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12-24-2018, 11:19 AM
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lordsmurf lordsmurf is offline
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I've been saying the market would hit a harsh correction in Q1 2019 since last spring. It grew too fast, divorced from other economic numbers both flat and under 5% growth. This also exclude government chaos finally leeching into market chaos, which was also one of my factors for the Q1 target.

I'm not an economist, but I understand money and finance, and have had a retirement portfolio for 20 years now. I've held most of my annual investable funds in cash in 2018, waiting to time the market. And that time is close, maybe now. I've started to leak a few dollars into various assets, but am still holding back most.

1st question: When do you think it will bottom out, and by what ultimate %? (Or, to keep things easier than %, the DOW, S&P or NASDAQ index prices.) I'm curious if a true bear market is coming, more downturns, or if simply a correction that will pass soon. I want to know what others think.

- I think the DOW will at least hit the 19k range, and that the market will lose all 2017-2018 gains, putting us back to 2016 levels. It's currently down to mid 22s, down from 26k+ highs earlier this year.

- I think the S&P may come close to 2100, and it's already falling more rapidly than both NASDAQ and the DOW. I like Warren Buffet's advice on S&P index funds, and the ETFs are top of my radar (along with some select mutual funds from Janus, American Funds, and T Rowe Price, in which I'm already invested).

- Tech stocks still seem over inflated, especially the FAANGs, so the NASDAQ is still a mystery to me. Even 2016 levels seem a bit much, reminds me too much of the dot bomb era. Mostly meaning that I'm not sure how it will do, % wise, in matching DOW/S&P turmoil. Nor when it may be wise to invest in funds heavy in NASDAQ tech stocks.

- International stocks/funds are another conundrum. I'm especially not sure if I should touch China with a 10-foot pole.

2nd question: With stocks down, what are your favorite holdings, especially those that pay decent dividends? Any good deals that you're seeing? I've always liked the advice "only buy what you know" (referring to company/sector), and stick to that.

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  #2  
12-25-2018, 11:36 PM
Winsordawson Winsordawson is offline
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No one has a crystal ball. You can get 50 different opinions on Seeking Alpha, but what we do know is that, despite the recent tumbles in the market, we are not yet in recession territory. The Fed tends to agree, evident by their interest rate increases. Economic activity is still strong. Fidelity publishes a useful business cycle graph every quarter: https://institutional.fidelity.com/a...le-update.html

So if you are waiting for a recession to buy, now is not the time. On the other hand, it is hard to time the market, hence the philosophy of dollar-cost averaging, where you invest a certain amount at set intervals. This is what I do for my retirement account, but if I had to invest my personal money I would wait awhile.

As I value time more than money, I rarely invest in individual stocks. You can't just buy XYZ Corp. and not keep track of its fundamentals for years. The average Joe and Jane bought GM thinking it was a solid stock until it declared bankruptcy in the last recession. I have been invested largely in ETFs, mainly ones that either track an index or are based on market capitalization (small-cap, mid-cap, etc.). Tech ETFs, like QQQ, offer the most long-term gains (and a lot of volatility), but you need to have a sizable time horizon for them. Your time horizon will be the most important factor in deciding what you will invest in.

A lot of investors are critical of passive investment, but studies have shown that over decades only a very small percentage of actively managed funds outperform funds that track an index. Warren Buffet agrees, as he has directed the executors of his estate to invest most of his wealth in an S & P 500 index fund. Every person who buys a stock thinks he or she has made the right decision, but for every buy there is someone who wants to sell (in theory, excluding market makers). Already, we know 50% of these people made the wrong decision, which is why I usually stick to passive investing.

International stocks offer a lot of reward if you time it right, but you cannot just invest and leave them to simmer like a slow cooker.

To answer your questions:
1. I have no idea, but economic indicators are still strong.
2. I don't focus on dividends as much as on growth. if your time horizon is short, there are some solid stocks like AT&T, which will have a very good dividend yield as the market tanks. I try to avoid "chasing dividends".
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12-26-2018, 09:39 PM
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Thanks for replying.

I went ahead and put in 20% of the funds before the rebound today. We're not talking huge sums here, just annual retirement funds. Long-term stuff, still some years to be aggressive.

No, I don't think recession either, just hard correction. At this early juncture, I'm not even sure if December is the correction, or just market noise.

Yes, dollar cost averaging is usually my method. And it still somewhat was this year, albeit to tiny amounts -- most of which lost value, even before December. I just did not like what I saw at the end of 2017 and into 2018. I put on the brakes, and am glad I did. It's been turmoil all year long.

As much as I hear "the market is strong", is it really? I'm not convinced.

Indeed, opinions are everywhere. I just wanted some from the local crowd. There are people here from many fields, not just video (filmmakers, actors, etc). It can good to get opinions.

"Chasing dividends" is a new phrase to me. I guess the main issue is that non-dividend stocks must be bought/sold to get growth value, and I leave that activity to the mutual funds. I just hold a few dividend-paying stocks mostly for the thrill of dabbling in the market. Real funds go into the ETFs or mutual funds.

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12-28-2018, 12:02 AM
Winsordawson Winsordawson is offline
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Consumer spending, which makes up a significant portion of the economy, is still high. As long as this continues, we should be fine. The yield curve did inverse earlier this month, which means that a recession is in our future. However, this could still be a couple of years away, as it took two years for the 2007 recession to follow the yield curve inversion of 2005. I recall research indicating that a recession usually follows a bear market (a drop of at least 20%) by six months to a year. Of course, with the Big Baby in the WH (tariffs and trade wars), anything could happen.
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01-18-2019, 09:23 AM
Angies_Husband Angies_Husband is offline
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Quote:
Originally Posted by Winsordawson View Post
The yield curve did inverse earlier this month, which means that a recession is in our future. However, this could still be a couple of years away, as it took two years for the 2007 recession to follow the yield curve inversion of 2005.
This.

...I have heard the professional consensus in the financial industry is to expect the "correction" in 2020.

But I very much agree with Winsordawson on his points, primarily: 1) What happened in December was not the real correction and there is still a (long) way to go. and 2) Investing all depends on what your time horizon is.

Personally, I think with the rise of all the computer driven trading and decision making, it is easy to imagine a world where machines are making buy/sell decisions simply based on historical models (and ignoring fundamentals). Maybe we are already there...

For fun, you can google "ARIMA model stock price forecasting" and after sifting through some of that, reflect back on what Winsordawson said "...for every buy there is someone who wants to sell..."

What happens when there is an imbalance in the quantity demanded for buying and selling? Price will (or should) change accordingly.

I would also tend to prefer collections (e.g., funds/indexs) over individual stocks, and to maintain a portfolio that is diversified and respects your required time horizon.
--

Ok, so this is an old thread (or so the box below tells me), but it is still young from an investing standpoint!

I am also laughing at the irony of finally getting around to creating an account (after much historical forum reading) and my FIRST post has nothing to do with VHS to digital capture/conversion advice...
The side note being, this forum is a fantastic resource for someone just starting on the "save the family archives" journey!
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02-01-2019, 06:23 PM
Winsordawson Winsordawson is offline
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Quote:
Originally Posted by Angies_Husband View Post

For fun, you can google "ARIMA model stock price forecasting" and after sifting through some of that, reflect back on what Winsordawson said "...for every buy there is someone who wants to sell..."
Thanks. Do you have a particular link for this?
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02-01-2019, 08:14 PM
Angies_Husband Angies_Husband is offline
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Quote:
Originally Posted by Winsordawson View Post
Thanks. Do you have a particular link for this?
There is a nice site at Duke:
https://people.duke.edu/~rnau/411home.htm

I have only poked around there a bit, but lots of good reading material on statistical forecasting.

ARIMA is #5, if you scroll down on the page.
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