Another Indication The Bull Market is Coming to an End!

[hyten1]

putting the recent so call market high into perspective

 

http://www.ritholtz.com/blog/wp-content/uploads/2013/03/inflation-dow.png

 

still about 1000 points below 2000

[hyten1]

i have to say market timing is hard (for me at least), i have never been good at it nor been successful

 

inevitability, everytime i try to time it and sell (base on macro reasons), the stock/market keeps going up after i sold

 

yes the market/stock eventually does turn and go negative but many times the market/stock will turn up again before reaching my sale prices.

 

its frustrating

 

take a look at 2008 my portfolio crash big time (i was down 40%) during that time i didn't time it or sold anything. but i did have about 15% cash, so i pour it back in. I also added some additional cash. i was up 120% in 2009.

 

i wonder if i did time it during that peirod what would happen

 

i am not saying you should not do what you feel comfortable, this is just my experience

 

EDIT: not to say i don't try, my cash level range from 0% to 30%. so i guess that is timing or more like sell/buying base on what i thought the stock was high or low.

 

 

[vinod1]

I think the most important for the valueinvestor - in terms of macro or "general market stuff" is to identify key risks, imbalances, that will eventually

need to correct. We don't need to try to make money on this, as the most difficult part would be the timing issue - but we need to be aware, so we don't

loose money by the unravelling effect. Where do you guys see the major issues right now?

 

I think, regarding the corporate profit margin discussion, that this is a key issue going forward. I am not totally convinced, that we will return to the

6% of GDP as Hussmann et. al. are saying;

 

I absolutely agree that the key to future market returns would hinge on profit margins. I think there are several reasons for why profit margins might be higher than in the past:

 

1. Structural change in the composition of the businesses remaining in the US. Many have outsourced or moved to higher margin products in US, leaving the lower margin ones to emerging market countries. Examples of this is the change in composition of sectors in the total market - technology sector, health care both of which have very high margins have become a much larger part of the economy. Unless something changes, I do not see these margins or these sectors losing margins or their share in the economy.

 

2. Relative strength of labor has been weakened by entry of large emerging market (China/India) workers, so returns to labor would be lower for a while (say 20-30 years) while they are brought into the economy.

 

3. Debt costs have gone down pretty significantly compared to the past.

 

4. Tax rates have gone down as companies were taking advantage of off-shore tax havens especially via transfer pricing.

 

I think factors #1 and #2 are the critical ones and likely lead to a much higher sustainable profit margins going forward compared to the past. The current profit margins of around 10% are very likely not sustainable but I think they are more likely to mean revert say around 8% than around 6% as they had in the past.

 

Vinod

[Guest deepValue]

Quick update on my anecdotal contra indicator...

 

In addition to a lengthy phone conversation yesterday, I swapped probably 20 emails today in response to vehement and repeated attempts to convince me that the market will not decline without the Fed tightening, and since that wont happen for a couple of years it is smooth sailing until then. A couple more nuggets - the dividend discount model is bunk because it is "not real cash flow", and corporate buy backs still add value even though shares are not actually declining hahahah!!!!! A shocking conversation to say the least, especially coming from someone who is relatively intelligent.

 

As Ericopoly said in late 2012 with regard to his excitement in anticipation of BAC's inevitable rise....I am currently quaking with greed!!! The bull case of cheap stocks relative to bonds, central bank tail risk removal and the QE put is permeating investor sentiment right now. It's palpable.

 

0.3% rank for your write-up on SumZero... It's hard to believe hedgies would take such offense.

[bmichaud]

It's actually 0% now :)

[Kraven]

Quick update on my anecdotal contra indicator...

 

In addition to a lengthy phone conversation yesterday, I swapped probably 20 emails today in response to vehement and repeated attempts to convince me that the market will not decline without the Fed tightening, and since that wont happen for a couple of years it is smooth sailing until then. A couple more nuggets - the dividend discount model is bunk because it is "not real cash flow", and corporate buy backs still add value even though shares are not actually declining hahahah!!!!! A shocking conversation to say the least, especially coming from someone who is relatively intelligent.

 

As Ericopoly said in late 2012 with regard to his excitement in anticipation of BAC's inevitable rise....I am currently quaking with greed!!! The bull case of cheap stocks relative to bonds, central bank tail risk removal and the QE put is permeating investor sentiment right now. It's palpable.

 

0.3% rank for your write-up on SumZero... It's hard to believe hedgies would take such offense.

 

Hedgies are a very sensitive bunch. Even talk about taking away their livelihood and you might as well be declaring models and bottles a sin and crime against humanity.

[Guest]

http://www.wired.com/business/2013/03/yahoo-summly/

 

"There’s no logical explanation for Yahoo’s reported $30 million acquisition of Summly, an app created by a 17-year-old Brit that launched five months ago. The team and technology are unexceptional and the app itself will be shut down. What Yahoo really gets for its big check is momentum and buzz.

 

In other words, Yahoo bought Summly to appear cool again."

 

 

[Guest valueInv]

http://www.wired.com/business/2013/03/yahoo-summly/

 

"There’s no logical explanation for Yahoo’s reported $30 million acquisition of Summly, an app created by a 17-year-old Brit that launched five months ago. The team and technology are unexceptional and the app itself will be shut down. What Yahoo really gets for its big check is momentum and buzz.

 

In other words, Yahoo bought Summly to appear cool again."

 

I wouldn't be so sure:

 

http://www.wired.com/gadgetlab/2011/12/summly-app-summarization/

 

Click-bait blogging.