Pulling out of the stock market short term
08-09-2011, 01:35 AM
#66
Boost Pope
iTrader: (8)
Join Date: Sep 2005
Location: Chicago. (The less-murder part.)
Posts: 33,019
Total Cats: 6,587
It creates a fire-sale buying opportunity for those of us who have been standing on the sidelines saying "****, I'm missing out on the uptick."
Granted, I believe we still have a way to go. The US job market is still in the *******, we are still up to our forehead-penises in unsecured debt, and the Chinese still pwn our manufacturing economy.
Oct 2007:
August 2011:
All of this has happened before,
Man, I remember when I used to smile every time gasoline went up a nickel. $5 / gal and I was laughing my head off all the way to the bank.
Glad I got out of petroleum before The Fall. At least that was one thing I did right.
So, anybody holding a double-bear long over this evening?
Granted, I believe we still have a way to go. The US job market is still in the *******, we are still up to our forehead-penises in unsecured debt, and the Chinese still pwn our manufacturing economy.
Oct 2007:
"The Economy will implode unless Congress passes the bailout package!"
(Congress passes bailout package.)
(Economy implodes.)
(Congress passes bailout package.)
(Economy implodes.)
August 2011:
"The Market will implode unless Congress passes the debt-ceiling reform!"
(Congress passes debt-ceiling reform.)
(Market implodes.)
(Congress passes debt-ceiling reform.)
(Market implodes.)
All of this has happened before,
Man, I remember when I used to smile every time gasoline went up a nickel. $5 / gal and I was laughing my head off all the way to the bank.
Glad I got out of petroleum before The Fall. At least that was one thing I did right.
So, anybody holding a double-bear long over this evening?
Reply
0
0
08-09-2011, 10:16 AM
#69
Elite Member
iTrader: (2)
Join Date: Sep 2008
Location: Central Florida
Posts: 2,799
Total Cats: 179
Further for consideration: how does a megabank which is backstopped implicitly (or explicitly depending on your interpretation of Dodd-Frank) by said sovereign carry a higher rating than that sovereign?
Taken a step further: how does a sovereign which does not have the ability to create the currency in which its debt is denominated carry a higher rating than one that does?
And the megabanks backstopped by the non-currency creating sovereigns?
Reply
0
0
08-09-2011, 11:26 AM
#70
Boost Pope
iTrader: (8)
Join Date: Sep 2005
Location: Chicago. (The less-murder part.)
Posts: 33,019
Total Cats: 6,587
I suppose it depends on said entity's perception of the relative dangers of hyperinflation vs. default. Any nation can obviously just fire up the printing presses whenever it feels the need, but the risk inherent in doing so is the devaluation of the currency in question.
Reply
0
0
08-09-2011, 03:57 PM
#71
Elite Member
iTrader: (2)
Join Date: Sep 2008
Location: Central Florida
Posts: 2,799
Total Cats: 179
That is not quite accurate. France, Spain, Italy, et al cannot fire up the "euro-printing machine" independent of each other.
Reply
0
0
08-09-2011, 04:31 PM
#72
Boost Pope
iTrader: (8)
Join Date: Sep 2005
Location: Chicago. (The less-murder part.)
Posts: 33,019
Total Cats: 6,587
France, Spain, Italy, et al sacrificed true nationhood when they founded / joined the EU in much the same way that the Western Territories ceased to be autonomous, separately recognizable entities when the ceded to the United States government.
Last edited by Joe Perez; 08-09-2011 at 05:02 PM.
Reply
0
0
08-09-2011, 05:48 PM
#73
Elite Member
iTrader: (2)
Join Date: Sep 2008
Location: Central Florida
Posts: 2,799
Total Cats: 179
Did their fiscal policies and national balance sheets cease to be "separately recognizable entities" upon entering the EU? In other words, from a market perspective, are Greece, Spain, France and Germany one-and-the-same?
Reply
0
0
08-09-2011, 05:54 PM
#74
I'm Miserable!
Join Date: Feb 2010
Posts: 583
Total Cats: -1
This CEO's point of view is by no means unique amongst our business leaders.
It's refreshing to hear someone speak their mind without trying to pander to disparate electoral groups while raising countless millions to run for high political office.
Check Steve Wynn too. All of the uncertainty and rudderless strategy from the oval office is not helping those who create jobs to do so as they grow their companies.
It's refreshing to hear someone speak their mind without trying to pander to disparate electoral groups while raising countless millions to run for high political office.
Check Steve Wynn too. All of the uncertainty and rudderless strategy from the oval office is not helping those who create jobs to do so as they grow their companies.
Reply
0
0
08-09-2011, 07:35 PM
#75
Boost Pope
iTrader: (8)
Join Date: Sep 2005
Location: Chicago. (The less-murder part.)
Posts: 33,019
Total Cats: 6,587
They share a common currency, so their economies (and therefore their GDPs, balances of trade, etc) are inexorably linked. They are not indistinguishable, in the same way that Indiana is not indistinguishable from Kentucky.
However they are not fully independent from one another either, in the way that two states which bear full, separate nationhood are. Brazil and South Korea are completely autonomous of one another, and are beholden to no common authority or shared resource.
France and Germany, from this point of view, occupy an interesting position in that they have many of the identifying characteristics of a Province or a Republic, insofar as that they are sovereign and have their own internal governments, however they are not economically independent of one another, their citizens are bound to a communal set of Higher Laws, they sign Treaties as a single entity, etc.
Reply
0
0
08-10-2011, 07:41 AM
#76
Elite Member
iTrader: (2)
Join Date: Sep 2008
Location: Central Florida
Posts: 2,799
Total Cats: 179
I am talking economically, fiscally. i.e. In the broader terms of this "market" discussion.
I can certainly see the argument that the individual countries have given up much of their sovereignty - if nothing else than through economic "peer pressure." That is, Germany (with a reasonably strong economy) assists in a bail out of Greece - which cannot print euros to satisfies its debt and thus runs a real risk of actual default - or risks broader "knock on" damage.
I suppose you could make the same argument that, if California were facing actual default with no access to credit markets, the rest of the states - through Federal intervention - would be on the hook to bail them out. The default mechanisms for US states and European nations are significantly different, though.
There are still important distinctions, but you could argue how applicable they are in practice.
I suppose you could make the same argument that, if California were facing actual default with no access to credit markets, the rest of the states - through Federal intervention - would be on the hook to bail them out. The default mechanisms for US states and European nations are significantly different, though.
There are still important distinctions, but you could argue how applicable they are in practice.
Reply
0
0
08-10-2011, 03:39 PM
#78
Elite Member
iTrader: (2)
Join Date: Sep 2008
Location: Central Florida
Posts: 2,799
Total Cats: 179
ZX-Tex - If you are still interested in refining your re-entry process for stepping back in to US equities (other than waiting until things feel better), another data point you could consider is the $SPX/$VIX overlay.
Reply
0
0
08-10-2011, 05:30 PM
#79
Elite Member
Thread Starter
iTrader: (15)
Join Date: Dec 2007
Location: San Antonio, Texas
Posts: 4,847
Total Cats: 27
I'll take a look at that thanks. Are you saying look at the overlay comparing the two, or look at the ratio of the two?
I was looking at DJI versus VIX the last few days which I guess is close since the DJI and the SPX follow each other more or less. Looking at the last 5 years of data, it looks like the VIX spikes drastically at the beginning of a big market drop and then tapers off as the market recovers. A big VIX spike seems to be at least a reasonable indicator that a big drop in the overall markets could be (is probably) coming after the spike. It seems one cannot wait for the VIX to drop completely because by then the rally is over. But, if it starts showing a steady downward trend over a couple of weeks...
And we just had a big VIX spike this week. The spike is bigger than the spike that happened during the May 2010 correction (DJIA dropped ~14%), and the biggest since the October 2008 spike (the huge death drop). It could be interesting to see if the size of the VIX spike correlates to the size of the following correction.
Another big drop today. DJI closed at 10719. GSPC (S&P 500) closed at 1120. VIX (S&P 500 volatility index a.k.a. 'fear index' closed at 43.
An interesting description of what the VIX is
http://en.wikipedia.org/wiki/VIX
I was looking at DJI versus VIX the last few days which I guess is close since the DJI and the SPX follow each other more or less. Looking at the last 5 years of data, it looks like the VIX spikes drastically at the beginning of a big market drop and then tapers off as the market recovers. A big VIX spike seems to be at least a reasonable indicator that a big drop in the overall markets could be (is probably) coming after the spike. It seems one cannot wait for the VIX to drop completely because by then the rally is over. But, if it starts showing a steady downward trend over a couple of weeks...
And we just had a big VIX spike this week. The spike is bigger than the spike that happened during the May 2010 correction (DJIA dropped ~14%), and the biggest since the October 2008 spike (the huge death drop). It could be interesting to see if the size of the VIX spike correlates to the size of the following correction.
Another big drop today. DJI closed at 10719. GSPC (S&P 500) closed at 1120. VIX (S&P 500 volatility index a.k.a. 'fear index' closed at 43.
An interesting description of what the VIX is
http://en.wikipedia.org/wiki/VIX
Last edited by ZX-Tex; 08-10-2011 at 09:58 PM.
Reply
0
0
08-11-2011, 10:49 AM
#80
Elite Member
Thread Starter
iTrader: (15)
Join Date: Dec 2007
Location: San Antonio, Texas
Posts: 4,847
Total Cats: 27
Speaking of indicators, here is an interesting quote from a WSJ blog, posted this morning:
The technical- trading phenomenon known as the "death cross" sounds ominous, but it no longer carries as much weight as it used to. The cross occurs when the 50-day simple moving average of the Standard & Poor's 500 index (1285.13) slips below the 200-day (1285.51), as happened today. It is supposed to indicate that declines are in a "long-term" downtrend.
Those who sold when a death cross appeared on Dec. 21, 2007, would have been saved from a further 54% drop in the index through the March 2009 closing low. But those selling after the last death cross on July 2, 2010, would have sold at last year's lowest close (1023) and would still be underwater.
It's still early days, but the S&P 500 is up since the latest death cross.
Those who sold when a death cross appeared on Dec. 21, 2007, would have been saved from a further 54% drop in the index through the March 2009 closing low. But those selling after the last death cross on July 2, 2010, would have sold at last year's lowest close (1023) and would still be underwater.
It's still early days, but the S&P 500 is up since the latest death cross.
Reply
0
0
