It takes guts to stay in stocks in this market, or is it foolishness? I stand by my previous statement that tapering will be put off until the winter. The Fed minutes from the July meeting were released yday and had a roller coaster effect on the market. Jim Cramer noted that just about every economic indicator is worse now than it was during the July Fed meeting so the opinions in those minutes no longer apply. Mortgage applications are just half of what they were a few months ago! I guess the Jackson Hole meeting is underway so maybe we'll see/hear something more up to date soon.
On the other hand, the interest rates are still climbing and Cramer noted that it will be very difficult for stocks to climb while interest rates climb. I believe that one of the things that can really hurt the market is climbing interest rates during QE, and that's what we have. Also watch out for gas/oil climbing uncomfortably high, as well as inflation. Just think if the Fed raised rates above zero %! That puts a major short term hurt on even the hottest bull markets. Additionally, this is a crappy time of year for the stock market, and the mood is fairly sour. Sometimes I wonder if I'm way out of line with my current strategy. Anyway, a good run up soon and I will consider taking a breather, even though I said the following on another thread...
"I agree with Birchtree to a certain extent. Let's say it's March 9, 2009. If you were to jump into the stock funds (primarily S or C) and be completely 100% in those up to today, would anyone else have a better 53-month performance than you? I'm guessing the answer is no. That's zero IFTs in almost 4.5 years and a 150% gain.
Timing the market is something most of us try to learn and do here, and I will keep trying, myself. I'm learning that most of my mistakes have been when I get scared and jump into the G or F funds and watch the stocks move upward. That's why I trail the S Fund by 15% for this calendar year already. But I'll keep learning and trying.
I believe you can improve your performance with timing. As we go into a recession, which occurs on average every 8-10 years, we tend to have a downward market, significantly usually. When the situation seems the worst that's usually when the market turns and big gains begin. That was certainly true in March of 2009.
I believe that in the modern times the market is news-driven. I believe that you can time a market correction/crash by having a sense of what's important in the news and how markets are going to react. The bigger the upcoming drop the bigger the signs. In 2011 we had the battle over the debt ceiling, European and especially Greek debt problems, and the downgrading of US debt. A full year before the 2008 crash we had housing values turn lower, the collapse of American Home Mortgage, massive big bank write-downs, and even the Cramer rant. 6 months later Bear Stearns went under and the market started showing volitile swings, then gas/oil went through the roof and the consumer shut their wallets. I was a dummy for not reading these signs and running to safety.
As Birchtree said there are none of these "imminent disaster" signs at this point. However, I do think that a big worry upcoming is when Bernanke shuts down his QE and raises the federal funds rate. I don't think tapering will happen right away because Bernanke's criteria to take away the economy's feeding tube has not been met yet - maybe this winter. And, I think the next recession is still 2-4 years away.
I watch a ton of financial news and try to get a read on the buzz, tone, and even pitch in their voices for the big scary things. I think corrections stay at 8% or less for awhile. If you can time those you can make great gains, and I'm trying to even though I fail most of the time. There are some on here that have done a much better job than I have at timing those smaller corrections."
