Bear Market Coming?

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Jun 26, 2007 10:16 pm

I was just wondering what some of you thought.


Now I know that we're not in the business of timing the market, but we're sure as hell more likely to make a good call than 99% of people.


I'm trying to convince myself that being more conservative and balanced is probably a good idea, but:


P/Es are still ridiculously low


Bond Rates are on the rise - Bonds don't look good to me....


But when I like at a weekly/monthly chart on the S&P - It looks scary.


I'm not trying to call a top, I'm just curious what some of you guys think about the next 6months to a year...


Jun 26, 2007 10:57 pm

It obviously depends on your time frame.  When you look at the short term chart, I would agree, it doesn't look great, probably trading in a range from 12,000 to 13,500.  It brings the old saying "Sell and go away in May" to life as we hit the summer doldrums.  Long term charts show the markets just starting to break out, new all time highs (except for the sh*tty Nasdaq right now)...could still continue to run another few thousand points (18,000?) before any significant pullback.  Lately I've been bullish on gold and copper and other metals and mining plays, could see a run before too long.  I'm really hoping techs and biotechs will take off though, I feel I've made some great bets there...but don't see it in the short term. 


As far as feeling that you should be more conservative and balanced, it's probably wise for the majority of clients out there.  That being said, the recent trading action has allowed for some discounted deals to be found.


Overall, right now I believe this market is piss poor and leaving many a little queezy.


Just my own personal thoughts. 

Jun 26, 2007 10:58 pm

Worth talking about.


I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%?


We're coming off a nice run in the market, and bonds will be okay in the long run. Retirees should trim back to 40% stocks (maybe that's all they ever have, but it can be increased at times). A lot of clients have 50-50 right now, more growth oriented still has 60-40 in favor of stocks.


Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.


Great stuff to continually touch clients with, if just to let them know you are thinking about them.


We have had a nice run, economic cycles still exist, and you can't get burned too badly if you never give up on stocks, or don't have too many.


The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.

Jun 26, 2007 11:02 pm

Hey I appreciate the response. 


Something I've been battling with, Can a chart on an index be as valid or as good as a tool as a chart on an individual security? 


At any rate, this market is ridiculous & tough to trade in my opinion.  I mean, if this thing sells off these financials are going to be a steal.

Jun 26, 2007 11:06 pm

Its like this.


Real Estate stocks are DRAGGING


Bonds have been CLOBBERED  (good bargain?)


Oil Stocks LOOk extremely extended - but have P/Es of 10?


Banks & Financials - P/Es of 10 too, but nobody likes them!


Consumer Staples - Most have PEG ratios of 2


Technology - About to take off?


Consumer Discretionary - Credit Card spending keeping it going.



Where are we at?  wheres the next Bull Market?

Jun 26, 2007 11:13 pm

We're probably in a secular bear market still and will be for a while. Bullsh*t, Bobby, you may say!!! Here's some information for you...if you take the average up year in a bear market and compare it to the average up year in a bull market, the bear market is higher. That's why I love VA's so much. They address all 3 possibilities of market direction. Most of you dumbsh*ts position your clients for the market going in one direction - higher.

Jun 26, 2007 11:17 pm

Bobby,


Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?


And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?

Jun 26, 2007 11:21 pm
FreeLunch:

Bobby,


Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?


And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?



How can I expand on a fact? The data is out there. Go look it up. The UIT's that I've been using employ strategies that screen out weak companies. In 2002, when the S&P was down 22% and the average investor was down 40%, the strategy was down about 12%. Clearly, I don't believe in a "well balanced growth portfolio." This is also why EIA are so attractive.

Jun 26, 2007 11:41 pm
FreeLunch:

I was just wondering what some of you thought.


Now I know that we're not in the business of timing the market, but
we're sure as hell more likely to make a good call than 99% of people.





If you were able to time the market better than 99% of the people out there, you wouldn't be posting here.



What makes you think you know more about the future than anyone else?

Jun 27, 2007 12:00 am
GolFA:

Worth talking about.

I'm taking the view that a lot of analysts think stocks could do 8%
this year. How much (more) risk do you want to take to get 8%?


If the analysts knew that stocks would do 8%, why are they not
trading SPX futures instead of writing predictions about the SPX?



Asset allocation is cool, but you need to add a factor for
nearer term market expectations. Large cap looks better now than small
cap, international is important, well managed tax exempt muni bond
funds are always a good idea.


Great stuff to continually touch clients with, if just to let them know you are thinking about them.


Do you mail clients their horoscopes?



The risk reward relationship between balanced portfolio and all
stocks is exponential for risk and less or linear for reward. Allreit
can probably explain that better than me.


I'll explain something much simpler, you are mouthing off platitudes
and cliche's from your firm's daily/weekly/monthly market and strategy
letter.


Jun 27, 2007 12:02 am

I am a big fan of sentiment (Hulbert/Newsletters & Burke/Individual Investors) and am trying to gauge bullishness. Right now we have a divergence between Hulbert and Burke as Hulbert is more bullish and Burke is defensive.


A correction sometime this summer would probably be healthy longer term. I would prefer to see a long sideways correction as opposed to the straight drop and flush... unless I was holding puts or inverse ETF's, then I wouldn't mind the quick money. 

Jun 27, 2007 12:09 am

Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!

Jun 27, 2007 12:14 am
futurestrader:

Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!


VA's, EIA's, DPP's, anything outside of the stock/bond markets.

Jun 27, 2007 12:17 am
AllREIT:
GolFA:

Worth talking about.


I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%?


If the analysts knew that stocks would do 8%, why are they not trading SPX futures instead of writing predictions about the SPX?



[quote]Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.


Great stuff to continually touch clients with, if just to let them know you are thinking about them.[/quote]


Do you mail clients their horoscopes?

[quote]The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.[/quote]


I'll explain something much simpler, you are mouthing off platitudes and cliche's from your firm's daily/weekly/monthly market and strategy letter.


When did you start getting so uppity, anyway? I think for myself, not that I said anything amazing. How many down markets have you been through with your clients money. It is one thing to bring up some new points, and another to attack someone you don't know. I've been around the block, Allreit, as in decades,  and I notice you got snitty over the past six months.

Jun 27, 2007 12:17 am
Bobby Hull:
futurestrader:

Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!


VA's, EIA's, DPP's, anything outside of the stock/bond markets.



And why do you think that is?

Jun 27, 2007 12:22 am

There's a bad moon a' rising.


Jun 27, 2007 12:23 am
futurestrader:
Bobby Hull:
futurestrader:

Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!


VA's, EIA's, DPP's, anything outside of the stock/bond markets.




And why do you think that is?


Don't know, don't care. I just sell them what they want to buy.

Jun 27, 2007 12:30 am
Bobby Hull:
futurestrader:
Bobby Hull:

[quote=futurestrader]Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!
[/quote]


VA's, EIA's, DPP's, anything outside of the stock/bond markets.



And why do you think that is?


Don't know, don't care. I just sell them what they want to buy.



Ahhh.. there's the salesmen spirit now! I was wondering where that was!

Jun 27, 2007 1:03 am
futurestrader:


And why do you think that is?





The high sales comissions. (rimshot!)



Bobby is our resident annuity shark/troll.

Jun 27, 2007 2:09 am
GolFA:

The risk reward relationship between balanced portfolio and
all stocks is exponential for risk and less or linear for reward.
Allreit can probably explain that better than me.


I'll explain something much simpler, you are mouthing off platitudes
and cliche's from your firm's daily/weekly/monthly market and strategy
letter.


When did you start getting so uppity, anyway? I think for myself,
not that I said anything amazing. How many down markets have you been
through with your clients money. It is one thing to bring up some new
points, and another to attack someone you don't know. I've been around
the block, Allreit, as in decades,  and I notice you got snitty
over the past six months.

[/quote]



If you post here, you are casting bread upon the water. Don't complain about what nibbles on it.



The point I'm making is you were quoting the same sort of lame market
commentary that every firm puts out in its market/strategy letter. The
problem is that no one knows the future, and trying to make point
estimates (e.g SPX goes up 8%) about the future is a worse than useless
activity.



The general record of market forcasters/commentators is bad. Some
people need the reassurance of a talking head. People who could
actually forcast macro events accurately would be running global macro
hedge funds, and making lots of money.



The main reason firms put out all this strategy commentary is to encourage more trading.
The hope is that clients will put alot of money in motion overweighting
and underweight various stocks/sectors/funds etc. Of course if you did
all the under/overweighting that is advocated, you would be 167%
invested



Even worse is the issue of aggregate opinion. If you want results from your private opinions, it has to be very different
from the general market opinion. If you think the fed will/won't cut
rates, it does you no good if everyone agree's with you and that is
priced in.



The in house commentators (and everyone else in the mainstream
financial services) will never be very different, because if they are,
they could be wrong, and lose a cushy job. Far better to be in the hurd
and say "The Fed's sudden 50bp increase in rates was entirely
unexpected and far in excess of the consensus estimate"



IMHO the best policy is to be agnostic, and stick your Asset
Allocation/Investment Disicipline regardless of what you think about
future market conditions.