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muck

Muck's Model

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Just saying . . . . the stock market has risen in value in the 3rd year of every presidential cycle going back to the 1940s . . . .

 

2011 is year three of Obama . . good time to buy? :wacko:

 

I don't know when it will be broken, but at some point this little cycle will not repeat and the 3rd year of a POTUS's term will be down.

 

While an improbable event, you can't claim it has any more predictive power than knowing hem length or the conference of the Super Bowl champion. I'm not convinced there is a correlation here that grounded in fact ... in other words, people try to ascribe reason to something (cycle of 3rd year of presidencies) that may not have much of a reason.

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I don't know when it will be broken, but at some point this little cycle will not repeat and the 3rd year of a POTUS's term will be down.

 

While an improbable event, you can't claim it has any more predictive power than knowing hem length or the conference of the Super Bowl champion. I'm not convinced there is a correlation here that grounded in fact ... in other words, people try to ascribe reason to something (cycle of 3rd year of presidencies) that may not have much of a reason.

 

Actually it has everything to do with the presidents party losing seats (which happens every cycle as well) and how the current president suddenly starts making very business friendly moves to curry favor with wall street donors and improve the economy in time for their election cycle in 2 years. :wacko: And I am serious . . .

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I think that argument becomes more stale as the economy becomes more global.

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You guys are right, initially, my call in 2010 looked amazing (with the correction from May to July) and since then the market has rallied. But you all are missing the point of my posts. Investing is a long-term game. You can be right buying for a year or even 20 years but when the market crashes, it does so quickly and ferociously. I've remained VERY CONSISTENT in saying this bear market will last at least 5 years - that means there will be periods of stock market growth. BUT IN THE END THE MARKET WILL BE AT LEVELS NOT FORSEEN BY MOST.

 

What good does it to be right buying for 1, 2, 10 years if you don't know when to be safe and get out of the market? If those of you who kept your 401ks going for 2010 are responsible enough to pull out at the right time - then bravo to you (I truly mean that). My point has always been that the market is fractured and this bullish behavior is an illusion. It's better to be safe and pull out now (or in 2010) than to be stuck long when the diaper dirt really hits the fan. The problem with most of you is that you are thinking (calling me out) based on short-term movements. I'm trying to protect you from the disaster that WILL OCCUR, regardless of whether or not it's this year or 2013, IT WILL HAPPEN.

 

Please don't mistake my forecasts for being short-term, they're not. I was a little bit over-confident about things happening quickly. In short, I under-estimated the FED. But in the end my doomsday scenario will be correct. This isn't about being 'right', however, it's about helping fellow huddlers portfolios. My intentions are only good. Belive me.

 

Are you advising people to essentially pull put their long term funds and leave the money in cash, or put it in bonds, etc?

 

Being a regular guy that puts money into a 401K every week, and generally speaking in funds that are day to day volitile, but expected to rise up more over time, my mindset is to not worry about that money. Some weeks I'll be buying shares cheaper than others. The value of the 401K is just a today number, with the only number that really matters being the one that's there when I retire.

 

I am not really inclined to start playing games with the money (moving it here or there predicated on what I think, or someone else thinks the market is going to do in the short/long term). At 39, long term for me is 55+. I might start looking at what's going on more closely when I am 50, and start moving money into "safer" investment vehicles at that point. Right now I'd be like a chimp trying to type Othello.

 

The world is a bit too volatile right now IMO for anyone to be able to predict a "safe" investment. What's a regular joe to do?

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I think that argument becomes more stale as the economy becomes more global.

 

First, it isnt an argument. It is the historical results. :wacko: big difference.

 

There probably is some truth in your statement about a global economy, but there was a global economy for the last 15-20 years as well and the model still held true.

 

And we are going off on tangents here . . but the political cycle is very infuential on the stock market, and the 3rd out of 4 years historically has been advantageous to stock market growth primarily due to political decisions during that time period that are designed to aid the current political party in power.

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You have said that all through 2010 but those of us with 401k's are saying we've made bank in the last 12 months. The market can tank at any time, sure, but the last year has been a great time to go balls to the wall and buy.

 

Actually, the time to buy was 2008 when it was tanking and you were getting in real cheap.

 

 

I'll just stick with what has worked for me... look long term, diversify, dollar cost average.

 

And by diversify, that means small and large cap, US and international, developed and emerging, stock and bond, tax deferred (traditional 401k/IRA) and tax exempt (ROTHs).

 

 

by covering my bases, I may not maximize my returns by guessing at the hot sector to be in at a given time (ie small/mid caps in 2010), but I am also not exposing myself to unnecessary risk.

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Actually, the time to buy was 2008 when it was tanking and you were getting in real cheap.

Yep. I've been maxed out since Jan 1st, 2009. I was just pointing out that the market went up significantly in 2010 so anyone getting in will have done well. Obviously the earlier the better.

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...this thread is getting hijacked...

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Are you advising people to essentially pull put their long term funds and leave the money in cash, or put it in bonds, etc?

 

Being a regular guy that puts money into a 401K every week, and generally speaking in funds that are day to day volitile, but expected to rise up more over time, my mindset is to not worry about that money. Some weeks I'll be buying shares cheaper than others. The value of the 401K is just a today number, with the only number that really matters being the one that's there when I retire.

 

I am not really inclined to start playing games with the money (moving it here or there predicated on what I think, or someone else thinks the market is going to do in the short/long term). At 39, long term for me is 55+. I might start looking at what's going on more closely when I am 50, and start moving money into "safer" investment vehicles at that point. Right now I'd be like a chimp trying to type Othello.

 

The world is a bit too volatile right now IMO for anyone to be able to predict a "safe" investment. What's a regular joe to do?

What I'm advising is primarily an all cash position. If your 401k provider has a cash fund that's where I'd put most/all of it - you should look at each individual fund and see how much is allocated in cash. I know for instance, my mom's provider has a PIMCO option and his fund is cash heavy (over 50%). I would not touch corporate or municipal bonds at all. If you had to choose govt securities, I'd opt for the short term ones. Basically I see a depression in the very near future. A depression caused by a major credit contraction (mass defaults), a situation where cash will be king. If you have gold, silver etc... then great but gold won't be able to buy groceries or pay the rent. The dollar has begun a multi-year advance. At the end of the day, if there is no depression and stocks continue to rise - taking a cash heavy position will only have limited gains - you will not lose taking my advice (which stresses safety). For those who remain long equities, they have everything to lose from a crashing market and little to gain really.

 

Bottom line: My adivce will not lose you money, worst case it will only limit gains should the market continue to rise. If however, my depression forecast becomes reality and you remain long the stock market, you could lose your entire portfolio. I'm trying to protect portfolios, not necessarily profit. Today's economic environment is volatile and uncertain and now is the time to be safe, not risky. And for those who think sitting in mutual funds and/or 401k equity accounts is safe - we'll you're just wrong. It has been safe for the last several decades but we've also been in a tremendous bull market since the 40s. Be safe, stay nimble and avoid the stock market - that's my advice.

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Yep. I've been maxed out since Jan 1st, 2009. I was just pointing out that the market went up significantly in 2010 so anyone getting in will have done well. Obviously the earlier the better.

Yeah but if the market has another flash crash and drops 1000 points tomorrow, those gains of 2010 are now lost. And if you stay in and the market keeps dropping you are now suffering big loses. Bear markets are swift and ferocious, if you're not prepared before it happens then it's usually too late. It's important to remember that I foresee a depression, not a simple correction. If it was just a correction I wouldn't be offering any advice other than to buy the dips.

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Model moved to a "+2" for next week.

 

This is the first change since dropping to a "+1" from a "+2" on Friday afternoon on 11/19.

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Model moved to a "+2" for next week.

 

This is the first change since dropping to a "+1" from a "+2" on Friday afternoon on 11/19.

+2 = strong buy.

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I'm not gonna say "strong buy" but I will say that, historically and on average, weeks with a +2 score have higher returns than weeks with a "+1" score.

Edited by muck

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I'm not gonna say "strong buy" but I will say that, historically and on average, weeks with a +2 score have higher returns than weeks with a "+1" score.

You described +2 as strong buy earlier but did add the caveat that the correlation was not very exact but there wasn't really a better way to put it

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This coming week is another week of "+2".

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This coming week is another week of "+2".

Well based only on last week's +2, perhaps this model has shifted to a contrarian predictor.

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Well based only on last week's +2, perhaps this model has shifted to a contrarian predictor.

 

You are a riot.

 

Excepting six weeks to the contrary, the model has been either a "+1" or a "+2" since the week ending March 13, 2009 ... when the S&P500 closed at 756.55. The S&P500 closed today at 1276.34.

Edited by muck

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This coming week is another week of "+2".

Another philistine question: Does the model limit itself to this coming week by it's indicators (e.g. +1 is a good time to buy) but offer no predictions for subsequent weeks? In other words, is there a range beyond one week?

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You are a riot.

 

Excepting six weeks to the contrary, the model has been either a "+1" or a "+2" since the week ending March 13, 2009 ... when the S&P500 closed at 756.55. The S&P500 closed today at 1276.34.

Don't take offense. I haven't been following your model that long and I'm fully aware of the accurate predictor it's been since I've been watching it.

 

I just haven't seen a +2 ever (since I've been following) and I found it odd that when it finally triggered +2 the market declined. I speculated before that the model may only recognize a trend rather than predict one - which is not only acceptable but preferable if you're trading. Again, no offense intended, just making an observation really.

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Another philistine question: Does the model limit itself to this coming week by it's indicators (e.g. +1 is a good time to buy) but offer no predictions for subsequent weeks? In other words, is there a range beyond one week?

 

While it is a "one week at a time" model, it tends to be rather slow moving.

 

Based on current levels, it would take something rather unusual for it to do anything other than be a "+1" or "+2" for at least a few weeks.

 

While I've not built any "day to day" models or any "month to month" models, I believe that I could if given more time (and a financial reason to do so).

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It looks like it'll be another week of "+2".

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It looks like it'll be another week of "+2".

The Fed's POMO is relentless and is gathering the last of all the suckers. Too bad this rally is fake and cannot be sustained. I really feel bad for all the soon-to-be bag-holders out there. The next time we crash will be much more ruthless than 2008 because people will expect a subsequent rally that will never have legs.

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The Fed's POMO is relentless and is gathering the last of all the suckers. Too bad this rally is fake and cannot be sustained. I really feel bad for all the soon-to-be bag-holders out there. The next time we crash will be much more ruthless than 2008 because people will expect a subsequent rally that will never have legs.

 

I am hopeful that this model will give a good indication of when to lighten up and then to get short. Right now, it says to be long; hopefully we won't miss any sort of big, prolonged sell-off. This model got it right in 2000-2002 and 2008-2009, but missed the rather rapid crash in October 1987. :wacko:

Edited by muck

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The Fed's POMO is relentless and is gathering the last of all the suckers. Too bad this rally is fake and cannot be sustained. I really feel bad for all the soon-to-be bag-holders out there. The next time we crash will be much more ruthless than 2008 because people will expect a subsequent rally that will never have legs.

 

I'm glad you posted this. I think we all were under the impression you thought the sky wasn't about to fall and the wolf isn't about to eat the sheep.

Edited by bushwacked

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