost 15% in real terms. (Note also that this calculation completely leaves out dividends.) Some have, some have lost more and some have lost less and the really great stock pickers have made money. What the numbers really say is that if you start with the DOW at 11,700 in the year 2000 and calculate its growth just due to inflation at an average annual rate of inflation (2.5% or 3% or ?) until 2012, you get 15,350 - when using 2.5% - and you get 16,195 - when using 3%. The DOW at 13,000 has not even kept up with inflation, simple as that.

 

The purpose of the quote was to highlight the economists mentioned, not to highlight the part about real losses on the DOW. But since you have commented on that, it is a good lesson for all of us about real and nominal values. It is also a good lesson about our - including mine - tendency to always calculate our percentage gains, but seldom our percentage losses and we seldom do those calculations in real, inflation adjusted values. Nominal returns look so much better than real returns. In other words, talking about "behavioral, psychological" economics, we are most inclined to do the numbers in a way that makes us feel good.

 

I have no answers for your other questions ... I assume you did not really expect any.

 

PS Farrell mentioned Wall Street addicts and here is a telling letter about Goldman Sachs.

 

Cheers John

An article worth reading. Explains why some people are so afraid to accept the reality that the US economy is improving.

 

http://finance.yahoo.com/news/why-americans-avoiding-stocks-ask-225638447.html

 

A very humorous article. He says, "But everyday investors refuse to jump in. They pulled $19 billion from funds that invest in U.S. stocks in December, according to the Investment Company Institute, and $2 billion more in January." He fails to say what the ICI goes on to say - that these unfortunate Americans were putting those funds into the bond market. Talk about bad timing, chasing returns. In other words they were not afraid of investing out of fear or bad psychology, but were just bad market timers. I still have to wonder about these articles that start with the premise that hordes of Americans are sitting on the sidelines with cash in their sweaty little palms - how do these authors think the DOW got to 13000+ with investors sitting out? Makes little sense to me.

 

Do you suppose the author would accuse the guys mentioned in the quote below of fear and bad psychology?

 

 

Perhaps a few behavioral economists might be inclined to agree with the outspoken, Paul Farrell when he asserts that "Wall Street addicts" are the problem. Perhaps the few average American investors who are sitting on the sidelines because they happen to agree with the economists mentioned above deserve more credit than condescending, psychological fluff masquerading as behavioral economic analysis.

 

Cheers John

A remarkable runup.

I am reminded of a few past incredible (meaning "not credible") market peaks.

 

I feel like the unfortunate (short term) designated driver at a rocking and rolling party. It is no fun sitting idly by while the "bubbly" (pun intended) is being consumed and praised and good cheer abounds. Oh well, it is good to see when someone has a good time and heads home in a cheery mood before the bubbly runs out and the regretting begins with "tomorrow's" retching hangover.

 

Cheers! John

Even a degree in economics does not guarantee an understanding of what is going on in Europe and how it will affect the U.S. But for your entertaining pleasure here is a fun explanation of the ongoing Eurozone crisis ... and some thought this was going to be solved in a year or two ... that is pretty funny too.

 

Cheers John

sounds sooooo simple, doesn't it!

 

but think about it: if it were so simple, everyone would be in the Warren Buffet class.

 

very few are so there must be something not so simple there.

 

 

Of course you are perfectly right! I use the phrase "buy low sell high" mostly as a joke. It actually gives you NO information about when to buy or sell stocks, but only about what you should have done after the fact. A phrase that is only a tiny bit better is "buy as prices are falling and sell as they are rising." I like this because it is counter to our usual fear/greed emotions. We (I) tend to feel good (greed) and think we should buy when prices are rising and feel bad (fear) when they are falling and think we should sell. I like this quote from John Hussman,

 

 

Cheers John

http://money.cnn.com/2012/02/03/markets/markets_newyork/index.htm

 

ed

 

OK, I'm confused. In response to "Buy low sell high" just the other day you said "buy." Now you give us the headline link above that says, "Dow at 4-year high, Nasdaq hits 11-year high" so I take it you are now telling us it is time to sell eh? Buy low and sell high, right?

 

Cheers John