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Message

re: Federal intrest rate and stock market

Posted on 6/10/15 at 3:28 pm to
Posted by Iowa Golfer
Heaven
Member since Dec 2013
10230 posts
Posted on 6/10/15 at 3:28 pm to
And just think, for the most part the people that post in here are significantly smarter than the average person.

That's a compliment, and that's also scary. But with respect to the original poster, if he wants to go to cash, nothing wrong with that. it's his money, and no one, including so called experts can guess any better than him. S if he wants to time, and I do a similar thing, that's on him and I. Both the benefits, and consequences. Whatever they might, or might not be.
Posted by gpburdell
ATL
Member since Jun 2015
1423 posts
Posted on 6/10/15 at 6:58 pm to
quote:

Anyone else pulling most of their money from stocks before the fed rate hike?

I'm slowly reducing my securities and will be out before the rates goes up. I'll be sitting on the sideline for a while.


Nope. Market timing is bad. You have to be right twice; selling and buying back in. The biggest gains happen in a short amount of time.

Posted by gpburdell
ATL
Member since Jun 2015
1423 posts
Posted on 6/10/15 at 7:11 pm to
quote:

I'm up on most of my stocks and my S&P ETF has been getting crushed. Pretty sure I'm going to pull out of it soon and see how things shake out.


Most professional money/fund managers cannot beat the S&P in a single year let alone over a decade or more.

It's not about the short term, but the long term performance that matters.





Posted by Cold Cous Cous
Bucktown, La.
Member since Oct 2003
15047 posts
Posted on 6/10/15 at 7:42 pm to
quote:

But with respect to the original poster, if he wants to go to cash, nothing wrong with that. it's his money, and no one, including so called experts can guess any better than him. S if he wants to time, and I do a similar thing, that's on him and I. Both the benefits, and consequences. Whatever they might, or might not be.

I agree. The scary part, though, is that he has about a ~50% chance of being right. And if he is right, he will chalk it up to his unique brilliance, not the actual reason. Which would be blind luck.
Posted by SECdragonmaster
Order of the Dragons
Member since Dec 2013
16226 posts
Posted on 6/10/15 at 10:42 pm to
Guys, this is a topic I am obsessed with right now.

I can't find a single credible source that believes anything other than "everything is all rosy" in the stock market.

That is usually an indication to sell. I know timing the market is next to impossible but thie market is at an all time high with astronomical debt levels in this country (including the government).

The amount that I currently have in the stock market is more than I ever imagined I would have. What would be so bad about taking the profits now and holding it out a few years and see what happens (as long as I do not care if I miss out on an ongoing positive run in the market)??
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 6/11/15 at 12:29 am to
quote:

Anyone else pulling most of their money from stocks before the fed rate hike?


You were too late. Everyone's been expecting a rate hike for over a year now.
Posted by Sho Nuff
Oahu
Member since Feb 2009
11917 posts
Posted on 6/11/15 at 2:42 am to
quote:

Anything wrong with taking my gains and then buying back in when the market corrects?

Not at all. So let me know when the perfect timing is to pull out and then to buy back in, ok?
Posted by Thib-a-doe Tiger
Member since Nov 2012
35402 posts
Posted on 6/11/15 at 6:33 am to
quote:

The amount that I currently have in the stock market is more than I ever imagined I would have. What would be so bad about taking the profits now and holding it out a few years and see what happens (as long as I do not care if I miss out on an ongoing positive run in the market)??




The fact that "time in the market" is more important than "timing the market"


When stock values fall, and those companies keep paying you the same dividends, you are getting more shares than you were when the market was up. Guess what happens when the values come back up?
Posted by Big Scrub TX
Member since Dec 2013
33438 posts
Posted on 6/11/15 at 1:57 pm to
quote:

but thie market is at an all time high


Perhaps on a price basis, but certainly not on a valuation basis.

quote:

with astronomical debt levels in this country


What are you referring to? If anything, the debt situation is much better than it was in 2007. Companies are flush with cash. And even the crappier companies have termed out cheap financing for years, so they actually do have some ability to weather a storm.
Posted by Shepherd88
Member since Dec 2013
4590 posts
Posted on 6/11/15 at 2:04 pm to
I'm glad someone else in here is sane lol
Posted by gatorsimz
cafe risque
Member since Feb 2009
8135 posts
Posted on 6/11/15 at 2:24 pm to
quote:

I can't find a single credible source that believes anything other than "everything is all rosy" in the stock market.


Peter Schiff


To the OP: Why leave the market entirely? Why not buy into financials?

If rates rise, the economy is growing, people are spending money/using more credit and banks are earning larger spreads.
Posted by Northwestern tiger
Long Island NY
Member since Oct 2005
23485 posts
Posted on 6/11/15 at 3:28 pm to
quote:

To the OP: Why leave the market entirely? Why not buy into financials?


agree
I'm looking at BAC, WFC or JPM.
But who knows, i remember when citi crashed big time during the last crises.
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 6/11/15 at 6:38 pm to
quote:

I might be in the minority but i hope rates do go up somewhat. My cash in the bank isn't doing squat and CD rates are pitiful.


So were you one of those who got out of the market two years ago?
Posted by UltimaParadox
Huntsville
Member since Nov 2008
40861 posts
Posted on 6/11/15 at 9:33 pm to
If you are so confident the correction is coming. Why sit on the side lines and make tiny interest rates.


Buying a short etf like SPXU is where real traders out perform the market.



By the way I am not a financial advisor.
Posted by SECdragonmaster
Order of the Dragons
Member since Dec 2013
16226 posts
Posted on 6/11/15 at 11:10 pm to
Thanks to you and thib.

That is the type of discussion I am looking to hear in this forum. I am not employed in the financial sector and will admit to my noob status. My lack of complete knowledge is why I have not sold yet.

Feel free to give me more reasons to stay in the game.

Posted by Iosh
Bureau of Interstellar Immigration
Member since Dec 2012
18941 posts
Posted on 6/12/15 at 12:00 am to
quote:

No more uber cheap corporate debt.
Oh noes debt is going to be incredibly cheap instead of ludicrously cheap. Better start stuffing the mattresses!
Posted by Shepherd88
Member since Dec 2013
4590 posts
Posted on 6/12/15 at 7:00 am to
It's dangerous to jump off a roller coaster
Posted by Big Scrub TX
Member since Dec 2013
33438 posts
Posted on 6/12/15 at 10:10 am to
quote:


Feel free to give me more reasons to stay in the game.


I don't know if you should or shouldn't. I'm not a pure buy and hold guy. And I think there is a nuance between "market timing" and investing based on fundamentals. e.g. if P/E's went back over 30X like they did in 1999, I would happily exit the market and not consider it at all to be "market timing". I simply don't want to buy American businesses at 30X. Similarly, if the market goes to 6X or whatever it was in early 2009, I might go to overweight equities based on valuation.

You can also play with different parts of the capital structure at different times. If you think things are a bit expensive now, then maybe buy some securities that are senior to the equity but still give you some good upside (like convertible bonds).
Posted by Broke
AKA Buttercup
Member since Sep 2006
65045 posts
Posted on 6/12/15 at 10:40 am to
I just love these threads.
Posted by LSU0358
Member since Jan 2005
7918 posts
Posted on 6/12/15 at 10:49 am to
quote:

Charts mean absolutely nothing.


I disagree very strongly with this. Technical analysis can be very useful. It has been very profitable for me the last several years.

I will say that if one doesn't trade with any leverage, buy and hold will work out best for most people. The more leverage one uses, the more important technicals/risk management becomes.
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