Market trends??

[youngMoney]

Seasoned Investors,

Right now I am 25% C, 50% S, and 25% I. Basically I am just holding with these percentages. Being a new investor I want to learn more about market trends and how to start making educated guesses on what direction the market will go. Any pointers??

Also does anyone have any advise on the percentages I am invested in? Is my hold strategy in these funds optimal because of my inexperience in the market? I have seen that the historical returns are decent in the C, S, and I funds. The only thing that scares me is the 3 years 2000 to 2003 where there were negative returns(also the small return for C in 2005). Does anyone expect negative returns for the coming years? What do you think the riskier funds are in today's market??

youngMoney

 

[Bullitt]

Looking good YoungMoney. You're doing the right thing by not putting any money into the F fund at your age. Just keep throwing as much tax free $$$ as you can into TSP by way of Dollar Cost Averaging. Ride the ups and downs and don't sell until we break the 5 year uptrend we're currently riding. Invest for the long term and while it's good to know what's going on in the economy, don't get too worried about a few market corrections. Keep an eye on the big picture, stocks for the long run.

 

[James48843]

A couple things really concern me as I look at 2008 and beyond.

1. The SEC has changed it's strategy. As an example- the "Uptick rule". This rule was put in place in the early 1930's, to prevent someone from shorting stocks while they are on a downslide. In short, before the uptick rule was in place, anyone could "bet" that stocks would fall, by selling shares short. The uptick rule meant that you couldn't do that unless the last movement was a positive movement (uptick). The rule kept big shifts from happening (ala 1929 crash), and worked just fine.

Now, suddenly, the SEC has decided that the uptick rule is no longer necessary. It dropped the rule last fall, and we've already seen some real roller coaster rides in the market since that time. IS the volatility a result of the end of the uptick rule? I don't know. What I DO know is that a basic protection in place since the 1929 crash is now gone. And that concerns me.

2. The elimination of the "circuit breakers". Again, a safety net put in place following the 1987 crash. I was in the market in 1987, and remember what it was like. The circuit breakers meant that markets would not be on automatic pilot down in the event of a snowball downward. There would be "time outs" from trading, long enough to catch our breath, and think about what was going on. The SEC did away with the circuit breakers, again this past fall. What were they thinking?

These two actions ought to make a lot of people sit up and pay attention. Those who saw the near "panic" mode a couple weeks ago saw how just a five percent move over a couple days sent a lot of people scrambling. That is only a small vision of what can happen if things get crazy.

So make sure you position yourself in a way that you can bail out in a hurry if you need to, but also that you leave yourself an out to be able to get BACK IN after the bloodshed subsides. THIS is one important reason to keep unlimted interfund transfer ability. If you lock yourself out with losses, you lose the ability to make that up.

In mid-janaury, during the mini-panic, the price of the C fund dipped to 14.79. It's now back up to 15.76 as of Feb 1st. Anyone who paniced and bailed at 14.79, and then would have been LOCKED OUT by an IFT limit rule, would have been much worse off.

Just a few things to think about.

 

[Christopher]

Greetings yM,

The market peak for stocks was in early October, the market bottom in mid January. Limited progress has been made in climbing out of the gap: percentage wise, the C is still 10.3% off its high, the S is 10.9% off its high, and the I is 12.69% off its high - there's considerable room for future capital growth.

The US dollar remains in an overall down trend, so if you're going to remain 100% in stocks, you might consider rebalancing a bit of S into both C and I for some added protection? Perhaps 30C-30S-40I? Again, imho.

Advice for the long term: 1. Exercise PATIENCE 2. (D)ollar (C)ost (A)verage your transfers 3. READ READ READ and familiarize yourself with market terms and concepts, and heed the advice from the seasoned brainiacs on this MB.

These three are the key to incremental TSP wealth. Happy Transfers to you...

Christopher

 

[Gilligan]

With the Giants win, the rest of the year should be good for stocks!

http://www.investopedia.com/terms/s/superbowlindicator.asp

 

[Bullitt]

the "Uptick rule".

You're right James. The removal of the Uptick rule was ridiculous. I actually read a few articles on why it was eliminated and still don't understand. I guess everyone got so caught up in the easy gains from the M&A activity in 2006, they figured it was 'all different this time'.

We have yet to see how this will affect the long term of stocks, but in the short term the answer is quite obvious. Small stocks such as the IWM index peaked very soon after the uptick rule was implemented. Hmmm.

I'm trying to keep an open mind and adapt to this rule. I think that if you stick to trading only in technicals going forward, you're going to get fried with trading costs and whipsaws because for all the raids, we've also seen a good unexpected squeeze or two come out of this rule. Leave the short selling to the pros or those who really feel comfortable doing it. Don't do it because some stiff on TV claims to be short the whole entire US stock market.

I believe that the market is efficient most of the time and that charts are about as good as the weather man at predicting the future. (I still check the charts every day though.) There should be plenty days ahead in which the market will continue to act irrational. The cool headed, saavy investor who keeps it together will buy on those days that the market presents it's golden opportunities.

Ha, maybe some disgruntled trader will dump his coffee on the NYSE fuse box some day if we open down 400 points in the Dow, implementing a circuit breaker of his own.

 

[nnuut]

[h=1]Why a selloff in European banks is ominous [/h]

Published: Feb 8, 2016 8:56 a.m. ET
Why a selloff in European banks is ominous - MarketWatch