S&P400 in six months?

[Brentastic]

Peter Schiff would be equivalent to the Huddle even just based off his comments over the past 4-5 years....and some of the names I mentioned about 2 posts ago as well....they are pretty accurate as of late...

 

but people paint these guys as "doom and gloom" based on what they have said, but what has happened in our country as of late.....isn't that about accurate?

Right. Plus these guys are extremely risk averse - they don't offer stock picks, they offer tools and techniques to spot and avoid risk. So when some economist posts a blog claiming they have lost x% compared to the Wilshire etc... it doesn't really mean anything because they aren't trying to out-earn any fund or index, they are trying to predict market turns and avoid losing money.

 

Let's compare 2 levels of 'forecasting success'.

 

1st scenario - Let's say the common economist of financial planner is right 95% of the time but when they are wrong, the result is that investors lose 95% of what they earned.

 

2nd scenario - the Prechter's and Schiff's of the world are 50% accurate on their predictions. When they are right you grow your portfolio. When they are wrong, you preserve or maintain what's already earned.

 

What is the difference in these two scenarios? That's right, you don't lose money under the 2nd scenario but you could lose it all under the 1st scenario. If you're ok with the risk of losing it all, then go 100% stocks - but we are in unprecedented times and to think the market will sustain growth at the rate it has been would be foolish. It's too risky right now to be invested in stocks or bank CDs/bonds. Eliminate risk during times of uncertainty and get back in when things are more clear. That's all I'm saying.

[Ursa Majoris]

but people paint these guys as "doom and gloom" based on what they have said, but what has happened in our country as of late.....isn't that about accurate?

Not wanting to belittle the crisis of credit, unemployment and all the rest of it but if you think life in America is "doom and gloom", you need to get out more to where it really IS doom and gloom. These are extraordinarily tough times and there is a whole lot that could and should be better but it isn't a cataclysm, not by any means. In America (and most likely in Europe too) it only takes a small diversion from the norm to bring all the doomsayers hurtling out of the closet, waving their arms about. It's "Princess and the Pea" syndrome.

[Brentastic]

this is very sound....but I think we should prepare for the likelihood of hyper-inflation just as much as deflation....both pose as a serious threat and I personally think one is just as likely to happen as the other...

 

it's pretty much one or the other depending on how much money we continue to print....

I would agree with you. The way I truly see it is deflation for the next 5ish years THEN hyper-inflation. Basically the next decade or so is going to be rough but if you manage risk from the angle that your only goal is to not lose money (that's my investment strategy) - then you will be much further ahead when the poopy gets filtered out.

[Brentastic]

Not wanting to belittle the crisis of credit, unemployment and all the rest of it but if you think life in America is "doom and gloom", you need to get out more to where it really IS doom and gloom. These are extraordinarily tough times and there is a whole lot that could and should be better but it isn't a cataclysm, not by any means. In America (and most likely in Europe too) it only takes a small diversion from the norm to bring all the doomsayers hurtling out of the closet, waving their arms about. It's "Princess and the Pea" syndrome.

To be fair, Prechter has been around for 30+ years and he was one of the few investors who were bullish in the 70s when all other economists were bearish. Prechter may be painted as a doom and gloom guy but that is not the reality - he's a 'react to what's happening' guy. Basically he's been around for awhile and he's been on both sides (bears/bulls). Here's an excerpt from wiki:

In 1979 Prechter left Merrill Lynch and published the first subscription issue of the Elliott Wave Theorist. The 1970s had been very bullish years in the gold market but mostly bearish for stocks, yet his Elliott wave analysis called for a long-term reversal lower in gold (February 1980)[2][7] and a long-term "super bull market underway" in stocks (October 1982).[2][8] Because these forecasts proved mostly correct—especially for the stock indexes—Prechter's following grew.

 

His visibility increased further after he won the U.S. Trading Championship in 1984, with a then-record 444% return in a monitored options trading account.[9] He was profiled in many financial and business publications and named "Guru of the Decade" by the Financial News Network (now CNBC) for the 1980s.[

[jaxfactor]

Just got off the phone with my brother who is an investment counselor. I watched my 401k lose 50% after 911. Since then I have diversified it and it has now gained enough back to where it is a tad shy of where it was pre-911. Here's how my 401k is now proportioned:

 

G-fund- 15%

C-Fund(Common Stock- S&P 500)- 45%

S-Fund- small stocks- 20%

I-Fund- International stocks- 20%

 

I am clueless when it comes to this sh*t which is why I trust my brother. But even he says that nobody knows for sure what's going to happen. He did tell me this little tidbit though. He said that if Massachusetts shoots down the health care bill, the market should continue to climb. Once again I have no clue as to why he says this, but he's my brother and I trust that he doesn't want to steer me wrong. He did say that the market will probably come down again even after that, so he'll call me when he thinks it's time for me to take all of my $ out of the stocks and put it in safe mode(G-Fund).He has NEVER EVER told me to take all of my money out of stocks before. In fact, he has told me just the opposite.Keep it in there because I'm in it for the long haul. 10-12 years is no longer what I consider the long haul though, nor does he.

 

Hell, at this point I'm hoping to have enough in my 401k after I retire and after taxes to at least pay my mortgage off. Can't help but worry that I'm going to lose my ass again.

[Avernus]

Not wanting to belittle the crisis of credit, unemployment and all the rest of it but if you think life in America is "doom and gloom", you need to get out more to where it really IS doom and gloom. These are extraordinarily tough times and there is a whole lot that could and should be better but it isn't a cataclysm, not by any means. In America (and most likely in Europe too) it only takes a small diversion from the norm to bring all the doomsayers hurtling out of the closet, waving their arms about. It's "Princess and the Pea" syndrome.

 

 

of course you will take what I said literally, this supports your take or argument even though there is no "argument"...there's just no way to put it...

 

the standards being what they were have and will be a fall from grace in a lot of households and it is only getting worse....this isn't a projection or a wish.....this is a fact...

 

with the bailouts and how our government has handled the recession, all they did was push back the official depression which will make this a long and hard road to hoe...

 

if they let the recession happen, we would have probably just started the REAL recovery process instead of living in a dream world thinking it's okay to spend when it isn't...we need to build up our savings which is what built this country in the first place...

 

the Chinese thrive on our spending which will lead to more money being printed and more BS from our government....we don't produce anything we just consume and that is the main problem...

[Avernus]

I would agree with you. The way I truly see it is deflation for the next 5ish years THEN hyper-inflation. Basically the next decade or so is going to be rough but if you manage risk from the angle that your only goal is to not lose money (that's my investment strategy) - then you will be much further ahead when the poopy gets filtered out.

 

 

this has been the strength of my purchasing physical metals so I can keep my purchasing power...I'm not investing my money, I'm stuffing all my money inside a metal bar and cashing in - probably never....or even hopefully never..

[Avernus]

also, for anyone interested there is a 3 part video called Hyperinflation Nation on YouTube...watch it...

 

even if you disagree with it, try to watch all three videos and then formulate your opinion...it's good stuff..

[Piles]

Thanks Brent and Avernus. I'm not sure I entirely agree with everything you are saying but definitely appreciate and respect your views. I'm not making any changes as of yet but if I see a 10% drop I maybe a bit quicker to make some adjustments. Definitely will try to educate myself with the information you provided as well. Good luck to all.

[Ursa Majoris]

the standards being what they were have and will be a fall from grace in a lot of households and it is only getting worse....this isn't a projection or a wish.....this is a fact...

 

 

if they let the recession happen, we would have probably just started the REAL recovery process instead of living in a dream world thinking it's okay to spend when it isn't...we need to build up our savings which is what built this country in the first place...

First, the only reason standards are dropping in most households is because people were tapping their houses like a piggy bank and/or spending money they didn't have i.e. credit. This is indeed a fact and a correction is long overdue. Reality bites.

 

Second, most people don't think it's OK to spend when it isn't. After actually turning negative a couple years back, the savings rate is now up to 5%. That's less than it ideally should be but large numbers of younger people have apparently got the message. Long term , that's healthy.

[Brentastic]

of course you will take what I said literally, this supports your take or argument even though there is no "argument"...there's just no way to put it...

 

the standards being what they were have and will be a fall from grace in a lot of households and it is only getting worse....this isn't a projection or a wish.....this is a fact...

 

with the bailouts and how our government has handled the recession, all they did was push back the official depression which will make this a long and hard road to hoe...

 

if they let the recession happen, we would have probably just started the REAL recovery process instead of living in a dream world thinking it's okay to spend when it isn't...we need to build up our savings which is what built this country in the first place...

 

the Chinese thrive on our spending which will lead to more money being printed and more BS from our government....we don't produce anything we just consume and that is the main problem...

This is exactly right. I just wonder how far we have to fall before our country has a collective wakening.

[Brentastic]

Again, so why do you see GS high profits as "baffling". The evidence you provided suggests that the profits are anything but baffling. Additionally, why are high GS profits a leading indicator of a deflationary depression?

 

Please lay out your entire hypothesis.

It's not really the record profits that are baffling. What's baffling is the fact that GS initiated the bailout and the bailout money earned them record profits and that GS is still operating 'business as usual'. The pure boldness of their actions is baffling.

 

I never said that high GS profits are an indicator of deflationary depression - I was referring to the record profits being an indicator that the market still has a lot more work to do to correct the over-valued equities. GS still manipulating markets and bubbles after all that ocurred the prior year should warn us all that their is poopy needing to be filtered out.

 

So to sum up - the market is waaaaayyyyyy over-valued. I think the market is going to tank big time over the next 5 years or so (I see it dropping 5,000 points this year alone) and it won't be over until GS and the Fed get exposed for what they are. The fact that GS is still operating in the same capacity as before the 2007 - 2009 drop should be a red flag for the most amateur of investors that this mess is still untangled.

 

I think deflation is the most logical next step because if everything is over-valued and the market tanks and people begin saving (as they should) - then goods and services must become cheaper. Nobody is willing to buy over-valued goods and services if they are seeing losses in their investments and want to save.

[Avernus]

First, the only reason standards are dropping in most households is because people were tapping their houses like a piggy bank and/or spending money they didn't have i.e. credit. This is indeed a fact and a correction is long overdue. Reality bites.

 

Second, most people don't think it's OK to spend when it isn't. After actually turning negative a couple years back, the savings rate is now up to 5%. That's less than it ideally should be but large numbers of younger people have apparently got the message. Long term , that's healthy.

 

up 5% from what?....that figure is pathetic...

 

and I don't know what "most people" you are talking about because while spending is down, it should be even lower right now with the unemployment rate being what it is....

 

families in this generation treat their tax return as a lottery ticket they plan to cash in....

 

and with interest rates being low, the economy is being propped up with plywood...and with that 5% you mentioned, the younger population thinks the "bad part" of the recession is over which if anything will lead them into a false sense of security because what we have gone through over the past 24 months is a mosquito bite compared to where we're headed...

[Jackass]

It's not really the record profits that are baffling. What's baffling is the fact that GS initiated the bailout and the bailout money earned them record profits and that GS is still operating 'business as usual'. The pure boldness of their actions is baffling.

 

I never said that high GS profits are an indicator of deflationary depression - I was referring to the record profits being an indicator that the market still has a lot more work to do to correct the over-valued equities. GS still manipulating markets and bubbles after all that ocurred the prior year should warn us all that their is poopy needing to be filtered out.

 

So to sum up - the market is waaaaayyyyyy over-valued. I think the market is going to tank big time over the next 5 years or so (I see it dropping 5,000 points this year alone) and it won't be over until GS and the Fed get exposed for what they are. The fact that GS is still operating in the same capacity as before the 2007 - 2009 drop should be a red flag for the most amateur of investors that this mess is still untangled.

 

I think deflation is the most logical next step because if everything is over-valued and the market tanks and people begin saving (as they should) - then goods and services must become cheaper. Nobody is willing to buy over-valued goods and services if they are seeing losses in their investments and want to save.

 

If you think the market is going to drop 5000 points this year, why would you be in cash as you seem to be advising? Why not short the market? You would make an absolute killing if you're right.

[Brentastic]

If you think the market is going to drop 5000 points this year, why would you be in cash as you seem to be advising? Why not short the market? You would make an absolute killing if you're right.

Good question - it is my understanding that the government just banned short-selling last spring. Such a stupid rule too (the uptick rule) because you never see them ban buyers. Why is it ok to ban sellers but it's perfectly fine to pile on buy orders?

[Ursa Majoris]

I think deflation is the most logical next step because if everything is over-valued and the market tanks and people begin saving (as they should) - then goods and services must become cheaper. Nobody is willing to buy over-valued goods and services if they are seeing losses in their investments and want to save.

It must really suck to be you. I'm not exactly a wild-eyed optimist but you're talking about total worthlessness of everything to the point of regression to anarchy. Not, repeat not, going to happen.

[Brentastic]

It must really suck to be you. I'm not exactly a wild-eyed optimist but you're talking about total worthlessness of everything to the point of regression to anarchy. Not, repeat not, going to happen.

I think that's a very grim worst-cast scenario that is probable but not likely. The market has several decades of manipulation and over-valuation that it needs to correct, it's not going to be pretty and it will be much worse than most people anticipate. If you're ready for it (I'm trying to warn you guys) then you will survive relatively unscathed. If you're not prepared, then it could be life-threatening in some cases. You're an older fella, hopefully you are spread out enough where a total market crash won't kill your retirement. If not, consider my posts a sign that you need to diversify into cash ASAP!

[Jackass]

Good question - it is my understanding that the government just banned short-selling last spring. Such a stupid rule too (the uptick rule) because you never see them ban buyers. Why is it ok to ban sellers but it's perfectly fine to pile on buy orders?

 

There was a short term ban on shorting financial stocks last year during the financial crises that is no longer in place.

 

The uptick rule is something different and was repealed in 2007, and the repeal was actually good for short sellers. The rule only allowed a stock to be shorted if the price was on an uptick (i.e trending upward). The rule was in place b/c it was thought to prevent market manipulation.

 

The bottom line is that you can short any stocks you want.

[Brentastic]

There was a short term ban on shorting financial stocks last year during the financial crises that is no longer in place.

 

The uptick rule is something different and was repealed in 2007, and the repeal was actually good for short sellers. The rule only allowed a stock to be shorted if the price was on an uptick (i.e trending upward). The rule was in place b/c it was thought to prevent market manipulation.

 

The bottom line is that you can short any stocks you want.

Thanks, I'm going to look into this today. I was certain short-selling was banned, if it's not, thanks for the head's up.

[Jackass]

Thanks, I'm going to look into this today. I was certain short-selling was banned, if it's not, thanks for the head's up.

 

Uh-oh. Now i'm going to feel guilty for being partly responsible for you losing your house.

[Big John]

Uh-oh. Now i'm going to feel guilty for being partly responsible for you losing your house.

He lives in an apartment.

[Brentastic]

He lives in an apartment.

Actually a 2 flat

[CaP'N GRuNGe]

Thanks, I'm going to look into this today. I was certain short-selling was banned, if it's not, thanks for the head's up.

 

For someone so sure about the direction of all our financial fates, you probably should have already known that. But, again, what do I know.

 

(Sorry, couldn't resist.)

[Avernus]

I wouldn't start shorting the market for another 60 days....there's quite a few stocks going up right now even coming off bad news...it's friggin rigged...

 

I wouldn't short anything anyways because I think the markets going to get hot/cold violently....there's too much bad news on a consistent basis with the stocks still going up and then you'll see them plummett....and then shoot back up again....

 

it's not as easy as some of you are saying.....there's too much unpredictability right now and probably for the foreseeable future...

[Brentastic]

I wouldn't start shorting the market for another 60 days....there's quite a few stocks going up right now even coming off bad news...it's friggin rigged...

 

I wouldn't short anything anyways because I think the markets going to get hot/cold violently....there's too much bad news on a consistent basis with the stocks still going up and then you'll see them plummett....and then shoot back up again....

 

it's not as easy as some of you are saying.....there's too much unpredictability right now and probably for the foreseeable future...

This is truth.

 

BUT, I did some research today and found a few inverse ETFs that I'm going to buy this week. I'm looking at these (in order of my preference):

 

FAZ - 3x inverse of the Russell 1000 index

SRS - 2x inverse of the DJIA Real Estate index

SDS - 2x inverse of the S&P 500 index

DXD - 2x inverse of the DOW index