Lest You Think

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Jul 13, 2006 3:45 pm

Lest you think it can't happen, be aware that market action like we've had for the last couple of trading sessions can go on for months--even years.


Dow Down 60, Dow down 102, Dow up 36, Dow down 129, Dow down 87.


Repeat week after week with an occasional "Bull Trap" where it rises for two or three days in a row.


Be particularly wary on Fridays.


Your clients are going to get very nervous--their retirement dream is slipping away from them day by day.


They're going to look for somebody to blame--and you are going to be square in their sights.

Jul 13, 2006 3:55 pm

The trap has passed.  6/15-7/4.  A BS rally back up on no volume.


Now we broke support on the 500 and the Q's just broke support.


A wonderful time for technicians.  Look at some of the semis bouncing right off October lows with nice relative strength.  I'm having a good time over hear.      

Jul 13, 2006 4:00 pm

Thank you o wise one. Your insight and thoughts are greatly welcomed...


Its amusing to see how you believe yourself to be the patriarch and all-knowing figure on this forum...


Gives me a chuckle as I go through the day...

Jul 13, 2006 4:02 pm

And by the way, this is going to be a beauty of a recession.  The public can't spend more than they earn any more because their artifically inflated homes have been tapped out with refi money spent on jet skis and other crap.  The working class can't afford to drive to WMT to buy junk because gas is too expensive.  This will be interesting to watch as it plays out.

Jul 13, 2006 4:12 pm

18 straight quarters of positive growth - I doubt we'll see negative growth, let alone a recession.  1,000 point trading ranges - yes.  The only thing worse than a down market is a flat market (remember the 70's, and I'm not talking about your white polyester disco suit)? 


However, nothing can be as bad as the 1999 - 2000 collapse after 8 years of record performance.  I remember thinking that my clients would complain if they got less than 30% returns on their stock portfolios.  Rule #3:  Regression is law.

Jul 13, 2006 4:12 pm

I think we should "buy & hold".

Jul 13, 2006 4:18 pm
Malcolm:

And by the way, this is going to be a beauty of a recession.  The public can't spend more than they earn any more because their artifically inflated homes have been tapped out with refi money spent on jet skis and other crap.  The working class can't afford to drive to WMT to buy junk because gas is too expensive.  This will be interesting to watch as it plays out.


Oil above $76 bbl, gasoline averaging $3.30 nationwide.  How about the cost of getting things delivered--the trucking industry is not going to go broke getting your groceries to the store.


The Dow Jones could drop to 3,000--clients with $200,000 portfolios could watch them drop below $100,000.


Real Estate--especially in distant suburbs--could be cut in half.


Interest rates could hit double digits by Christmas.


Investors will want to be in cash and will see no reason to pay management fees to be in cash.


In the 1970s about 80% of the brokers who had been registered in 1970 had quit by 1980--they did not retire, they quit.  People with their money in cash need a financial advisor like they need a root canal.

Jul 13, 2006 4:49 pm

I think that's right NASD.  Especially on the interest rates.  I think you are also right on the management fees especially for 3rd party managers where the broker sits on his duff and does nothing but collect fees while the brilliant manager tanks. 


I think we are headed toward some difficult times.  Brokers who learn how to really manage money will see their businesses grow through referrals and the rest are going to see their businesses shrink. 


I kon't know much about the trucking industry but I'll take your word on that.  

Jul 13, 2006 5:36 pm
NASD Newbie:
Malcolm:

And by the way, this is going to be a beauty of a recession.  The public can't spend more than they earn any more because their artifically inflated homes have been tapped out with refi money spent on jet skis and other crap.  The working class can't afford to drive to WMT to buy junk because gas is too expensive.  This will be interesting to watch as it plays out.


Oil above $76 bbl, gasoline averaging $3.30 nationwide.  How about the cost of getting things delivered--the trucking industry is not going to go broke getting your groceries to the store.


The Dow Jones could drop to 3,000--clients with $200,000 portfolios could watch them drop below $100,000.


Real Estate--especially in distant suburbs--could be cut in half.


Interest rates could hit double digits by Christmas.


Investors will want to be in cash and will see no reason to pay management fees to be in cash.


In the 1970s about 80% of the brokers who had been registered in 1970 had quit by 1980--they did not retire, they quit.  People with their money in cash need a financial advisor like they need a root canal.


Let's revisit this doom & gloom at the end of the year.  The Dow could drop to 3,000 and the sky could fall too.  Your real estate prediction is plausible, but the rest of your predictions look a little overdone.

Jul 13, 2006 5:43 pm

Sounds like you need an advisor NASD, to tell you what happens in the short term doesn't matter never has never will. Go play golf, enjoy life. Get off of these boards where you spend 10 hours a day correcting people and telling us the sky will fall.



How about this DOW will break 12,000 by the end of the year!    I'm a bull!

Jul 13, 2006 5:49 pm
bankrep1:



How about this DOW will break 12,000 by the end of the year!    I'm a bull!


What do you see to drive the market higher?  Gasoline at $4 per gallon, is that it?


A protracted war in the Middle East?  Is that it?


What if Israel destroys the Iranian oil fields, is that Dow 13,000?


A smart guy like you must have all sorts of reasons to substantiate your point of view. What are they?

Jul 13, 2006 5:57 pm
bankrep1:

Sounds like you need an advisor NASD, to tell you what happens in the short term doesn't matter never has never will.



Is that right?  Is it possible that the short term can linger and become long term?


What do you tell your client who is 55 years old about being patient?  If a client is sitting on $500,00, down from $1,000,000 what are you going to tell him?  How long should he wait?

Jul 13, 2006 6:15 pm
NASD Newbie:
bankrep1:

Sounds like you need an advisor NASD, to tell you what happens in the short term doesn't matter never has never will.



Is that right?  Is it possible that the short term can linger and become long term?


What do you tell your client who is 55 years old about being patient?  If a client is sitting on $500,00, down from $1,000,000 what are you going to tell him?  How long should he wait?

Aha! That is the real argument. 75% of all the wealth in this country is controlled by the 50+ crowd (see some of my previous posts) and the market (S&P) has shown no growth for 5-6 yrs. now and 5 yrs is 20% of a 50 yr. old's actuarial life. How much pain can we all stand? Will "Mr. Market" force us to do the wrong thing because we can't stand the pain. THAT is what the buy & hold crowd fails to factor in. If Israel gets adventuresome, grab ahold of your cajones!!

Jul 13, 2006 6:32 pm
Revealer:

If Israel gets adventuresome, grab ahold of your cajones!!



Other things too--GOP loses the House in November could result in a protracted sell off that consumes the next two years.


China's insatiable demand for oil results in $100 bbl prices--there is almost no way the market can crawl up that wall  of worry.  Too many industries are negatively affected by $5 per gallon gasoline.


Jul 13, 2006 6:34 pm
Revealer:
NASD Newbie:
bankrep1:


Sounds like you need an advisor NASD, to tell you what happens in the short term doesn't matter never has never will.



Is that right? Is it possible that the short term can linger and become long term?



What do you tell your client who is 55 years old about being patient? If a client is sitting on $500,00, down from $1,000,000 what are you going to tell him? How long should he wait?

Aha! That is the real argument. 75% of all the wealth in this country is controlled by the 50+ crowd (see some of my previous posts) and the market (S&P) has shown no growth for 5-6 yrs. now and 5 yrs is 20% of a 50 yr. old's actuarial life. How much pain can we all stand? Will "Mr. Market" force us to do the wrong thing because we can't stand the pain. THAT is what the buy & hold crowd fails to factor in. If Israel gets adventuresome, grab ahold of your cajones!!





Well most of my clients 5 yr. avg.'s are between 6-8% (and yes alot of them have been invested that whole time, no in and out, no timing etc.). Not to bad considering I always preach 8% to be the most to count on. I don't see how going forward is going to be any different than in the past. 2000-2002 was pretty ugly and people were showing gains in 2000, small loss in 01 and a good scare in 02' unfortunately a few clients did bail in 02' however, I already received the you were right calls.



Again this is why I advocate the VA with a living benefit for those who are scared of the market. Mr. or Mrs. Jones I am not asking you to trust me, read here the word is insured. How can you argue with that?



Jul 13, 2006 6:37 pm

By the way:



$4 gas means Exxon is going to the moon, a war means the defense sector is going higher and if the Oil field's are destroyed...well Halliburton is a to quote Jim buy buy buy!



DOW 13,000

Jul 13, 2006 6:41 pm
bankrep1:



Again this is why I advocate the VA with a living benefit for those who are scared of the market. Mr. or Mrs. Jones I am not asking you to trust me, read here the word is insured. How can you argue with that?


Are you saying that you believe that a VA will provide enough growth to fund the retirement of a 55 year old engineer?


How many years of 7% growth does it take to return to where you were if you lose 50% in a massive slide?


Do you realize how ignorant you sound when you say that 2001-03 was ugly?  Try Dow at 5,000, or lower for ugly.


Again, suppose your 55 year old client with $700,000 watches it erode to $400,000 while you sit there with your Alfred E Neuman "What Me Worry" routine going.  What kind of a return does he need to achieve get back to his $700,000 in, say, seven years?


Do you think they'll ring a bell telling you that the bull is out of the gates?

Jul 13, 2006 6:46 pm
bankrep1:

By the way:

$4 gas means Exxon is going to the moon, a war means the defense sector is going higher and if the Oil field's are destroyed...well Halliburton is a to quote Jim buy buy buy!

DOW 13,000


Why will Exxon go to the moon?  Oil hit a historic high today--XOM was up a dime a share.  What are the economics of companies like XOM--how much do their costs go up with the price of gasoline?


Don't you figure that war is already built into the defense sector--and Haliburton too for that matter.


Buy the rumor, sell the news.


Whatever you do, don't talk to your clients with the awe inspiriing ignorance of reality you are displaying on this forum.

Jul 13, 2006 6:56 pm
NASD Newbie:
bankrep1:

Again this is why I advocate the VA with a living benefit for those who are scared of the market. Mr. or Mrs. Jones I am not asking you to trust me, read here the word is insured. How can you argue with that?



Are you saying that you believe that a VA will provide enough growth to fund the retirement of a 55 year old engineer?



At 55 the objective is no longer growth in most cases the objetive is guaranteed retirement income. The only tool that can guarantee a 5% withdraw for the clients entire life and their spouses life is a VA with a living benefit rider GWB, if the client still needed growth at 55, my advice would be not to retire they need to save more money





How many years of 7% growth does it take to return to where you were if you lose 50% in a massive slide?

who cares, no one is losing 50%

Do you realize how ignorant you sound when you say that 2001-03 was ugly? Try Dow at 5,000, or lower for ugly.

The dow fell from 11500 to like 7500 at one point, that was a 35% dip. I will remind you as I do my client the dow is 30 companies, who cares what it does, I don't and you don't. You sound stupid of course 2001/2002 were the worst years we've seen since 1973/74



Again, suppose your 55 year old client with $700,000 watches it erode to $400,000 while you sit there with your Alfred E Neuman "What Me Worry" routine going. What kind of a return does he need to achieve get back to his $700,000 in, say, seven years?





The question is irrelevant for the following reasons, A. a 55 year old retiree would never lose 40 something percent in the investments I would place him in



Do you think they'll ring a bell telling you that the bull is out of the gates?

They doAt 55 the pbjective is no longer growth in most cases the objetive is guaranteed retirement income. The only tool that can guarantee a 5% withdraw for the clients entire life and their spouses life is a VA with a living benefit, if the client still needed growth at 55 my advice would be not to retire

Jul 13, 2006 6:57 pm

oops ignore the last paragraph in my post