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Discussion Starter #1
From what I see in the US...and knowing that the US market is highly linked to ours...how could people be buying stocks right now?

Interest rates are still at zero...and money is not being lent. Money supply in the US is contracting...home values still going down...artificial stimulus is likely propping up the market. Market is grinding higher, but the volume is historically low. Bullish sentiment is approaching all time highs...

Is it just me or is this thing out of control now? It is a serious house of cards..and I would imagine as risky as any point in history.

WHo would think I was crazy if I put everything in short term US treasuries? I could buy an etf or mutual fund and just wait out what seems to me to be a definite drop in the market to a more reasonable level. I have no fear of huge inflation in the US...I think deflation is more of a trend than inflation...thus my interest in capital preservation and US treasuries.
 

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WHo would think I was crazy if I put everything in short term US treasuries? I could buy an etf or mutual fund and just wait out what seems to me to be a definite drop in the market to a more reasonable level. I have no fear of huge inflation in the US...I think deflation is more of a trend than inflation...thus my interest in capital preservation and US treasuries.
You might very well be right. That's why I keep a portion of the portfolio in bonds even though I'm investing for the long-term. However, I'm not willing to make all-or-nothing bets on this scenario panning out. So I'm keeping my current stock holdings. But considering stocks are not screaming values anymore, I'm building up savings in cash and short-term bonds.
 

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Theres always going to be effiencies in the market and its your job to find the areas and exploit it.

Its must easier to predict and forecast an individual company's direction/result than the entire market's.
 

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Discussion Starter #5
I have no doubt that I will likely be a horrible market timer like many others before me...I just cannot see a reason to buy in right now.

I suppose I see a sideways market and a likely rise in treasury yields...couple that with a dollar at partity and that's why I was thinking short term treasuries for a while....
 

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As long as people continue to drink Coke, shave, use soap, laundry detergent, smoke, drink, use electricity, and natural gas, use a bank, and credit cards I will continue to buy stocks, and enjoy a growing income via dividends.

I do have cash right now, but not because I think stocks are bad, or asset allocation is a good idea, but rather things I want to buy are not priced right for me.
 

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I believe this is a very bad time to buy if you plan to just buy and hold. The best way to play it if you are in cash and don't like to trade is to buy in slowly a month at a time and possibly buy more if we get a real sell off like we did in 2008. People say go all in all the time, but that seems crazy when prices are so high.
 

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The economy has just recovered and we are out of recession. The bull market has just started. There is no way it will reverse in a few weeks/months. Probably DJIA will get to 17000 before pulling back. Of course we still could have 4-5% swings that don't mean nothing.
 

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Discussion Starter #9
if you think a bull market is underway...I think you may have lost your mind. The US is propped up on stimulus money and still trying to avert a depression...the only thing driving the market is the stimulus and record low interest rates. You think the economy has the fundamentals to start a new bull market??

I guess that's why every trade has a buyer and seller :)
 

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The question is, if you're not buying stocks, where are you going to put your money?

Stocks... overpriced.
Real estate... overpriced.
Gold... overpriced.
Bonds... overpriced.
Oil... after a huge dip, its once again overpriced.

There is way too much money in the system right now, and inflation is on its way. This month? This year? This decade? Who knows when, but cash and bonds aren't the place to be when it spirals out of control.

Sure you can take a bet on real return bonds (which are also, coincidentally, overpriced), but then you're pretty much taking a zero real return in order to sleep at night.
 

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Interesting thread. I've been struggling with this since I'm sitting on some cash and it does look like the market will dip by the end of the year. I'm going back to making monthly contributions to low cost/index funds, which is the only thing that works for me - I'm not great at buying when there's 'blood in the streets'.
 

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Bh23 is right and I believe the maximum amount of people will be sucked into this market which will take a little more time so the maximum pain can be administered. We are in a secular bear market so expect things to go south until we eventually see PE's under 10 and dividend yields close to that PE.

On the way there we will get these cyclical bull markets which you can play until we get to the bottom. The only thing I can see that will change things is if money and lots of it can get into the hands of the consumers to compete for the higher prices. Right now that money has found its way into stock prices so maybe if the Fed can print the money to continue to prop up stocks and nail the shorts this can work.

If you don't believe the Fed would print money to buy and manipulate stocks higher then how does it get higher. I suppose it can be done by buying the US debt so money can be sent to stocks that would have gone to bonds. But if bonds collapse because people do not except this sort of crap then it is game over. High interest rates will kill everything so how will they stay down if no one wants to take in all that debt.
 

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if you think a bull market is underway...I think you may have lost your mind. The US is propped up on stimulus money and still trying to avert a depression...the only thing driving the market is the stimulus and record low interest rates. You think the economy has the fundamentals to start a new bull market??

I guess that's why every trade has a buyer and seller :)
Apparently you don't know the definition of a bull market. It is related to stock prices. S&P500 is more than 80% above the March 2009 low, we definitely are in a bull market.
Anyway, I'm glad that so many people are still bearish, this is a good sign for the strength of the bull market.
 

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Discussion Starter #14
just because the market goes up doesn't mean it's a bull market...ever hear of a bear market rally?? That is what this is...one fundamental of a true bull market is volume...this rally is built on historically low volume. It is built to sucker people like you into thinking it's a new bull market. I hope everyone turns bullish...a sign that the market is about to tank.

WHat fundamental driver is there for this to be a bull market in any way? The US is still fighting depression..that is a fact. Keeping rates at zero is the only thing the gov't can do to try and stave off depression...and even at that, I don't think they will. I believe deflation will take over...but of course, maybe it won't.

Housing is about to take another leg down...the loss of value in housing is also deflationary. People are losing their wealth at an astronomical rate.

Look at the charts for 1929 and the mid 30's...many people thought a new bull market was underway then. Some people will never learn.
 

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One year definitely doesn't make a bull market. The Japanese market has had 7 or so ~50% rallies in ~1 year periods over the last 2 decades. What is the net result after twenty years? A loss of 70%.
 

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I'm not currently buying anything new, but I'm rebalancing at every opportunity.
Mostly from Canadian stocks to short-term bond, a little gold, a little Nasdaq index and a little emerging markets. The short term bond is the largest portion of rebalancing, by far, and IMO makes up for a little extra risk in the other categories.

There are positive signs for the market, including the amount of negativity in this thread. Usually the most dangerous times are when everyone is positive. For example, just before the 2008 crash, much of the talk on forums was about leveraging. Additionally domestic employment is picking up and China may be in the process of developing a significant middle-class who will have insatiable demand for our resources. Be prepared for everything - including a significant bull run or a significant crash.
 

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Discussion Starter #17
I'll consider leveraging...when the market corrects and becomes a good buy.

Sentiment is largely bullish...one thread has no bearing on overall sentiment.

I wouldn't be surprised to see some similar behaviour to what has happened in Japan...but no way will it go on as long as it did in Japan.
 

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wow, so much skepticism. I'm firmly in the camp that believes we are in the middle of a bull market and will continue to see the stock market trending upwards with corrections. This is not a bear market and the market will definitely not retest its lows of 2009. Yes there will be corrections that present great buying opportunities, but the economic/market sentiment is no where near that of 2008-9. Those who are sitting our right now, proabably missed the gains in 2009, will miss the gains in 2010 and finally when they get invested, the market will actually be overpriced - ripe for correction.

Reasons why i'm optimistic.
1. ISM manufacturing index @ 59 its most bullish reading since 2004, indicating that manufacturing activity is rapidly expanding.
2. S&P P/E ratio of 21, lower than any other time in the 2000s (apart from 2008-9) and way off freakish highs of 40s in 2000-2001.
3. Most companies beating Earnings estimates, with increasingly optimistic outlooks for the future, specially from economic bellweather stocks like intel, GE.
4. Unemployment finally starting to reverse with the U.S adding 160000 jobs in March and more importantly the private sector contributing to most of these job gains. Interestingly enough despite all the doomsday scenarios, at the peak of the recession we didn't see the same percentage of job losses as we did in previous recessions
5. Consumers starting to spend, and so are companies...the longer consumer and industrial consumption remains muted, the more rapid the fire will be when they actually do start spending. Companies need to buy computers, consumers need to buy cars etc....its only a matter of time
6. Case-Shiller index suggesting that the worst hit R/E markets in the U.S are stabilizing with a lot of the deleveraging complete - people who could not afford to keep houses have sold by now.
7. Financial sector showing that major banks are well capitalized, enough that the U.S government has sold its stake in these companies at a sizeable profit. There is no impetus to cause a crash in the markets the way lehman did. (granted that one lurking danger left is soverign debt and specially U.S defecit)
8. Bernanke signalling generationally low interest rates for the conceivable future, which will put economic expansion on an even firmer footing

Japan or 1930 recession is not a proxy for what will happen in this recession, both are very different scenarios.....U.S monetary policy in this recession has been very different from the 1930s.
 

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Discussion Starter #19
I appreciate your view...but I totally disagree. Only just over a year ago did the US avoid a depression. So, throw some money into the fire and watch the v recovery? I'm not buying it...not at all.

March retail sales included easter this year....as well as a rush of canadians going down there to get deals.

There is no reason for this market to ride so high for so long on low volume...maybe you're right and this is a bull market...maybe you're not.
 

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i cannot think of a single recovery in which there have not been overwhelming, mind-numbing negatives.
 
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