Death of Beta-Centric Buy & Hold Long-Only Strat
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Yesterday was the coolest day I've seen in a long time. Two GREAT chances to get in and out in the same day. The longer we sit and breach support the better chance it has of becoming overhead resistance. Being in cash and scalping like a big dog lets me sleep very well. This time we wont be able to say we didn't see it coming. I'm thinking 650 ish will be the bottom. Considering the components of the DOW I think it's going to bottom in the mid 5000. It's going to bear a range bound grind down to it from here. Terrible for investing GREAT for trading.
More evidence of the same, S&P closed under 800; OUCH!. Still keep wishing I’m wrong but I’m looking like quite the hero to my clients at the moment. They are out of the MF’s and actually making money with cash.
Speaking of statistics; I’m not making a trade unless it’s a scalp with an 85% or better probability. Not going out past 60 days, time decay is a great friend. As I said before there are ‘2% ers’ all over the place on stock that we want to own with good solid dividends.
Sure wish I could see tomorrow's bar.Was short via SH today and have had SKF four about 3 weeks. Buy and hold is really smart. We’ll now need all of the “magical” 25% “bounce” that Incredible Hulk is expecting to get back to 1,000. Might happen, but not soon - so why would anyone be in this market right now?
Well here we are at the end of the rubber band. Will it snap??
The MF's are down 6% from where I sold them on average. Sad .... I still hope I'm wrong.brandnewadvisor reminds me of the brokers selling Putnam OTC in 1999/2000 because it worked the year before. Just another sign that we are very near the market bottom. Personally I expect a 25% pop to around 1000 on the s&p by year end.
What's your reason for your expectation, Hulk? Do you think that earnings will be up by that much? If so, why?
A couple reasons. I’ll start with my gut, based on what feels like capitulation from personal client interactions. Despair in the media, on wall street, in DC, and on main street all point to a “low point” for me. I went out to eat at a nice restaurant and it was completely full. I wait in line on Thursday (not a weekend) at Best Buy that is 20 deep. I spent $40 on some computer cord. The world is not ending. People are still spending. Every time (as if I’ve seen more than the (2000-2002 mrkt) there is 0 hope to be found and the bears are smiling as if they can’t be wrong, then we are at/near the bottom. Investments cycle. The longs think we can’t be wrong, then we are wrong for awhile. The shorts begin to think they can’t be wrong, then they are wrong for awhile. My gut (whiich has been wrong) tells me we are there.
From a fundamental standpoint. I think companies throw everything and the kitchen sink in for writedowns on the first quarter and pushes s&p earnings to $50-$55 an annualized basis giving us a current pe near 13. I think by 3rd or 4th quarter, the writedowns are no longer there and with even a slight uptick from all this money their throwing into the system we see quarterly earnings closer to $65 annualized. Based on future expectations, what will be then current valuations and having the worst behind us, I think 15 is a resonable PE for the market we finally see the cash flow in from the sidelines pushing us to 1000 on the s&p.
I tell my clients I’m an eternal optimist. Unfortunately, I’ve been wrong the last decade, but I think the next decade looks very promising (see the optimism).
Feel free to shoot holes through my reasoning. I spend my days selling against the media, I might as well sell against other brokers too.
15 is a historically reasonable P/E only when there is earnings growth and economic expansion - something we had for about 50 years. That is not the case currently as the only way spending can rise is if it is from savings as there is no savings rate and no borrowing. This is all positive - just join the darkside and buy a short etf or put option. btw - since the date of my first post my allocation that people called me stupid for is up about 9%...market is down 9%.A couple reasons. I’ll start with my gut, based on what feels like capitulation from personal client interactions. Despair in the media, on wall street, in DC, and on main street all point to a “low point” for me. I went out to eat at a nice restaurant and it was completely full. I wait in line on Thursday (not a weekend) at Best Buy that is 20 deep. I spent $40 on some computer cord. The world is not ending. People are still spending. Every time (as if I’ve seen more than the (2000-2002 mrkt) there is 0 hope to be found and the bears are smiling as if they can’t be wrong, then we are at/near the bottom. Investments cycle. The longs think we can’t be wrong, then we are wrong for awhile. The shorts begin to think they can’t be wrong, then they are wrong for awhile. My gut (whiich has been wrong) tells me we are there.
From a fundamental standpoint. I think companies throw everything and the kitchen sink in for writedowns on the first quarter and pushes s&p earnings to $50-$55 an annualized basis giving us a current pe near 13. I think by 3rd or 4th quarter, the writedowns are no longer there and with even a slight uptick from all this money their throwing into the system we see quarterly earnings closer to $65 annualized. Based on future expectations, what will be then current valuations and having the worst behind us, I think 15 is a resonable PE for the market we finally see the cash flow in from the sidelines pushing us to 1000 on the s&p.
I tell my clients I’m an eternal optimist. Unfortunately, I’ve been wrong the last decade, but I think the next decade looks very promising (see the optimism).
Feel free to shoot holes through my reasoning. I spend my days selling against the media, I might as well sell against other brokers too.
Your thoughts are as valid as anybodies. Everything I've been doing is a short term trade not an investment. I think if you're 'selling' you've been doing great. As for what you see around you I understand where you are coming from. What I've been seeing around me is significant deflation; food, fuel etc. That was the larger part of my decision to go to cash. You can now buy a nice steak dinner around here for less than $10. Gasoline in real dollars is a low as it's been in decades (I think) you can buy a brand new car for less than 10k with 0 APR. Look at the DOW chart and compare it to the chart in 1933 if you want to get some sweaty palms. As God is my witness I hope I'm wrong but I think we are going head south in a slow protracted bleed.Feel free to shoot holes through my reasoning. I spend my days selling against the media, I might as well sell against other brokers too.
OUCH!!! Worst close in 12 years. I’m a hero to my clients (at the moment) that’s not said with bravado.
15 is a historically reasonable P/E only when there is earnings growth and economic expansion - something we had for about 50 years. That is not the case currently as the only way spending can rise is if it is from savings as there is no savings rate and no borrowing. This is all positive - just join the darkside and buy a short etf or put option. btw - since the date of my first post my allocation that people called me stupid for is up about 9%...market is down 9%. [/quote] 15 PE? No way going forward. Who knows how low the "E" is going...but then the next shoe to fall will be the "P". And when that goes down in 2010-2013 we will really be in for a crap environment. Spend some time looking at the 70's charts, companies growing earnings from 1973 to 1980 and stock traded dead flat. That is usual action after this type of deal, first the E then the P gets hit.[quote=Incredible Hulk]A couple reasons. I’ll start with my gut, based on what feels like capitulation from personal client interactions. Despair in the media, on wall street, in DC, and on main street all point to a “low point” for me. I went out to eat at a nice restaurant and it was completely full. I wait in line on Thursday (not a weekend) at Best Buy that is 20 deep. I spent $40 on some computer cord. The world is not ending. People are still spending. Every time (as if I’ve seen more than the (2000-2002 mrkt) there is 0 hope to be found and the bears are smiling as if they can’t be wrong, then we are at/near the bottom. Investments cycle. The longs think we can’t be wrong, then we are wrong for awhile. The shorts begin to think they can’t be wrong, then they are wrong for awhile. My gut (whiich has been wrong) tells me we are there.
From a fundamental standpoint. I think companies throw everything and the kitchen sink in for writedowns on the first quarter and pushes s&p earnings to $50-$55 an annualized basis giving us a current pe near 13. I think by 3rd or 4th quarter, the writedowns are no longer there and with even a slight uptick from all this money their throwing into the system we see quarterly earnings closer to $65 annualized. Based on future expectations, what will be then current valuations and having the worst behind us, I think 15 is a resonable PE for the market we finally see the cash flow in from the sidelines pushing us to 1000 on the s&p.
I tell my clients I’m an eternal optimist. Unfortunately, I’ve been wrong the last decade, but I think the next decade looks very promising (see the optimism).
Feel free to shoot holes through my reasoning. I spend my days selling against the media, I might as well sell against other brokers too.
If you look at the dividend levels for the S&P it NOW makes the S&P appear expensive, hard to believe but true.
[quote=brandnewadvisor] This is all positive - just join the darkside and buy a short etf or put option.
btw - since the date of my first post my allocation that people called me stupid for is up about 9%...market is down 9%. [/quote] I feel sorry for those that think going short is somehow wrong ... I'll never get that. I sure would love to hear about the allocation model you are using.think they want to take out the low on the S&P here, if that does not trigger an end of the month phoney rally we are setting for a big leg down I think. Agree S&P is not cheap, dont know how people think it is. Dividends being cut a record rate, does not look good. Looking at some names, IP, AA, DOW, GE, WHR, X, BDK, INTC...list could go into the hundreds making 10-20 year lows.If you look at the dividend levels for the S&P it NOW makes the S&P appear expensive, hard to believe but true.
I had a guy run a Z Score on every listed stock
SCAAAAAAAAAAAAAARY !!!!!If if works like it's supposed to the fun has hardly begun.
[quote=brandnewadvisor][quote=Incredible Hulk]A couple reasons. I’ll start with my gut, based on what feels like capitulation from personal client interactions. Despair in the media, on wall street, in DC, and on main street all point to a “low point” for me. I went out to eat at a nice restaurant and it was completely full. I wait in line on Thursday (not a weekend) at Best Buy that is 20 deep. I spent $40 on some computer cord. The world is not ending. People are still spending. Every time (as if I’ve seen more than the (2000-2002 mrkt) there is 0 hope to be found and the bears are smiling as if they can’t be wrong, then we are at/near the bottom. Investments cycle. The longs think we can’t be wrong, then we are wrong for awhile. The shorts begin to think they can’t be wrong, then they are wrong for awhile. My gut (whiich has been wrong) tells me we are there. From a fundamental standpoint. I think companies throw everything and the kitchen sink in for writedowns on the first quarter and pushes s&p earnings to $50-$55 an annualized basis giving us a current pe near 13. I think by 3rd or 4th quarter, the writedowns are no longer there and with even a slight uptick from all this money their throwing into the system we see quarterly earnings closer to $65 annualized. Based on future expectations, what will be then current valuations and having the worst behind us, I think 15 is a resonable PE for the market we finally see the cash flow in from the sidelines pushing us to 1000 on the s&p. I tell my clients I’m an eternal optimist. Unfortunately, I’ve been wrong the last decade, but I think the next decade looks very promising (see the optimism). Feel free to shoot holes through my reasoning. I spend my days selling against the media, I might as well sell against other brokers too.
15 is a historically reasonable P/E only when there is earnings growth and economic expansion - something we had for about 50 years. That is not the case currently as the only way spending can rise is if it is from savings as there is no savings rate and no borrowing.
This is all positive - just join the darkside and buy a short etf or put option.
btw - since the date of my first post my allocation that people called me stupid for is up about 9%…market is down 9%. [/quote]
15 PE? No way going forward. Who knows how low the “E” is going…but then the next shoe to fall will be the “P”. And when that goes down in 2010-2013 we will really be in for a crap environment. Spend some time looking at the 70’s charts, companies growing earnings from 1973 to 1980 and stock traded dead flat. That is usual action after this type of deal, first the E then the P gets hit.[/quote]
Still feel the same way Fritz? You can come out of your bunker now. We are still 18 points away, but we are close enough for me to feel vindicated.
These guys are hiding under their desks right now. When they do return they will claim the bought in at Dow 7k.
You think that Ron??? The hiding under the table babble that is. Since I made several post before yours am I included in 'these guys'?? Because we both know your statement is bullsh*t. Why even say something you know is bullsh*t? Do you use bullsh*t in your sales pitch?These guys are hiding under their desks right now. When they do return they will claim the bought in at Dow 7k.