1986 or 1994 or 1999

[Guest]

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For the folks that have been investing for awhile...does this feel like December 1986 (falling dollar caused financial meltdown) or December 1994 (the start of the last bull market) or December 1999 (the start of this bear market).

If it does not feel like any of those years...what does it feel like to you?

Thank you and have a great day!

 

[Guest]

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From those quacks at PIMCO, Fidelity and Vanguard:
Normal Curve
Typically the yield on 30-year Treasury bonds is three percentage
points above the yield on the federal overnight rate.
Inverted yield curves are rare. Never ignore them. They are always
followed by economic slowdown -- or outright recession -- as well as
lower interest rates across the board

 

[Mike]

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I'm young and therefore wasn't investing in those periods you mentioned. However, I am a numbers guy, so people may find this analysis useful (and it's authored by me... no plagiarism!).

Economic analysis by the numbers of the years in question (GDP numbers taken from the US Department of Commerce - can be found here http://www.bea.doc.gov/bea/dn/nipaweb/TableView.asp#Mid):

GDP growth by quarter for the four years with annual rate in parenthesis:
1986: 3.9%, 1.6%, 3.9%, 2.0% (3.5%) - pretty good year.
1994: 4.1%, 5.3%, 2.3%, 4.8% (4.0%) - looks a lot like this year.
1999: 3.4%, 3.4%, 4.8%, 7.3% (4.5%) - incredible 4th quarter numbers.
2004: 4.5%, 3.3%, 3.9%, pending (pending) - everything I've read lately projects the current quarter to be slightly better than the last one. That puts us at a growth rate of about 4% for the year, matching 1994. Noting the business cycle, we are almost in an identical positionas 1994 (~ 3 years removed from a recession).

Now, I'm going to list the GDP numbers going back 3 years prior to the highlighted years above. This will help to illustrate my point regarding the similarity to 1994.

Annual GDP growth rates:
1983-85: 4.5%, 7.2%, 4.1% - explosive growth... wow.
1991-93: -0.2%, 3.3%, 2.7% - recession, followed by modest growth.
1996-98: 3.7%, 4.5%, 4.2% - nothing but consistent expansion here.
2001-03: 0.8%, 1.9%, 3.0% - '01 was considered a very mild recession - now you know why - positive growth (although weak), followed by another fairly weak year, then a pretty good year.

For the record, we are NOT in a bear market. 2000-2002 featured negatives and was clearly a bear. Last year was positive and a bull. This year had a downward trend (consolidation) followed by a sudden bullish trend... and barring a collapse of epic proportions in the next two weeks, it will also yield positive returns.

 

[Guest]

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Mike

Great numbers. First off we are in a bear market. We are currently in a bull run rally in a bear. Hey the NASDAQ is still down 50%!!!!! Do not forget that fact. Anyone that put money in the market March 2000 is still down half.

OK the fed takes $25 for oil to figure out GDP. What will the numbers for this year look like if they took the average of $42???

There are no universally accepted rules for defining a secular bear market. But in very general terms, it’s a long time, perhaps 10 to 20 years, characterized by below-average stock market returns.

Since this bear started 2000 we still got a was to go. Hold and hope will not work right now.

good luck and great numbers. Since the average for the market is 12% we still are below average.

MT

 

[tsptalk]

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MarketTimer wrote:

If it does not feel like any of those years...what does it feel like to you?

The summber of 1998. I saw a 1998 chart showing the market going up making new highs but the number of stocks making new highs was not going up. Like we are seeing now.

 

[Mike]

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2004 data (current compared to 12-31-03):

C fund is up 9.96%.

S fund is up 15.63%.

I fund is up 15.50% (now trails S).

2/3 of our stock funds are outperforming that magical 12% figure. I'll go out on a limb here and say the C fund will at least match it if anything holds true on the historical numbers that December produces.

This market is charging, not hibernating.

Tom, that's interesting. Looking at the big picture though, this isn't like 1998 at all in the sense that there hasn't been a long-term run-up in stock prices coming into this year. Last year was nice, but the three years before it were down big.

 

[coolhand]

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Here is an interesting article that seems to indicate that OPEC is pricing oil in Euros vice dollars. As crude is seen in the U.S. as being a volatile commodity, in Europe the price appears to be relatively constant.

http://www.apfn.net/messageboard/02-19-04/discussion.cgi.15.html

It used to be that oil was priced in dollars. Perhaps that is not the case any more.

 

[coolhand]

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THE PRICE OF OIL VERSUS STOCKS

[align=center]

[/align]
[align=left]Here is another interesting chart. The price of oil, when below $35/bbl, did not appear to have any meaningful correlation between stocks and the price of oil. Above $35/bbl it now appears to have a direct opposite correlation. Hmmmmmm. [/align]
[align=left]Can any one provide a chart that shows the dollar vs oil over the past year or so?[/align]
[align=left][/align]

 

[Spaf]

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I rechecked the charts back from a decade at bigCharts. com. Plus definitions and terms. RE: The Dow Theory,etc, etc.

We had a Bear market in 2000 like was indicated. But it ended in 2003 and turned into a a bull market, that stoped in early 2004 and the market becamebearish and that lasted until Aug/Oct 2004 when another bull market took over. When they speak of markets i.e., bulls v bears they are speaking of primary movements and each movement has it's oun peculiar way of correcting and it's own special footprints in: bears and bulls.

Rgds Spaf

 

[Rolo]

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Wow, this is interesting and good data. Thanks guys, very educational and probably the closest thing to a scrye we'll find.



I definitely would not say that we are/were recently in a bear market. The bull just went out for some toquitos in 2004.



I am thinking 2004 feels a lot like 1934 and I am thinking that 2005-2007 will be like 1935-1937, with three years of continual growth. Hopefully, after that, I will be crafty enough to do something with the following stagnation.

Link to clickable chart and nifty facts: http://www.advanced-stock-selection.com/ChartSN1929.htm

 

[tsptalk]

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Mike wrote:

Tom, that's interesting. Looking at the big picture though, this isn't like 1998 at all in the sense that there hasn't been a long-term run-up in stock prices coming into this year. Last year was nice, but the three years before it were down big.

I was just doing a little side-bar, referring to themarket making new highs but the number of stocks making new highs is going down. It is just a yellow flag.

 

[Spaf]

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Rolo wrote:

I definitely would not say that we are/were recently in a bear market. The bull just went out for some toquitos in 2004.

Yea! the bull market of 2003 continued into 2004 but the bears took over in Feburary to run the cycles we had until August when the bull market took the market back. I am not a market guru. The market from the old time kept going up till it hit the NASD bubble in 1999. Things changed after that. It's like we have a different system, so to speak. Now we play the cards we are delt, the reason for this site!

 

[Spaf]

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Please see the proper definitions, terms etc. for defining the phases of the market.
RE: The Dow Theory, and other market definitions.
It's easy to lose track of just where we are at in the market, but the market has it's own footprints, now we are in a bull movement (primary), with advances and corrections. The best time to be in stocks. With the proper allocations in the funds with the best performance!

 

[Pilgrim]

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Anybody believe 60% gain over the next two years?

http://money.cnn.com/2004/12/06/pf/moves_forecast05_0501/index.htm

 

[Rolo]

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Spaf wrote:

...now we are in a bull movement ...

heh..huhuhuuh..uhuhuhuhuh... "bull movement" uhuhuhuhuhuhuh YES! YES!

 

[tsptalk]

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Pilgrim wrote:

Anybody believe 60% gain over the next two years?

http://money.cnn.com/2004/12/06/pf/moves_forecast05_0501/index.htm

"NEW YORK (MONEY Magazine) - After the stock market's sluggish performance in 2004, it's fair to ask whether the bull run is over. Is that all there was? Not by my calculations. "

I think we must be spoiled to think it was a sluggish year. In 2004 the S&P 500 (C fund) is up 10%, S fundis up 15.71%, and the I fund is up 16.12%. And it isn't over yet. The best two weeks of the year are to come. It was a tough trading year for me, but pretty fair returns overall.

 

[Mike]

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My YTD just shot past 10% the other day... but after today's losses, I'm sure I'm back below that double digit target. Heh.