Birchtree's Account Talk

[Handballer]

Here are a few tid bits from my WSJ. On Friday, the Wilshire 5000 index, a broad measure that captures the returns of thousands of U.S. stocks, closed at 15,979.16, the second all-time high it set this week. The Dow Jones Industrial Average and the Standard & Poor's 500-stock index are within 1.1% and 3.4% respecttively, of the record highs they set on Oct. 9, 2007. That means a long drought is tantalizingly close to ending. Between August 1982 and August 1987, the S&P 500 closed at all-time peak prices 152 times. From October 1990 through March 2000, the S&P 500 closed at record highs on another 308 days. Can you smell the potential. Since March 9, 2009, when this bull market started, the S&P hasn't yet hit a single all-time high. That feels long overdue, and investors are aching for it to happen.

Still, the S&P remains 2% below where it stood in March 2000. The price/earnings ratio, or the multiple that investors are willing to pay for a dollar of corporate profits, has gone from 28 to 15. In those 13 years, earnings have doubled, the price is the same and the multiple's been cut in half. The average bull market - defined as a rise in price of at least 20% - has produced a gain of more than 160% and lasted 56 months. The biggest, from 1990 to 2000, lasted 113 months and rose 417%. This bull market is 47 months old and up 122%.

I admit my gain was no way near that good. If I have 47 more months left, hope to average 10% or more with TSP.

 

[Birchtree]

I posted this back in May 2010 for some perspective. I've been keeping friends posted as to how well I've been doing off the March 9th bottom. At week #59 I had a gain of $1294K. Now for the bad news. At week #61 I'm at $897K - this is a devaluation of -$397K in two weeks - -$278K came off this week alone. I knew I was becoming a bigger player so that's why I built my sacrificial lamb chop account to cover any margin calls - so far it's still intact. I'll just bleed a little more if necessary. The typical bull market lasts three to five years so any correction is for buying. I still firmly believe that we are in the first leg of a new secular bull marketr and my oceanic account will be redeemed. Yesterday was emotional capitulation and today was price capitulation. I saw a big jump in risk aversion with a spike in the VIX index to 41. Honestly, if this isn't a bottom I don't know what is. There is so much fear that that is a small blessing. This correction continues to keep scared money away from investing, just as has been the case for this entire bull market. This is actually a perfect scenario for a bull market and the longer scared money is kept out of this market the greater will be the bull run. I am still looking at a multi-year bull run - this is not 2008 allover again.

So, the reason I posted this is that I'm due for a +$397K week at any moment. Money is rushing for the entry door and panic buying will propel an implosion to the upside - just like money getting out they now have to get back in for performance. I'm patiently waiting....

 

[rktect1]

after taking that kind of loss, might as well stay in and buy more bc markets eventually recover. better to avoid the drop and buy more when there's blood on the streets though, that's my belief anyway. I'm cool with moving to safety after taking a small loss, but getting slammed a la 2008-2009 might as well stay in and keep buying until the market recovers

When there is blood in the streets, its usually ours. At least mine. And i dont have another million to throw into the punch bowl. Im already usually fully invested. Usually. Right now im not. Im 2/3 in.

 

[wavecoder]

When there is blood in the streets, its usually ours. At least mine. And i dont have another million to throw into the punch bowl. Im already usually fully invested. Usually. Right now im not. Im 2/3 in.

true a lot of people get hurt by a move like that, that's the reason why i was interested in really learning what i could about technical analysis. my system is really intended to dodge incidents like 2008 and 2011 because chart indicators showed those things coming weeks in advance. anyone who had a buy and hold strategy got burned in the worst way, i even personally knew guys who were about to retire, then couldn't because their 401k's went down by over 50% in a matter of days. Well the ones who didn't totally get hurt were the ones who just kept their money there and waited it out, the markets eventually made back all their gains, but disastrous for those who were nearing retirement.

it's only a matter of time before the markets crash before I retire, and it undoubtedly will happen more than once (got 32 years to go haha), and my goal is to avoid them, then go all in when prices are cheap. then one day i'll be rich like birch

 

[Birchtree]

I posted this a couple weeks back and it's a good reminder for those bullish. "As in the 1970's, the next cyclical bear is not likely to be as severe as the last two, and it will likely finally end the secular bear market, and usher in the next secular bull market. (pick your times). How can we be sure that once this secular bear ends and the next secular bull market begins the Dow will soar to 50,000 and above? Because in each of the secular bull markets of the last 110 years, the Dow has gained 500% to 1000%." Now that's history on our side.

 

[Birchtree]

I'm not rich yet but I am working diligently to accumulate more shares so that in another three years I could be several more million dollars to the good. The problem now with TSP is going to come from higher fund prices - it's much more difficult to accumulate shares at higher prices and prices are going to keep rolling higher. The TSP member needs volume of shares inorder to make gains. It's us old characters that have a sufficient balance that the windfall comes around - but it has taken many years to build that base. My wife is still building her defined contribution base and is now racking $27K per point.

 

[Birchtree]

I have 10 dividends due to be reinvested today, so a little temporary down side is purrfect. From a contrarian perspective a small sell-off will likely extend the current rally even further. It would appear that the market has not yet become confident enough in a global recovery to avoid panicking at one new set of unknows. It still pays to be optimistic. For investors with a long term horizon and a tolerance for some risk and volatility, it remains a time of great opportunity for growth across a broad range of companies and sectors. I believe the transports are still positive today - at least for now.

 

[Birchtree]

Following a bull market peak in net new highs since 1940, the median bull market has lasted another two years and delivered an additional S&P gain of 32%. The fact that individual investors are not grossly over allocated to stocks at this point suggests they still have a fair amount of liquidity to invest. As long as liquidity remains favorable stocks should notr experience any deep setbacks. We are I suspose currently in a runaway rally. It's anyone's guess as to how long one of these moves will last. The rally of 6/07 lasted 7 months. I can tell you that once a market gets drawn into one of these rallies you can pretty much throw out every trading tool as the mechanics of the rally just roll over any and all trading strategies. Sentiment becomes useless, cycles get stretched to rediculous lengths, technical analysis and ocscillators are worthless. Just one bulls' opinion.

 

[Birchtree]

A runaway rally - whew. This could be one of the most significant events seen during the past few years. Thus it would appear that the probability of the industrials hitting 14,164 level without significant difficulty is high, allowing for the odd pullback. This cyclical bull inside a secular bull may still be in the beginning stages. This is the stage period where the greatest amount of money is made by the stock market bulls. This bull remains intact and has a very long way to run yet. I am buying 10 different stocks today adding accumulation to my base.

 

[Frixxxx]

I am buying 10 different stocks today adding accumulation to my base.

Today's a good day to do it!

 

[Birchtree]

When the market bottomed on March 9th, 2009, the VIX closed at 49.33. No big volume today on the downside. The herd mentality is instrumental in bringing about a panic. Moreover, it's usually found that a negative news event is behind the widspread fear that leads to the panic - now the opposite may occur as a buying panic kick in to push the markets higher - I can't wait for a +400 point day.

 

[sugarandspice]

............. The fact that individual investors are not grossly over allocated to stocks at this point suggests they still have a fair amount of liquidity to invest. As long as liquidity remains favorable stocks should notr experience any deep setbacks..................

"The fact that individual investors are not grossly over allocated to stocks at this point suggests they still have a fair amount of liquidity to invest," Mr. Ritholtz said in his blog. "As long as liquidity remains favorable stocks should not experience any deep setbacks."

Its amazing! No wonder your the man here Birch. Your "opinions" are word for word like the professionals. Gotta keep the flock fresh....Baaaa....Baaaa

Need the link Birch?
Didnt think so.

 

[MrJohnRoss]

I have 10 dividends due to be reinvested today, so a little temporary down side is purrfect.

Well done, BT. A most enviable position to be in, indeed.

 

[Birchtree]

How To Invest Within The Kress Cycles | Clif Droke | Safehaven.com


Consolidations or pullbacks are just a natural way the market works its way higher.

 

[sugarandspice]

Sugar,

That two sentence excerpt was from a Barry blog back in April, 2010. I don't have the link and I'm sure Barry doesn't mind that it's almost three years old. I suspect I posted it previously with the link - ibid.

Right Boss! And somehow you managed to "remember" it exactly word for word...well except for the credit part of who actually said it.

 

[Birchtree]

This is my thread that has been awarded to me by Tsptalk. I use my thread to disseminate information that I consider may be useful to others. No one is required to read or believe anything they encounter on my thread. I may not always follow every rule applicable to posting because some of the rules may not be relevant. I'm not a professional working in the field of finance so I don't have access to a multitude of analysts - so I cull information from others that are employed in the field of investing. The important stuff I usually try and add a link because the articles will be more than a few sentences. There is so much information available on the internet and news papers such that I may not always give exact credit. I'm going to repeat some words from Henry To and I have no idea where they came from but I will give him credit - now if that doesn't suffice to make everyone happy just cruise on....

Henry says, "A bull market typically does not top until after the A/D line has topped out. The lead time could be anywhere from a few months to as long as two years (the A/D line made a significant top in April 1998, nearly two years before the peak of the late 1990s bull market. Since 1929, there have only been three instances (out of 19 bull markets) when there was no negative divergence between the A/D line and the major stock market indices - those being the 1946, 1952, and 1976 peaks. In addition, the A/D lines of nine of the ten S&P 500 sectors hit new highs the other day - suggesting that the bull market still has a long way to go."

 

[sugarandspice]

Awarded to you by TSPTalk???? Nothing was awarded to you. It was given to you when you agreed to the terms and condition here. That includes following the rules. Why don't you help us all out and list the rules you don't think are relevant so we can all operate as free agents. I'm sure the site admin and moderators would really appreciate that.

 

[Birchtree]

Perhaps the term awarded was not correct - rather the appropriate term should be provided. I do follow the rules 99% of the time smarty pants.

 

[Birchtree]

Perhaps in the near future SugarandSpice will be benevolent and provide the membership with something related to investing rather than brandishing a diatribe that is boring, boring.

It appears to me that on updays the advance-decline line is strong, and on the down days the advance-decline line is weak and holding. The majority of stocks appear to be holding tough. If I can make back my loss from yesterday I'd be a happy camper. Talk to me Sugar about the possibility of a bond bubble since you usually have an affinity to the F fund.

 

[Birchtree]

John Bogle says, "Investors shouldn't focus on stocks if they don't have the stomach to deal with the turbulence that he expects the market will see in the next decade." That means that anyone who has a fear of being burried alive (taphophobia) should stay away from equities.

Schoenstien says, "That despite the recent market volatility, his fund remains fully invested in stocks." When the VIX drops below 12 all hell is going to break out with a tremendous buyiung panic - straight from the mouth of Birchtree.