***Official*** 2014 Stock Market Thread

[Mermaidman]

Ok Folks, January has officially sucked complete donkey balls - and now february is starting off with the DOW down 200+

So I'm quite a n00b at overall investments. I do my research and know the basics of strategies and diversifying. However, there are some things I'm not clear on. I'm at the point where this month I'm trying to fill up my yearly $5500 IRA now with this huge sell-off going down. January has been the worst month in quite some time, so I figure buy now while the market is down, right? More stock for the same amount of money, no?

Does it make sense for me to be loading up my Roth IRA Index funds now while were having a big month of drops? Previous day I put in $1000, now it's continuing to go down so I'm thinking I need to put in some more?

Emotionally, it sucks seeing my retirement accounts lose value, but it could be a buying opportunity . . . As a compromise, I committed 1/2

 

[Imp]

And this bullshit is why I decided to "f*ck it" and just buy a bunch of high dividend payers. Whatever, I'm still getting my craptastic ~6% per year. Still beats savings accounts and GICs.

 

[dr150]

Does it make sense for me to be loading up my Roth IRA Index funds now while were having a big month of drops? Previous day I put in $1000, now it's continuing to go down so I'm thinking I need to put in some more?

You can do some dollar cost averaging and buy a little at a time on red days. In that manner, the averaging will be less losses if the market is volatile (i.e. up/down) than if you invest the whole sum in one shot. You can also wait on the sidelines by waiting a few weeks/months to have a better guess of the "bottom".

VYM is a good ETF that pays ~3% dividends, so you do get some ROI while the market is volatile/soft.

 

[Hugo Drax]

And this bullshit is why I decided to "f*ck it" and just buy a bunch of high dividend payers. Whatever, I'm still getting my craptastic ~6% per year. Still beats savings accounts and GICs.

You have to be careful about those high dividend stock. Ie check the payout ratio etc..

 

[sm625]

We are now almost 6 weeks past the top on the DOW and some other key indices. This is where crashes occur. I havent had much interest in jumping in for more since I already nailed a 7 bagger. But some puts are mighty tempting here. The volume on mid 160's february puts on SPY is amazing. Lots of people betting on another 10% coming off in the next couple weeks.

 

[glenn1]

U.S. futures are up this morning after Japan and Hong Kong crashed hard this morning, both well into official correction territory. If the market does open up this morning, gratefully accept the gift and use it to trim positions, perhaps significantly if you haven't already done so.

http://online.wsj.com/news/articles...62533080903814.html?mod=WSJ_hp_LEFTTopStories

 

[KB]

Fridays jobs report should be a bad one because of the bad weather. Might see more selling then.

 

[mshan]

Before we had that melt up of stock market at end of year, targets for end of 2013 I'd seen on tv were maybe S & P 500 1725 - 1750 on the high side (e. g. IIRC, perma bull Tom Lee of JP Morgan had year end target of 1716 for much of year, before revising it higher to around 1750 (I forgot what precise revised number was).

S & P 500 1900 seemed like strong consensus (few as high as 2000), projection I'd seen for end of 2014.

Ending last year at almost 1850 seems like absurd outlier and "baseline" starting point for this year (2012, we had mini fire sale at end of year because of uncertain presidential election and fiscal cliff, so the market may have been undervalued to start that year).

One comment I heard was that if economy had truly shifted into a higher sustainable gear (3%+ GDP growth), then market near end of last year was still cheap, but if we were in more of the same old same old (2%+ GDP growth, no significant new capital expenditure, companies still just continuing to buy back shares and issue more dividends), then market was already fully valued.

10 year Treasury being pushed down to 2.6%, instead of pushing above 2.9% - 3% with Fed's taper, that seems more like the real pain trade to me (2.5% - 2.75% being fair value range commentators on tv mentioned towards end of last year).

Last summer at first hints of Fed taper (PBoC stirring things up): http://video.cnbc.com/gallery/?play=1&video=3000176107 & http://video.cnbc.com/gallery/?play=1&video=3000178429 (IIRC, there was a week before scheduled refinancing of Chinese debt then, and Chinese government may have intentionally dried up liquidity to put scare through their own financial system to get them to clean up their act and not put their whole financial system at risk)
http://video.cnbc.com/gallery/?play=1&video=3000178429

 

[sm625]

One comment I heard was that if economy had truly shifted into a higher sustainable gear (3%+ GDP growth), then market near end of last year was still cheap, but if we were in more of the same old same old (2%+ GDP growth, no significant new capital expenditure, companies still just continuing to buy back shares and issue more dividends), then market was already fully valued.

GDP has no relation to stock market valuations. Stocks have jumped 30% per year the last 2.5 years on the back of absolutely anemic ~2% GDP growth. Stock market value is at this point based solely on how much federal reserve money printing makes its way into the coffers of the corporations that make up the stock indices. They've had a hell of a run the past few years, its been a hell of a fraud. But make no mistake it has been a fraud. If someone, anyone, in the private sector tried to run a racket like this they'd have been slammed down long ago. Markets cannot rise parabolically forever, even on the back of such blatant middle class trashing fraud.

 

[AmdEmAll]

Anyone know an online trading site that will let you buy penny stocks like HEMP and CBIS?? Stupid Tradeking apparently does not allow that and now the stocks are sky rocketing without me.

 

[mshan]

Two and a half years ago we were here:

- http://www.tradingmarkets.com/recent/if_this_is_armageddon-1577752.html (first debt ceiling debate, on top of Greece, impending Eurozone banking crisis; IIRC inflation maybe spiking toward 4% and real concern that wing nuts in Congress could push economy back into double dip recession in order to win presidential election next year)

- http://www.tradingmarkets.com/recent/the_cuckoos_nest-1578737.html (Occupy Wall Street occurs just as companies start one time surge in full time employment jobs for several months?)

- http://www.paulnathan.biz/commentaries/111-at-the-point-of-panic.html (European Lehman Moment?)


And we still had uncertainities in presidential election, fiscal cliff, and another round of debt ceiling debates and government shutdown chatter after the European Lehman Moment had passed.



Plus, IIRC, $400 billion in share repurchases by corporations last year (financed by artificially low interest rates courtesy of Fed QE?)

Fed actually seems like it is trying to talk down expectations for economy as it begins taper (to keep interest rates from spiking above 3%?)

Going into this year, it was apparent that there was not going to be an actual second government shutdown or real risk of default on debt, and the taper had at least been announced (to start in January), and even then I see comment on tv that some think the Fed has embarked on QE Infinity or QE Eternity despite formal announcement of taper.

 

[sm625]

Taper was only 10 billion. A token gesture. At the rate they are tapering it will be 5-10 years before the tapering reaches zero. Obviously we will have another recession before then, which will slam the lever the other direction. Everyone assumes this; that's why the DOW almost rammed its way to 17000. And of course during all this, the fed funds rate still sits at zero, robbing hundreds of billions per year from savers and transferring that money into the hands of risk investors who will only profit from some sort of inside info.

 

[JTsyo]

GMCR broke $100 after Coke said they were buying a stake. Kind of makes me feel bad for bailing at $75 with 50% gains.

 

[KB]

Taper was only 10 billion. A token gesture. At the rate they are tapering it will be 5-10 years before the tapering reaches zero. Obviously we will have another recession before then, which will slam the lever the other direction. Everyone assumes this; that's why the DOW almost rammed its way to 17000. And of course during all this, the fed funds rate still sits at zero, robbing hundreds of billions per year from savers and transferring that money into the hands of risk investors who will only profit from some sort of inside info.

The taper is 10 billion per month so it will only be (65 billion) 7 more months before tapering is gone. Unless you mean that the Fed will get scared and reduce tapering.

http://www.cnbc.com/id/101279385

 

[sm625]

They arent going to taper an additional 10 billion per month each month. That would mean 7 months and theyre done, as you said. There's no way they'd do that, the stock market would collapse. The taper has to be a one time $10billion reduction, with any later reductions not set in stone. Hell even just a single $10 billion reduction took 10% off the global markets, what do you think tapering all of it in 7 months would do?

At any rate, I'm looking at playing for a bounce downward off the 38% retrace. Whenever I hit big on a short play I usually play for another downward surge off 38%, 50% and 62%. My indicator still isnt showing any hint of a buy signal yet.

 

[sm625]

And here we are, at 2:45pm on a friday we are sitting around the 50% retrace. This is as perfect a shorting opportunity I have ever seen. Not that it has better than a 60% chance of hitting, but its just the fact that the bounce is likely to be so big. Long SPY Feb 2014 178 put @ $0.82

 

[Michael]

I am not as worried about a "crash". The economy is still reasonable and Fed policy is still accommodative. What I see now is a transition from a super-bull market where almost everything went up (and low cost index funds ruled) to a more "stock pickers" situation. I don't see much room for general P/E expansion but I do see lots of companies getting credit for more growth and others getting a lower valuation as they stumble. Stocks on the extreme edge of valuation (twitter, amazon, etc) will react much more severely to bad news. Bad news, in general, will matter more.

Companies still have a lot of cash on their balance sheets and can much better weather a storm now.

Michael

 

[GunsMadeAmericaFree]

American Airlines is the place to be this year. I'm up over 40% since the beginning of the year, and that was just a little over a month ago. Why should you invest in AAL?

1) led by an experienced merger team

2) merger synergies will lead to increased profits

3) oil looks to be lower over next year or two (oil one of biggest airline costs)

4) entire airline industry as a whole better able to pass on price increases due to
consolidation (decreased competition)

5) 10 billion dollar cash hoard - some of which is being used to buy back stock
(which in turn increases earnings per share)

6) Price to earnings ratio is low compared to industry average.

7) it is expected that American will begin paying a dividend in 2015, at which point funds
that only buy dividend paying stocks will drive the price up further.

I personally suggest $25 AAL January 2016 call options, aka LEAPS. With nearly two years until expiration, that leaves a long, long time for the stock price to appreciate before you sell, and for many of the merger synergy savings to appear and drive the stock price upwards. Very likely to be up 35% to 40% within a couple of months.

 

[AmdEmAll]

Anyone know an online trading site that will let you buy penny stocks like HEMP and CBIS?? Stupid Tradeking apparently does not allow that and now the stocks are sky rocketing without me.

I like how no one answers questions in this thread.. bunch of elitest

 

[Borkil]

I like how no one answers questions in this thread.. bunch of elitest

I use etrade and i was able to purchase cbis. I only put $100 down but I already doubled my money lol

 

[jpiniero]

I am not as worried about a "crash". The economy is still reasonable and Fed policy is still accommodative.

The problem is that it's obvious Wall Street is addicted. Friday was yet another example of it; that the market was up 1% because they think the weak jobs report means the Fed will slow or stop the taper. When they realize the Fed is serious about getting out, that will be when the selloff will begin.

 

[Michael]

I like how no one answers questions in this thread.. bunch of elitest

Maybe no one here buys penny stocks?

Michael

 

[senseamp]

Japan had near zero interest rates for 20 years. Their economy and stock market have been in the gutter the whole time.

 

[AmdEmAll]

Maybe no one here buys penny stocks?

Michael

Not all my questions have been about penny stocks

 

[Michael]

Not all my questions have been about penny stocks

The latest was on penny stocks. They tend to be a complete crap shoot so I suggest having nothing to do with them.

Michael

<typing on my phone without my reading glasses ...>