Your Views and thoughts on the Market

My thoughts are that if I think about the market I'm wasting my time. Sheep think about the market.

Do you really think that way rickson9? If you were in the markets last year no matter how you invested in the market you would have had your *** kicked.

I agree with you that it's all momentum and herd behavior

I hope so anyways because I'm new and missed this rally. I'm hoping to buy in bit by bit if the market falls as quick and sell bit by bit if it climbs fast again

Maybe I'm just a dumb sheep. I'd rather see a gradual increase and just buy and forget, but I'm not comfortable with that right now

My thoughts are that neither myself nor anybody else knows what the market will do over the next few weeks, months or years, therefore, I am happy to sit and collect dividends.

I wouldn't mind seeing another huge market drop which would provide another opportunity to invest the dividends along with additional money.

Knowing what the market will do in the short term is very tough to know but I think it is important to keep up with the longer term trends. Examples would be owning the US index over the last 10 years or the Japenese index since 1989. Another would be falling asleep and collecting dividends in what you thought were good US bank stocks.

Paying attention to interest rates and where we are in the business cycle can also sway your thoughts on the market and the stocks you own. Also look at the huge debt and deficit the US must cover every year and what might happen if they are unable to get the funds they require.

So I don't think your a dumb sheep high octane with a strategy to enter the market bit by bit. In fact not paying any attention to the market can make you like the dumb sheep who just held on last year while thier great companies like GE or US bank stocks came crumbling down.

I think the paint is already on the wall and the economic landscape is pretty clear: flat

You have far too many important economic indicators pointing to a prolonged period of contraction regardless of the amount of stimulus thrown at this problem.

It's not about the money; it's all about the debt.

At best....flat.

P/E are too high.

Could be a Stimulus bubble.

Impossible to know, but I think the markets likely overshot during the crash, and are now just coming back to a reasonable level, where they will fluctuate around.

I took on a bunch of debt early this year to buy stocks, made a killing with it, and am now still holding about half that. I'm willing to keep holding what I have until a) it drops back to breakeven, or b) the interest rate on my borrowings goes up higher than my dividend rate on my holdings. All I have to lose up till either of those points is the gains I've made to date. No risk of owing more than I hold.

Nobody knows where the market is going, who cares, blah blah blah, normal preface everyone uses....

now to my juicy opinions

I'm quite surprised that the market has risen as much as it has as fast as it has. So surprised that I essentially see zero stocks worth buying anymore. That being said, I think we overshot to the down side in a huge way. I've been saying for a while that I don't think there is any chance whatsoever of us revisiting the March lows. There was just too much uncertainty at that time that has been cleared up since, specifically US bank vital signs.

That being said I think the market is closer to a fair valuation now than it was on March 9, 2009. Hindsight is 20/20.

Brad911 is a value investor and he says it is all about the debt. I happen to agree with that even though value stocks were stomped on last year, much to my surprise, along with everything else.

I think besides gold going up because of the lack of confidence in fiat currencies, value investing will make a come back. I personally don't like waiting for the value to come to light so I like playing the ups and downs a little more. But if you want to buy and hold in this market then you should be buying strong companies with little debt ready to ride out any storms.

Dog, the main reason "value" companies were "stomped" last year is the fact that financials make up a large percentage of this category. That recovery is already largely behind us as you can see the 52-week highs are all pretty close to current levels.

Buying quality value is key to limit risk, but of course that also limits returns in the high beta recovery phase... like the one we're in now and have been since March.

Gold will rise as the recovery (read inflation and risk appetite) pushes down the low yielding currencies including the USD (which gold is conveniently priced in). Gold will correct with the market, then diverge as the flight to safety fades once again.

As much as the market factors in doomsday to the downside, it is also efficient in predicting recoveries. This is what's happening now. Bad news is till around us, but the market will lead the recovery.

It is however, human nature to establish a point of reference - and many of us are using low points back in March as the yardstick for when we should or should have bought. Well in hindsight, let just say that it was an opportunity of a lifetime, and if you didn't take action then, the chances of hitting those lows again will be very slim. You've probably heard the saying "all boats rise with the tide". At this stage there are still good opportunities as the tides rises. Proceed with caution, but don't let that point of reference paralyze you .

dogcom said:

Brad911 is a value investor and he says it is all about the debt. I happen to agree with that even though value stocks were stomped on last year, much to my surprise, along with everything else.

I think besides gold going up because of the lack of confidence in fiat currencies, value investing will make a come back. I personally don't like waiting for the value to come to light so I like playing the ups and downs a little more. But if you want to buy and hold in this market then you should be buying strong companies with little debt ready to ride out any storms.

Click to expand...

Can't find a link, but I just saw a story on Bloomberg about how companies with high debt levels have outperformed over the past few months.

I am a new investor in stocks and not experienced at all, but just looking at my RY share now is somewhat shocking to me (got in April for appox. 38$).

The all time high of RY was mid 2007 at 60$ or so... and now mid/end recession we are at nearly 52$ gives me the feeling that RY is overpriced. There is not much air to aim higher- but lots of potential to go down.

I am totally uncertain if I should sell (as I said, don;t see more potential) and bank in the nearly 30% gain

or

keep it for the dividend.

Anyhow, taking this as an example makes me a bit nervous (as I said first time stock investor) as I have some more cash getting available by the end of this week I am absolutely uncertain what to do with it.

NorthernAlex said:

I am a new investor in stocks and not experienced at all, but just looking at my RY share now is somewhat shocking to me (got in April for appox. 38$).

The all time high of RY was mid 2007 at 60$ or so... and now mid/end recession we are at nearly 52$ gives me the feeling that RY is overpriced. There is not much air to aim higher- but lots of potential to go down.

I am totally uncertain if I should sell (as I said, don;t see more potential) and bank in the nearly 30% gain

or

keep it for the dividend.

Click to expand...

Congratulations on getting RY at $38. It was a good move on your part...Canadian Banks are the envy of the world, and RY is one of the best. Yes, banks are no longer cheap and I would be hesitant to add more for the time being, given some headwind with growing loan losses this year and 2010...but with the improving economy, steep yield curves and recent securities underwriting activities, banks should do well. I would hang on to RY for the long run, and add to banks when we experience another dip. Perhaps keep new funds for some of the laggards in the current upturn (utilities, telecoms etc.)...as always, due diligence is in order - do your research!

Q3 earnings may give us more insight as to how the market will proceed. Q2 was ok at best....but perhaps b/c expectations were so low, and perhaps b/c companies shed thousands of jobs and even more in expenses.

Also curious to see what is revealed if the Fed is audited.
http://news.goldseek.com/LewRockwell/1249244807.php

As an aside, when the HST is added to our groceries, gas etc....does that count towards the govt released inflation #'s?

Moneygardener I would think the companies with the most debt would do well because they are pricing in the better chance that they will survive rather then pricing in thier demise. This however is not a sustainable price rise unless the debt burden is taken down. The strong companies without all that debt were probably already priced to survive.

tojo said:

Congratulations on getting RY at $38. It was a good move on your part...Canadian Banks are the envy of the world, and RY is one of the best. Yes, banks are no longer cheap and I would be hesitant to add more for the time being, given some headwind with growing loan losses this year and 2010...but with the improving economy, steep yield curves and recent securities underwriting activities, banks should do well. I would hang on to RY for the long run, and add to banks when we experience another dip. Perhaps keep new funds for some of the laggards in the current upturn (utilities, telecoms etc.)...as always, due diligence is in order - do your research!

Click to expand...

I'm guessing you haven't looked at the numbers for the utilities and telecoms recently. I just recently finished a stock screen for Canadian equity and yikes these things are crap, though as the steady eddies they should hold up ok. No bank stocks even made the radar screen. DD would certainly be in order, but for the newbie poster I'd hold as financials are still market darlings at this point. Ridiculously priced or not you don't argue with momentum since as the saying goes it will run you over.

Before anyone gets too excited it's worth pointing out the mammoth change in reporting that was rolled out not that long ago to greatly sweeten the numbers. Not to mention the pathetically low earnings estimates that even most pieces of crap can exceed to the joy of the idiot investor. In regards to that above momentum it's also worth noting the overpopulation of idiot investors.

dogcom said:

Moneygardener I would think the companies with the most debt would do well because they are pricing in the better chance that they will survive rather then pricing in thier demise. This however is not a sustainable price rise unless the debt burden is taken down. The strong companies without all that debt were probably already priced to survive.

Click to expand...

Just pointing out that simple tenets like, 'invest in companies with low debt levels' are not a symptom of the time right now, theoretically this is true all the time and everyone knows this. That being said debt is necessary to run a business and a greater amount of debt is necessary to run businesses in certain sectors. Investing like a sheep is never a good strategy. The credit crisis did not and will not kill the usefullness of debt forever. Everything runs in cycles....