Birchtree's Account Talk

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Fears are reason to embrace stocks, not run from them. Fear should be aggressively bought, never sold. Sadly, the great majority of investors and speculators haven't trained themselves to fight the crowd. Instead of buying low in extreme fear, they sell low. Then they stayout until long after markets have rallied dramatically, only belatedly returning to buy high. It is only the contrarians, the wise minority that have hardened and steeled themselves to trade fear rationally, that buy low, sell high, and earn fortunes. I'm addicted to equities and nervous with excitement - buying into the Christmas season.
 
Mea culpa... If I'm lucky the House will show more backbone and the market will go back down... :suspicious:
 
In January 2011, Birinyi said the average length and size of bull markets suggested the S&P 500 would rally to 2854 in Sept 2013 - well we're a little short. So let's bump that to Sept 2014.
 
The oceanic account had a bumpy week but Friday saved the day: +$59K, -$5K, -$58K, +$41K for a gain of +$37K. Exactly the opposite of last week. Still trying to achieve that +$1M goal and now I need +$55K to get to the pinnacle. Should economic data show signs of improvement, the S&P 500 may post a rally similar to the bull market that started in 1982, when the index advanced 229%, or the one in 1990, when it surged 302% - we have gained 150% from the 2009 bottom already and I think there is much more to go.
 
I noticed there are 389 guests on board this morning - if you wander this way this is for you. The danger in volatile markets lies not just in the volatility itself, but also in how investors react to it. However quickly or often it happens, stock prices will continue to go up and down the rest of this year. Investors who diversify their portfolios broadly and hew to a strategy designed for long-term success, will likely weather these ups and downs with less angst, and likely less loss, than those who attempt to time the market's inevitable gyrations. Market volatility may not be unavoidable, but it is usually manageable. Time in the market often times can be more rewarding than trying to time the market. My friends do let friends buy and hold. We are in a liquidity driven rally. As long as the Fed continues to print money, the market can continue to go higher. I'm not worried about the Obama fear mongering going on - no one pays attention to him anyway.
 
"The stock market tends to deliver the bulk of its gains between Oct. 31 and May 1. It isn't unprecedented for the stock market to fly in the face of the poor seasonal odds and rise during the summer months, of course. But it doesn't happen very often. There have been 13 occasions over the past 50 years when the S&P 500 gained as much during the summer as it has this year. Yet in those years when it has done so, (pay attention) that strength has tended to persist into the subsequent winter period - resulting in an average S&P 500 gain of 8.6% between Halloween and May Day six months later. That is higher than the winter gains following losing summers: Over the past 50 years, the S&P 500's average gain in such periods was 5.3%." Snort.
 
Birchtree said:
"The stock market tends to deliver the bulk of its gains between Oct. 31 and May 1. It isn't unprecedented for the stock market to fly in the face of the poor seasonal odds and rise during the summer months, of course. But it doesn't happen very often. There have been 13 occasions over the past 50 years when the S&P 500 gained as much during the summer as it has this year. Yet in those years when it has done so, (pay attention) that strength has tended to persist into the subsequent winter period - resulting in an average S&P 500 gain of 8.6% between Halloween and May Day six months later. That is higher than the winter gains following losing summers: Over the past 50 years, the S&P 500's average gain in such periods was 5.3%." Snort.
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Good stuff BT. Best post of the day. Funny, those were the same stats I was looking at over the past week. Getting ready for the late Oct through April surge, especially with the Bernanke Asset Bubble being pumped up to the hilt.
 
FWM, now that was a comical post - thankyou.

"The third quarter was a good one for European stock markets. The Stoxx Europe 600 gained 8.9%, while the S&P 500 stock index advanced 4.7%. Of the top 20 best performing markets in the three months to the end of September, nine are Western European ones, Banl of America Merrill Lynch data show. Granted, many investors remain skeptical about Europe. But that might be presisely the driver for contniued good performance once risks from the U.S. dissipate. And while doubts linger about Europe's prospects, the marginal flow of investment may have turned in Europe's favor. The third quarter saw the biggest quarterly inflow into European stock funds on record, says fund tracker EPFR Global. Meanwhile, the economic news has been growing brighter. Further improvements in global growth could see European stocks benefit because they have higher operating leverage, or the ability of firms to turn extra sales into higher profits. The operating leverage of European earnings to nominal gross domestic product growth is 1.7 times that of U.S. earnings, Deutsche Bank estimates." I will continue to hold my 20C/80I position.
 
Hi Birchtree, i see your still invested in the I fund, the article u posted on amoeba s page was for the dollar to decline even more as we approach the debt ceiling and no budget. do u think its a good play in the short run??????
 
I plan to hold my current TSP (tugboat) position through 2014 and perhaps longer - 20C/80I. I believe that European and Japanese QE will continue even if the U.S. starts to decrease their QE buying. Liquidity is what will drive these markets to higher highs as they play catch up.
 
"The 1995-96 shutdown provides a guide for how lost government output will affect the economy, and you can throw in added drag from lost business and consumer confidence. Most economists reckon the shutdown will shave 0.1 to 0.2 percentage point off annulized fourth-quarter GDP. In contrast, how badly the debt-ceiling fight might damage the economy is impossible to quantify. But qualitative assessment is easy: it could really, really hurt." Folks, fear mongering has been running rampant thanx to the guy in the White House. Hyper-bearishment is starting to reign supreme - fearmongering has grown into a lucrative cottage industry. If you fall under a fearmonger's sway, you are either going to sell low or fail to buy low. Both grevious errors will vastly reduce your long term success. My five dividend reinvestments today will be my silver thread to a better income stream for a comfortable old age future - so bring me some more pain.
 
Birchtree said:
"The 1995-96 shutdown provides a guide for how lost government output will affect the economy, and you can throw in added drag from lost business and consumer confidence. Most economists reckon the shutdown will shave 0.1 to 0.2 percentage point off annulized fourth-quarter GDP. In contrast, how badly the debt-ceiling fight might damage the economy is impossible to quantify. But qualitative assessment is easy: it could really, really hurt." Folks, fear mongering has been running rampant thanx to the guy in the White House. Hyper-bearishment is starting to reign supreme - fearmongering has grown into a lucrative cottage industry. If you fall under a fearmonger's sway, you are either going to sell low or fail to buy low. Both grevious errors will vastly reduce your long term success. My five dividend reinvestments today will be my silver thread to a better income stream for a comfortable old age future - so bring me some more pain.
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Hi Birch,
You are fully invested in market but have most in I fund. That appears a good strategy. Of course, if you already have monies in a low S or C fund, I'm not sure it makes sense to move to "I" with those funds if the market is already low... then again, it depends on whether Gov defaults. If no default, I think market pops right back up. Otherwise... ugghh.

I am looking at buying "I fund" with the 50% that I have now in G fund. What are your thoughts on safety of monies in G fund, and lack of risk for a loss? I should think there is very little risk, but then again if Government defaults, wouldn't that cause a drop in value of Treasury bonds? I mean, logically, that would seem the only thing that would ever affect the G fund.
 
My strategy may help answer some of your questions. I invest as a family unit. My TSP (tugboat) is invested in large cap global stocks via the I fund with a leverage kick from the large cap C fund. My wife has a defined contribution plan that is 100% large cap domestic S&P 500 index fund and my oceanic account is around 95% small cap individual stocks. My Birchtree 300 fund has been built to deliver a dividend income stream - this is my oceanic account. I also have been building a margin escape portfolio called my sacrificial lamb chop account which will be jetisoned if necessary to save my oceanic base from the back office margin girls when they come knocking again. So I'm considerably diversified as I approach the future and I'm risk on for the next 20 years. I started out the week with a ytd gain of $945K and will undoubtedly give some of that back this week - but then again I'm getting golden prices for my dividend reinvestments that will grow in perpituity.
 
No panic here yet nor will there be any. I started the week +$945K ytd in my oceanic account and will be giving some of that back this week - no matter because earnings are arriving and it will all return. In the meantime I continue to reinvest my dividends expecting more dividend increase announcements - so I'm cool with all this political nonsense.
 
Golly Gee, Alcoa finally made some money - is this a sign of better days ahead. We could be entering an inflationary bull market like we had from the 1940s to 1960s.
 
Birchtree said:
No panic here yet nor will there be any. I started the week +$945K ytd in my oceanic account and will be giving some of that back this week - no matter because earnings are arriving and it will all return. In the meantime I continue to reinvest my dividends expecting more dividend increase announcements - so I'm cool with all this political nonsense.
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Yes, good idea to stay the course if you are a long term investor. I just received this from Vanguard....

"Budget issues in Washington over the past few days may have you concerned about their effects on the markets and on your portfolio. It's natural to feel uneasy about the situation, especially since it's difficult to pick up a paper or your smartphone without seeing some unpleasant news about it. However, if past experience is any indication, the market impact could be fairly minor.
In 2011, when the government narrowly averted a shutdown during another budget impasse, the stock and bond markets regained the ground they'd lost because of the situation by the end of the year.

In 1995 and 1996, when the government did shut down due to differences between political parties, the markets were "defiant," said Roger Aliaga-Díaz, a senior economist with Vanguard Investment Strategy Group. In fact, he said, "broad equity and bond prices rose against the pessimism" during those periods.

The ongoing debate over the federal debt ceiling may also be on your mind. History can help add perspective here as well. Our analysis also showed that, in 2012, when the debt-ceiling debate ran to the last minute, markets rallied once lawmakers reached an agreement. Because "the impact on the economy from such a dysfunctional political outcome would be unthinkable," as Mr. Aliaga-Díaz said in the analysis, Vanguard believes all parties involved have a strong incentive to reach agreement.

While past performance is no guarantee of the future, it helps to stay focused on the long term. Having a strategic asset allocation—one built with your investment goals, risk preferences, and time horizon in mind—that factors in tax efficiency is more important than ever. If your goals and time horizon remain unchanged, it makes sense to screen out the noise of recent events and stick with your investment plan."
 
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