Birchtree's Account Talk

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Birchtree said:
The VIX at 24.86 - 0.60 is a positive vibe for Monday. When it drops below the 15 level it will be time to really worry. I think we were there in April before the market sell off. That will be my lesson for the future.
Click to expand...
Hi Birch - can you explain the VIX to me? I know it's a volatility index, and I think what I understand is that the higher the number, the higher the market volatility. Not sure how it measures volatility exactly, but that's beside the point. What I don't understand is why you consider a low reading (15) to be an indicator that it might be time to sell. Still learning. Thanks!
 
The VIX is simply a fear gauge - buy when it's high because the market will be getting hammered and that's when prices are on sale. When the VIX gets to the 15 level everyone is comfortable and the market will be on highs going higher. I try to use it as a contrarian indicator The hardest thing to do is sell when the market is placing new all time highs - the end of April would have been perfect to take some profits. Live and learn - there however is no guarantee the future will repeat the past.
 
Birch's Oceanic account seems very complex with tax implicatons. Probably a lot harder to just move in and out of stocks like we do with our TSP accounts.
 
From TWSJ. "Now investors must decide whether this is the start of a new bull market or a late-stage rally. Timing is everything. The biggest beta bang comes early in a bull market. High-beta stocks gained 112.3% to the S&P 500's 40.9% during the first leg of the rally from March 9, 2009, to June 12, 2009; from March 11, 2003, through Feb 11, 2004, high-beta stocks returned 116.1% to the S&P 500's 46.9%. If you're convinced the market is going to rally significantly, then you should be buying the high-beta stocks regardless of whether they produce adequate long term results." Folks I'm there and ready for my gains.
 
My oceanic account is really not complex - I buy a good many stocks for the income. I was forced to take profits I didn't want to take - that's the downside of playing with margin. Now I can sit back and let the portfolio grow and buy when prices are best. I don't plan to do anymore selling this year and perhaps not in 2012 either. I may selectively raise cash when the opportunities are great for rewards - this bull has a long way to run. I'm watching the bond market closely in anticipation of a roll over. The end of the outperformance in bonds likely means a move higher in equities - and that's what Bernanke wants to happen.
 
BirchTree,

I've been busy lately, but am shocked you still hold an overbalance in the 'I Fund'. What are you seeing in the EuroTrash zone? All I see is stinky OWS sphinctorial ooze.:o

Is the ‘I Fund’ overbalance actually part of an asset allocation incorporating all your assets? That is, is the 80% ‘I Fund’ holding something like a 20% Foreign equity holding when you take in all your other accounts?
 
If the Fed says anything to announce or confirm a policy move to stimulus for their balance sheet expansion through a QE3 program this market will utterly explode - that'll be on Wednesday. We are set up to do work now in the 1350-1600 area once we get through 1350. Be ready because the train won't wait.
 
Hey Birch,
So what fund do you think would be the best to be in through the rest of the year? I am currently in the C fund, but the S funds looks to have had a better return since this rally started the first part of this month. The I fund performed real well last thursday as well. Thanks for all your input as it helps us rookies out such as myself.
 
I plan to hold my current position of 20C and 80I until well into 2012 - I think large caps should start to outperform.
 
"Studies have shown that investors and consumers tend to be 2-3 years behind the curve of a financial market trend. That is, investors who were scared onto the sidelines by a stock market crash will usually wait up to two or three years before re-entering the market, but only if stocks have advanced during that time."

http://www.marketoracle.co.uk/Article31268.html
 
Birchtree said:
Will the market exceed the early May peak of 1370 on the S&P 500 - you bet and probably sooner than later. "You heard it here first folks, we are sitting at the base of a new bull market. The only question is are you buying stocks to take advantage of this, or not".

http://seekingalpha.com/article/303426-u-s-economic-growth-the-base-of-a-new-bull-market
Click to expand...

Marc Faber doesn't think we will break through 1370 this year because of all the technical damage that's been done to stocks these past few months:
http://pragcap.com/marc-faber-equities-could-rally-to-sp-1250
 
I guess it's time for me to pull in the horns a little bit and let my dividends do some of the heavy lifting for a few weeks. The portfolio bucket has been filled to some extent - now I'll wait to see how much I may have to give back. So we'll see what Greece does.
 
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