Opinions on market direction considering economy, margin debt, & valuation

generally:

market correction

sharp rally into spring

market crash after spring rally


just my own opinion from personal research.

Flush Alert happened yesterday. SPX possibly to 1900 or overshoot to 1875. Articles about deflationary worries popping up today. Looking for more Fed Talk soon. This market will tank hard later this year or early '16 imo.

if spx doesn't get some traction here could be a big drop coming.

Buy yourself some SPXS

I find it pretty interesting, especially after what we've all lived through these last 7-8 years, that only now are "experts" discussing deflation. Doesn't matter, the same "experts", probably arriving at the party late again, will eventually be discussing inflation. As they just were. Before they (some of them) decided to shift to deflation.

It's almost like a horoscope with some of these folks. Make it ambiguous enough and always claim to be clairvoyant.

I'm convinced none of the "experts", including the extremely successful ones, are significantly more accurate than the average Joe. Now I do think the successful traders and investors are more accurate, but not significantly more accurate. They just do this full time. Same with economists.

Perhaps the worst of them all is the government. Anyone read their short term energy outlook? Published in December.

I guess back to the OP's original question. I don't have any answers, but I'd sure like to hear what you think. I do tend to believe the adjusted p.e. ratio is something to pay attention to. Margin debt to the extent it is retail margin debt. Institutional margin likely shouldn't be a concern.

I'm with you. I've taken money off the table and shifted some things around. I've been doing this for over a year. I miss upside certainly, but also miss the dramatic downward slide that is inevitable. I miss it, and have cash left to buy bargains as near the bottom as I can manage. My near the top and near the bottom is no where near perfect, but it has served me well with respect to preserving my gains. Albeit smaller gains than if I could predict things perfectly, but gains.

2008-2009 didn't trouble my net worth much as it was easy to see that one coming a mile away. I remember talking to my bank and asking questions. They were just shaking their heads at what was going on. I had bought some vacation type real estate in Florida and was considering buying more. I asked the realtor (as if they understand anything except their commission) when it was going to end. Their answer was never. The conversation with the bank was because of some suspicions I had. The realtors answer scared the crap out of me.

This one is really more tricky. Many things haven't reacted as conventional wisdom would indicate they should react after the gubmit capital infusion. It's not been a normal recovery, or whatever it is that were experiencing. Certain commodity prices acted opposite as they should have. Also some equities. I'm a simple guy, so this one has me confused.

With respect to energy we won't know the demand side of the equation for a while. At least not the true demand side of the equation as we usually learn these things in arrears.

Deflation will likely prop up my precious metals. I'm not sure deflation is where were headed though. If you asked me 6 years ago, I would have thought we'd have had inflation by now. And I think we have at the grocery store and places that matter to average folks, but not statistical inflation as defined by those smarter than I, or those (gubmit) with an agenda. Mostly I would have been wrong, notwithstanding what a decent dry aged rib eye costs currently compared to what it cost not that long ago. But I'm not arguing with bankers, fixed income traders and government bureaucrats, I'm trying to preserve and grow my capital.

Anyway, I've hedged the dollar with some conservative currency plays. I'm considering going long oil at some point, but not quite sure when. I'm in a lot of cash, and honestly can't decide what to put it in, or when to put it in.

Because this time I don't see deflation necessarily increasing purchasing power. What these experts are predicting and calling deflation isn't deflation as it is defined. Based on the articles that came out the last several days. Some articles have been coming out previously, but recently a lot of deflation articles started popping up in a greater number.

It would have an opposite effect. I think it already has the last couple of trading days. I wouldn't call it a trend, but there was a fairly significant jump intraday gold Monday I think. By their definition, they're not just predicting deflation, but already calling it that.

There are some economists that argue holding gold during deflationary periods (because gold and cash are unhinged) would increase operational wealth. It's a long winded argument, and they, like every other expert pushing their thesis pick and choose time periods. The most interesting to me is when they talk about holding pm's between 1920-1933, hardly a period of inflation. And an interesting end result for those that held some pm's in their portfolios. Of course we were on the gold standard then.

quote:

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* massive drop in oil prices gives consumers cash for spending

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I may be wrong, but I believe this is opposite of what analysts are seeing and it is confusing them. They thought retail and the likes would see a boost from low oil prices, but it looks like consumers are hoarding the extra cash.

They're concerned about lack of demand for energy.

We can debate inflation and deflation and their impact on precious metals, or rather what the latest stories define inflation or deflation as, but to me the more interesting conversation is base metals and energy.

I'm not saying inflation or deflation doesn't have predictable (mostly) impact on pm's and base metals, but in the case of base metals, there has been a lack of industrial demand.

What I'm suggesting as a possible scenario for energy is it is possible there is a lack of demand here also.

Again, we'll find out after the fact.