***Official*** 2016 Stock Market Thread

[dullard]

Well, its official, took the plunge at $1290.00 (retail ask price one week ago) for 1oz 50 Gold Eagle:

Doh. Hopefully it was only one falling knife that you caught.

 

[FelixDeCat]

Doh. Hopefully it was only one falling knife that you caught.

No, I've just always wanted one. I carry my gold coin in my pocket. Nice to have REAL MONEY with you at all times. Not that fiat currency.

 

[FelixDeCat]

Also, I bought 110 shares of DRYS at $5.85 this morning!

 

[Imp]

Also, I bought 110 shares of DRYS at $5.85 this morning!

I won't lie... I'm also tempted to go in at the $5 range -- with $2k or $3k, could get 25 to 50 times bump on nothing. Cheaper than playing the lottery for a year. Who knows? One pump and dump later and you could be rich. Just remember to dump before the SEC investigation or trade-freeze.

 

[FelixDeCat]

Holy crap! I just realized something.

W/S loves to handicap the future and it has been rising for a few reasons.....

1) Markets always go higher during election years, but we are at record highs, so maybe thats already priced in.

2) Anticipation of a Trump boost to the economy by loosening government regulation on the financial and other industries.

3) Adding $1T to the National Debt in new "stimulus spending" on "infrastructure".

As a result, the market expects and WANTS an interest rate increase, maybe as soon as December. The question is should it be .25% or .50%. My guess is .25%. And now for my hypothesis -

AFTER the rate decision is made, especially starting in January, if we continue to get strong economic data will the markets fall 10-15% like it did last January on fears that the Fed will have to raise rates in 1% increments, and where will it stop? Will too many increases put the brakes on earnings growth?

Usually W/S shoots first and ask questions later, so who knows what will happen. The selloff last January was a buying opportunity and any dip is bought these days, so who knows.

 

[Imp]

If you don't buy now, you'll never get in...

And DRYS is back down to ~$5.50. If I buy now, I may lose 99% or gain 20x...

 

[FelixDeCat]

If you don't buy now, you'll never get in...

And DRYS is back down to ~$5.50. If I buy now, I may lose 99% or gain 20x...

Thankfully I dumped DRYS premarket @ $6.35 and later bought ZIOP on hopeful momentum play @ $7.10. Otherwise I dont see much chance for DRYS at the moment. The other shippers rallied last week but DRYS kept going down. I think the target is $4+, which is exactly where it was before the run up to $102.

 

[Imp]

And I just got reminded/remembered... The pseudo-Italexit vote is next Sunday -- not really but it's important and could lead to it.

Reading a bit on it, looks like a fucked if you do/don't scenario. I'll let "the markets" remind me how Trump's election fixes that problem and a potential Frexit next year -- and the actual implementation of the Brexit.

 

[FelixDeCat]

That's it. Im out again. Stupid market.

 

[repoman0]

As all of the "world is ending" republicans start investing after 8 years of being out of the market, the market will rise (I personally know at least about 5 millionaires who refused to be in the market for the last 8 years simply because a democrat was the president). But then the "world is ending" democrats will start pulling out of the market and it will decline. I don't have a perfect crystal ball for that timing. But I think we'll see that decline start at the next fed meeting.

Thanks. Here we go ... moving close to half of my 401/403 accounts to cash from S&P 500 at market close today. I need a better balance than 100% S&P 500 anyway, so I'm going to slowly convert some of the cash to international stocks and then re-buy into some US stocks and bonds over the coming year or four.

For now I set my contributions to 65% Russell 3000 tracking fund, 20% "developed international" and 15% US bond fund. I don't particularly know what I'm doing but this is pretty close to a lot of suggestions that I've seen and the equity funds have 0.05 and 0.06% expense ratios, and 0.12% for the bonds which seems pretty low.

 

[dullard]

Thanks. Here we go ... moving close to half of my 401/403 accounts to cash from S&P 500 at market close today. I need a better balance than 100% S&P 500 anyway, so I'm going to slowly convert some of the cash to international stocks and then re-buy into some US stocks and bonds over the coming year or four.

For now I set my contributions to 65% Russell 3000 tracking fund, 20% "developed international" and 15% US bond fund. I don't particularly know what I'm doing but this is pretty close to a lot of suggestions that I've seen and the equity funds have 0.05 and 0.06% expense ratios, and 0.12% for the bonds which seems pretty low.

Rebalancing is a good idea. Doing a large swings from all S&P 500 to half cash is usually a sign that you may be overreacting a bit. I wouldn't be concerned with taking some profit and being more conservative (that is probably a good thing). I just think half is being fairly drastic.

Your expense ratios are low, so that is good. But, you might want to reconsider bond funds. Individual bonds, when held to maturity (and assuming they were for entities that don't go belly-up) don't drop in value. Bond funds do drop in value, frequently by quite a lot. So bond funds are often not a good way to add stability to your portfolio. Also, since you can just go and buy a bond directly yourself, why pay someone 0.12%/year to do it?

 

[repoman0]

Rebalancing is a good idea. Doing a large swings from all S&P 500 to half cash is usually a sign that you may be overreacting a bit. I wouldn't be concerned with taking some profit and being more conservative (that is probably a good thing). I just think half is being fairly drastic.

Your expense ratios are low, so that is good. But, you might want to reconsider bond funds. Individual bonds, when held to maturity (and assuming they were for entities that don't go belly-up) don't drop in value. Bond funds do drop in value, frequently by quite a lot. So bond funds are often not a good way to add stability to your portfolio. Also, since you can just go and buy a bond directly yourself, why pay someone 0.12%/year to do it?

Well, I'm 27 and am only playing with about $75k -- maybe it is overreacting, but it's still not a ton of money I do plan to buy back in, maybe after the upcoming rate hike. It's not like it'll make that much of a difference compared to my contributions, which are about a third of my current balance yearly.

I would like to hold individual bonds, but I am not sure how -- I only have so many investment options through my 401/403, which is held by TIAA-CREF. How does one buy individual bonds in a retirement account?

This is the "standard" bond fund I have access to, FWIW:

http://www.morningstar.com/funds/XNAS/TBIIX/quote.html

 

[dullard]

I would like to hold individual bonds, but I am not sure how -- I only have so many investment options through my 401/403, which is held by TIAA-CREF. How does one buy individual bonds in a retirement account?

This is the "standard" bond fund I have access to, FWIW:

http://www.morningstar.com/funds/XNAS/TBIIX/quote.html

When you have a smaller amount of money, and most of it is in a sheltered account, you are probably doing about the best you can do with bonds. The only other alternative would be to have it in a combined fund such as a target-age fund that has some bonds. In the long run though, as your portfolio grows and especially when you start to get taxable accounts, then get out of bond funds and buy them directly. Just something to keep in mind for the future.

Bonds are tricky though. A bond that pays regular returns is terrible in a taxable account since you'd be taxed at regular income brackets. You want that type of earning in a tax-deferred account (such as the 401k). But, a tax-free bond such as a municipal bond is redundant in a tax-deferred account (why use your precious tax-deferment on something without tax or with lower tax).

 

[repoman0]

When you have a smaller amount of money, and most of it is in a sheltered account, you are probably doing about the best you can do with bonds. The only other alternative would be to have it in a combined fund such as a target-age fund that has some bonds. In the long run though, as your portfolio grows and especially when you start to get taxable accounts, then get out of bond funds and buy them directly. Just something to keep in mind for the future.

Bonds are tricky though. A bond that pays regular returns is terrible in a taxable account since you'd be taxed at regular income brackets. You want that type of earning in a tax-deferred account (such as the 401k). But, a tax-free bond such as a municipal bond is redundant in a tax-deferred account (why use your precious tax-deferment on something without tax or with lower tax).

Got it, thanks for the info. Taxable accounts are at least a few years off for me because any savings is going into risk-free accounts to buy property. I had all my savings in stocks for a while, made a few+ k playing with the market when I had no house plans but now it needs to stay safe.

I think you gave me the advice to stay away from putting it in bonds -- thanks for that too, by the way. The fund I was looking at is down a few percent since I was looking to buy into it. My pitiful 0.95% savings account has been much better.

 

[Charmonium]

The problem with bonds is that when rates start to go up, everyone might try to get out at the same time. That means funds will have a lot of redemptions and will have to sell assets for whatever they can get thus depressing prices. And of course rising rates will depress prices anyway.

So personally, unless you need the income like some of us do, I'd avoid bonds right now since there is very little opportunity for capital appreciation and a much greater chance for capital loss.

In theory, junk bonds should move more with the stock market since those bonds reflect the value of the companies that issue those bonds and they should do better in a rising market - which seems to be the way we are headed at the moment. But if there's a mass exodus from bonds, that probably won't matter. That doesn't seem likely right now since any sort of aggressive rate moves either by the fed or the market seems remote, but you never know.

 

[MaxDepth]

Rate will most likely go up in January as the HARP regulation expires.

Oil stocks are a definite hold for me. I need to see the first 100 days of the new Presidency to see if all hell will break loose in the Mid-East. Still have a strong action with airlines, except for Allegiant, which I see as a boutique stock that already hit its high for the next year. As soon as I hear of trouble in the Mid_east though, especially in the oil fields, I'm selling half of my airlines.

 

[Kazukian]

Bought 200 shares of GUSH @ 87.59, sold the 2 contracts @ $105 for $1300 this morning.

 

[MaxDepth]

Whelp. Looks like OPEC will be cutting output in January.
http://indianexpress.com/article/bu...l-price-surges-as-opec-agrees-on-output-cuts/

 

[dullard]

Rate will most likely go up in January as the HARP regulation expires.

HARP was extended until September. Not that the extension will matter that much. How many people still qualify? They'd have to (1) live in a place that housing prices still haven't recovered (most have), (2) not have wanted to refinance in the last 7 years but suddenly want to do it now, and (3) the 7 years since HARP's passage still hasn't let them pay down their 30-year mortgage enough. Then add on the actual HARP requirements (must be a Fannie/Freddie mortgage from before 2009, etc) and I just don't see that many people left.

That said, what does having a few people refinance have to do with interest rates staying low? In a refinance, some debt is paid off and new debt is created at about the same value. I just don't see that action as having much impact on the demand or supply for debt.

 

[Imp]

Ya, so, OPEC supposedly has a "deal." To believe they'll follow through, you'll have to believe that a bunch of countries run by dictators/regimes with a history of cheating won't do what they normally do.

I think Q3 GDP for the U.S. got revised above 3%. What can I say? Everything is indeed awesome.

 

[Balt]

VDE (vanguard energy ETF) did pretty well today, I'm up 24% at this point. I want to cash out, but my investment was pretty small and I'll be taxed at the short term capital gains rate until December 30. Going to hang on for now.

As Imp said, I won't be the least bit surprised if someone backs out or denounces the deal and sends oil stocks right back to where they were.

Still under water on my large-cap biotech (GILD) play. Might take the tax loss before the year is out, may just hold onto it for a couple of years, collect dividends, and see if they can come up with something new that will excite the market.

 

[MaxDepth]

Extended to September 2017? The reason I postulate is to say "see? we've cleared the housing mess. Now let's raise the rate." Of course global economy, brexit, and other bigger things weigh more but it is another US voice to ask for a rate hike.

EDIT: Just looked up the information on HARP, they say over 300,000 still can apply. We used it because we met the Fanny Mae owns our original loan checkbox. We cut the loan down from 5.8 to 2.75 and down to 10 years instead of the original 30.

 

[Imp]

I won't be the least bit surprised if someone backs out or denounces the deal and sends oil stocks right back to where they were.

Aside from OPEC being OPEC, if oil goes up, shale becomes nice and viable again. U.S. rig counts and production have been edging up for more than a month, I believe. All those bankruptcies and liquidations probably lowered costs significantly -- bankruptcy acquisitions, surplus of labor, etc. OPEC cuts 1.3 million? The U.S. production dropped by like 500k to 1 million in the past year.

But whatever, everything is so awesome, we should raise rates.

Edit: Holy crap, 10 year Treasury hit 2.39% today. Think it was 2.35% Friday. Come on, let's keep it going!

 

[FelixDeCat]

What goes up .... must come down....OAS Petroleum back to $12, last $15, up 30% on Wednesday.

The tiny production cuts wont mean much in the long run and I think oil stocks will go back down when the short covering rally is over.

EDIT: Anything is possible, however. We went to $100 oil in the first place based mostly on the rise of China in 2008. But too many interests to short it back down might cause a spike to $75 oil in the next few months especially based on continued fables of production cuts and rising demand in the seasonably slow time of the year for oil.

 

[Imp]

^Supply/demand probably will balance out by late 2017 even without a production cut. But then if shale goes all out, that'll take longer, and you still have to work through the storage built up over the past two years -- unless you magically turn off all production in the world for a few days.

And if all this awesome news does in fact cause rates to rise and stay up... Good luck to all those debt holders, both private and public. Low rates cause bubbles? What does ~7 years of never before near zero and negative rates do?