financial armageddon 2014

[uncle168]

1. the sti peaked in 2007 @ 3906, it has been 7 years but no new high has formed

2. i do not predict the future, only stupig people do that to bluff little children

3. you should not short at the peak as you don't know when is the peak, you should wait for a steep correction and a 50% retractment then you short and get out before it hits the bottom of the start of the retracement

4. i do not know where is the peak

5. you can't prepare for a crash because you don't know when it is going to happen. the best thing to do is to stay in cash and wait for the crash. if you stay vested with 5% return for 5 years, you can get more than 25% compounded return but a black swan event can wipe out all your return in a single day

6. cash is not stupig, cash is king, keekeekee

7. the problem is when the opportunity comes, most of us are fully vested, with no liquidity to take advantage of the situation

8. i repeat i don't predict the future, i explain the risk of buying stocks that nobody will want you to know

 

[Vincent_G]

I have heard people say market would crash since 2011 when market already picked up from 2009-2010.. If people choose to stay on the sideline since 2011, how much have they lost??

 

[w1rbelw1nd]

Uncle is here to only instruct us... Not to share and learn from us...

 

[Gaara1989]

Uncle168 prob lost alot more than most of us here. Until he gone crazy and everyday posting here hoping tt e mkt will crash

 

[Shiny Things]

2. i do not predict the future, only stupig people do that to bluff little children

Nope, you don't get off that easy! Saying "stay in cash" is a prediction about the future - you're predicting that sometime in the future, you'll be able to buy stocks cheaper than you can buy them today.

Look, this isn't always a stupid thing to say. It was definitely true in 1999. And on average, you get a 5% pullback a few times a year, and a 10% pullback about once a year or so. But that doesn't mean you should always stay in cash and wait for the pullback: if you'd woken up on January 1st 2013 and said "gosh stocks have just rallied a bunch, I'm going to wait for a 10% pullback before I buy", you'd have waited all year and missed a 30% gain.

This is why you have a bond allocation in a sensible portfolio. That gives you some ammo to redeploy to stocks if there's a downturn; but in the normal case, where stocks are headed up and to the right, you'll want most of your cash in stocks because that's where the money is.

i would love for a financial armageddon like 2008 again.....imagine all the delicious deals u can pick from....SPY at 800 points.....citi at 1 dollar.....goldman sachs at $60 dollars....casino stocks at 1/20th of their peak....god everynight i pray for 2008 to happen again....

Hate to burst your bubble mate, but that's probably not going to happen. 2008 was a collapse the likes of which we hadn't seen since the 1930s, and the massive leverage that allowed the bubble to inflate pre-2008 (through SIVs and ABS-CDOs and all those other wacky SPVs) simply doesn't exist any more.

If you're sitting in cash (or even not entirely in cash, but in something like your 40-40-20 portfolio) waiting for a second 2008 to happen, you're going to be waiting a long time.

u dont necessary have to be in cash right now....but u can change the allocation of the portfolio....judging from the insane highs of the S&P right now....i think one shouldnt be more than 50% vested in stocks right now....maybe 40% stocks 40% bonds and 20% cash.

Why is the S&P's current level insane? And what would be a more normal level? I'd be happy to have a bet with you in the usual amount.

 

[frenchbriefs]

have u read the book four pillars of investing?im sure u did as a proponent of index investing.....right at the beginning on the book theres this very important element the author said...."they confuse the future with past returns"...

high previous returns usually indicate low future returns and low past returns usually mean high future returns.....during the 2008 crash,stock market was extremely cheap this signified a higher than average return once the market starts seeking a revert to the norm......in the last 6 years after the 2008 crash the US stock market has experienced a tremendous boom,growing nearly 110% in less than 6 years.....surpassing even the highs in 2000 and 2007,pushing on to nearly 20% above its peak....i believe such incredible growth is unnatural and the market is in a mania right now.....what is certain is the market has already achieved high previous returns so from this point on future returns are going to be low......

i think u should start reallocating ur portfolio.....stock prices are insanely high and u should start weighing heavily towards bonds......let me know which bond etfs are good for buying......

Nope, you don't get off that easy! Saying "stay in cash" is a prediction about the future - you're predicting that sometime in the future, you'll be able to buy stocks cheaper than you can buy them today.

Look, this isn't always a stupid thing to say. It was definitely true in 1999. And on average, you get a 5% pullback a few times a year, and a 10% pullback about once a year or so. But that doesn't mean you should always stay in cash and wait for the pullback: if you'd woken up on January 1st 2013 and said "gosh stocks have just rallied a bunch, I'm going to wait for a 10% pullback before I buy", you'd have waited all year and missed a 30% gain.

This is why you have a bond allocation in a sensible portfolio. That gives you some ammo to redeploy to stocks if there's a downturn; but in the normal case, where stocks are headed up and to the right, you'll want most of your cash in stocks because that's where the money is.



Hate to burst your bubble mate, but that's probably not going to happen. 2008 was a collapse the likes of which we hadn't seen since the 1930s, and the massive leverage that allowed the bubble to inflate pre-2008 (through SIVs and ABS-CDOs and all those other wacky SPVs) simply doesn't exist any more.

If you're sitting in cash (or even not entirely in cash, but in something like your 40-40-20 portfolio) waiting for a second 2008 to happen, you're going to be waiting a long time.



Why is the S&P's current level insane? And what would be a more normal level? I'd be happy to have a bet with you in the usual amount.

 

[frenchbriefs]

let me put it this way.....is the price u are paying now for SPY good value for the expected future return?

lets say u bought into S&P500 at 800 at the very bottom of the 2008 crash.....lets say u assume the stock market is going to bounce back to the pre 2007 crash level which is 1500.....now 800 to 1500 thats a growth of almost 85%....u are paying a price of 800 for a potential upside of 85% which is extremely respectable.....of course u can slowly sell of chucks of ur stock and realise the gain along the way but lets say u decide to hold all the way till it hits 1500....which it does in 2011 or 2012.....

now the S&P500 has surpassed all expectations and shot up to 1900....lets say u still had some of the stocks u bought at 800...the last 6 years the s&p500 has returned a princely growth of 140%.....

now lets say ur a new investor....would u put money into the s&p500 now??the price point is now 1900,u are paying $1900 to enter the S&P 500,that means in order to make a return of 140% the s&p would have to grow to 4550 points in the next 6 years!!!!!!!4550 points wtf how is that even possible????USA would have to expand its economy to 48 trillion,pay off its 16 trillion debt,conquer the world and destroy China india and russia!!!!!!

even a modest growth of 30% means the S&P 500 would have to reach 2500 points wtf??????

face it stocks are way too expensive now.put all ur money into bonds or cash....

Nope, you don't get off that easy! Saying "stay in cash" is a prediction about the future - you're predicting that sometime in the future, you'll be able to buy stocks cheaper than you can buy them today.

Look, this isn't always a stupid thing to say. It was definitely true in 1999. And on average, you get a 5% pullback a few times a year, and a 10% pullback about once a year or so. But that doesn't mean you should always stay in cash and wait for the pullback: if you'd woken up on January 1st 2013 and said "gosh stocks have just rallied a bunch, I'm going to wait for a 10% pullback before I buy", you'd have waited all year and missed a 30% gain.

This is why you have a bond allocation in a sensible portfolio. That gives you some ammo to redeploy to stocks if there's a downturn; but in the normal case, where stocks are headed up and to the right, you'll want most of your cash in stocks because that's where the money is.



Hate to burst your bubble mate, but that's probably not going to happen. 2008 was a collapse the likes of which we hadn't seen since the 1930s, and the massive leverage that allowed the bubble to inflate pre-2008 (through SIVs and ABS-CDOs and all those other wacky SPVs) simply doesn't exist any more.

If you're sitting in cash (or even not entirely in cash, but in something like your 40-40-20 portfolio) waiting for a second 2008 to happen, you're going to be waiting a long time.



Why is the S&P's current level insane? And what would be a more normal level? I'd be happy to have a bet with you in the usual amount.

 

[alexchia01]

let me put it this way.....is the price u are paying now for SPY good value for the expected future return?

lets say u bought into S&P500 at 800 at the very bottom of the 2008 crash.....lets say u assume the stock market is going to bounce back to the pre 2007 crash level which is 1500.....now 800 to 1500 thats a growth of almost 85%....u are paying a price of 800 for a potential upside of 85% which is extremely respectable.....of course u can slowly sell of chucks of ur stock and realise the gain along the way but lets say u decide to hold all the way till it hits 1500....which it does in 2011 or 2012.....

now the S&P500 has surpassed all expectations and shot up to 1900....lets say u still had some of the stocks u bought at 800...the last 6 years the s&p500 has returned a princely growth of 140%.....

now lets say ur a new investor....would u put money into the s&p500 now??the price point is now 1900,u are paying $1900 to enter the S&P 500,that means in order to make a return of 140% the s&p would have to grow to 4550 points in the next 6 years!!!!!!!4550 points wtf how is that even possible????USA would have to expand its economy to 48 trillion,pay off its 16 trillion debt,conquer the world and destroy China india and russia!!!!!!

even a modest growth of 30% means the S&P 500 would have to reach 2500 points wtf??????

face it stocks are way too expensive now.put all ur money into bonds or cash....

You are assuming too many things.

Whether SPY at $1900 is too expensive or not is for the future to determine.

It could be peak now or it could be not, as traders and investors, this is not our concern.

If you think it's peak and stay in cash. What happens if market rally another 1k points? You are going to miss the rally.

If you think it can go higher and buy into the market, what happens if market crashes tomorrow? You are going to get caught in a massive mud-slight.

Our job is not to predict market peaks or bottoms. We just need to have a strategy that to handle both market rallies, falls and crashes.

This is how we can sleep well at night. Not worrying about market crashes when we brought into the market and worries about market rallies when we didn't.

It's unwise to trade and invest based on your personal opinion. The market don't cares about your personal opinion. Every experience trader and investor knows that the market can stay insane longer you can stay sane. So let go of your personal opinion and learn how to manage the market's mood swing is a better thing to do.

 

[frenchbriefs]

like i said,it all boils down to the law of william j bernstein.....thou shall not conflagate future returns with the past....

that which has high returns in the past usually indicate lower future returns....and low past returns usually indicate high future returns.....

i believe this with all of my soul,flesh and blood.....ALLAH HU AKBAH!!!!!TAWKALT AL ALLAH!!!!!I RELY ON GOD!!!!!!


the lower price u pay for it now....the higher ur returns will be,the higher price you pay now,the lower the future return will be....risk vs return never changes....right now u are taking on a hell lot of risk overpaying for SPY for very mediocre possible future returns...


oh course no matter how much faith we put in our beliefs we must never take the risk and bet the entire farm on it....that is a sign of insanity.....

which is why i advocate portfolio allocation....40% stocks 40% bonds and 20% cash.....should the SPY continue on its present insane trajectory,at least u could still partake in the insanity......but this allocation will mean we will have more firepower when the crash comes and i believe it is coming.....just like i believed gold was way overpriced for years...

You are assuming too many things.

Whether SPY at $1900 is too expensive or not is for the future to determine.

It could be peak now or it could be not, as traders and investors, this is not our concern.

If you think it's peak and stay in cash. What happens if market rally another 1k points? You are going to miss the rally.

If you think it can go higher and buy into the market, what happens if market crashes tomorrow? You are going to get caught in a massive mud-slight.

Our job is not to predict market peaks or bottoms. We just need to have a strategy that to handle both market rallies, falls and crashes.

This is how we can sleep well at night. Not worrying about market crashes when we brought into the market and worries about market rallies when we didn't.

It's unwise to trade and invest based on your personal opinion. The market don't cares about your personal opinion. Every experience trader and investor knows that the market can stay insane longer you can stay sane. So let go of your personal opinion and learn how to manage the market's mood swing is a better thing to do.

 

[ahboy82]

realli awesome thread to read all the viewpoints.

lolx

 

[Milo-Dino]

I love uncle168...
Waiting for him to be ri...

The moment he turn bullish.. Crash is imminent

 

[bakuten]

nice reads....
but i will still say...
better to be 1 year early than 1 day late...

 

[iCuteCube]

From a neural stand point of view, both method is doable depending on your profiling.

For uncle168 probably that's the best choice for him and he's comfortable for it. I mean, recommendations are recommendations, you are the final person who called the shots right? Since it is ultimately your money.

I bought emerging market and it turn negative for sometime, only recently become positive. With a longer time frame, it's pretty obvious that your returns is still higher than bank returns, but i believe we all aim much higher than bank returns considering the risk that we are carrying on the shoulders.

For my case at 26 years old, 80% of the money is already in the market. My strategy now is to "store" money and not to buy anything in the market until next year.

I understand the part from uncle168 that despite you putting money in some instruments, but if he is able to buy from near-bottom price, the money he earn is easily alot more. However, there's is still risk because you never know how long it need to be recovered and also need to factor in the opportunity cost.

And furthermore, using the money for something else will deprive your buying power if there's any "good buy". Therefore, either way, opportunity cost is one of the important underlying factors if you are able to profit well. Everything the same, but the playing style is different.

The bottom line is, as a friend or as a stranger, all i want to hear from you guys is positive investment $$$ Keeps everyone smiling.

 

[Shiny Things]

nice reads....
but i will still say...
better to be 1 year early than 1 day late...

Nope. "Early" is another way of saying "wrong", especially when you're talking about a trade with negative carry - short stocks, short AUDJPY, long puts, things like that. (Tail-hedge trades almost always have significant carry costs - that's why Nick Taleb's funds lose money all the time.)

If you're early, it's entirely possible you'll get stopped out before the crash comes - there are plenty of examples in Michael Lewis's "The Big Short" of people who correctly called the housing market crash in 2008, but didn't make money off it because they were early.

One day late, on the other hand - that's fine. Unless it's a huge one-day crash like Black Monday (which is rarer than you'd think), there's plenty of time to flip your position and go short; the top-to-bottom crash in 2007-2009 took nearly 18 months to play out.

 

[wahkao3]

ignoring risk will bankrupt you

by staying in cash position at the peak will allow you to buy at 1444 while others loses 70% of their wealth

i agree with your advise. the problem is i dunno where is the peak!!!
if u know pls tell me

 

[frenchbriefs]

**** michael lewis...

thats the problem,the problem is they were trying to predict when the bust will come,the thing with these mania is it can go on for a very long time and no one knows how long the masses will remain in a state of euphoria or delusion.....for example the gold bubble that went on forever and ever.....and right now the s&p 500 bubble,the thing is when the crash finally do come are u prepared for it?do u have ammunition to go in with guns blazing?or are u stuck on board the titanic trying to look for a lifeboat?like uncle 186 is saying,cash is king now,if not cash then bonds.....

**** nick taleb,if u wanna short u should look at the king of shorting george soros....

i heard u are still fully vested in the s&p500......remember s&p500 had two major recession in the last decade.....the road to the bottom of hell is 18 months long.....can u take it?i believe s&p500 is in a state of euphoria right now......with nowhere to go,money is flowing from the housing bubble crash,the gold bubble crash right into the stock market bubble.right now people see that the s&p 500 is rising just like the US housing market just the gold market and they think wow!!!!stocks have returned 20%+ annualized in the last 6 years!!!!its going to hit the stars just like gold and oil and housing when every tom dick and harry working at mcdonalds was flipping houses for 100k and IT stocks did.

i admit i dunno what the **** is going on in the stock market but right now it feels like im watching on my 42 inch plasma TV a HBO series called Apocalyspe now!!!!!......u can almost taste and smell the shyt covered insanity just like the insanity during the 2008 crash and the gold bubble mania.....i can smell the stench of madness in the air once again.....its coming!!!!!

remember stock market is just a reflection of investor sentiment,there is nothing concrete or fundamental at all that says S&P should be at 1900++.....right now the mirror shows a reflection of madness!!!!!!!!

Nope. "Early" is another way of saying "wrong", especially when you're talking about a trade with negative carry - short stocks, short AUDJPY, long puts, things like that. (Tail-hedge trades almost always have significant carry costs - that's why Nick Taleb's funds lose money all the time.)

If you're early, it's entirely possible you'll get stopped out before the crash comes - there are plenty of examples in Michael Lewis's "The Big Short" of people who correctly called the housing market crash in 2008, but didn't make money off it because they were early.

One day late, on the other hand - that's fine. Unless it's a huge one-day crash like Black Monday (which is rarer than you'd think), there's plenty of time to flip your position and go short; the top-to-bottom crash in 2007-2009 took nearly 18 months to play out.

 

[guowei]

there is a thing known as cycle... stock too expensive can look into other form of investment ba...

from what i can see, precious metal seem to be quite low.

there is also alter investment like high end Toys or wine.

i park my 60% mostly in NZD, vomited when it drop lately T_T... at least i still got my job and my health.

i recommend 60:40, 60% investment, 40% saving... i waiting to dump my 40% when there is a crush

 

[jgyy1990]

30% of that 40% I will pak elsewhere

 

[bakuten]

there is a thing known as cycle... stock too expensive can look into other form of investment ba...

from what i can see, precious metal seem to be quite low.

there is also alter investment like high end Toys or wine.

i park my 60% mostly in NZD, vomited when it drop lately T_T... at least i still got my job and my health.

i recommend 60:40, 60% investment, 40% saving... i waiting to dump my 40% when there is a crush

cycle says that our current monetary system is reaching its end.

with BRICS forming the new IMF-ish bank backed by real assets(namely Gold, Silver, oil, gas). I dont see how fiat money are going to survive against it without a world war.

Even in Mexico, Hugo Salinas Price says they are 2-4 votes away from backing the Peso with silver.


I know not all here agree with me. but I have always emphasized that Gold and Silver are money. Hence the 0% interest returns, I mean...with the recent ECB's NIRP....0% returns issnt that bad now eh?

We have been living a fiat lie for the past 4 decades....since Nixon delinked the dollar from Gold. If you do not look further back into the past for cycles, you risk losing all you have today.

This is my view, and you do not need to agree with me, just sharing my thoughts

 

[bakuten]

Nope. "Early" is another way of saying "wrong", especially when you're talking about a trade with negative carry - short stocks, short AUDJPY, long puts, things like that. (Tail-hedge trades almost always have significant carry costs - that's why Nick Taleb's funds lose money all the time.)

If you're early, it's entirely possible you'll get stopped out before the crash comes - there are plenty of examples in Michael Lewis's "The Big Short" of people who correctly called the housing market crash in 2008, but didn't make money off it because they were early.

One day late, on the other hand - that's fine. Unless it's a huge one-day crash like Black Monday (which is rarer than you'd think), there's plenty of time to flip your position and go short; the top-to-bottom crash in 2007-2009 took nearly 18 months to play out.

I understand where you are coming from....however...

try telling that to Argentines.

think most of them would agree with me that they would rather have been 5-10 years early(buying gold) than 1 day late when their Peso got hyperinflated.

by the time they were late....they could not even get their hands on real physical solid Gold no matter how much money / stocks they had.