Yes, It Really is that Bad

I've never denied it. I've made comments about it in the past. Mish Shedlock has been telling me about it for the last several years (I really love his blog). I get geopolitical analysis that tells me it's bad too (although like so many pros they now admit it's worse than they originally thought).

So why have I played with fire?

Because, generally speaking the market doesn't trade strictly on fundamentals. Not that fundamentals don't matter either. The fundamentals are the foundation on which the market operates, but after that it's a game of bulls vs bears; puts vs calls; market makers vs traders. And so on and so on. It's like an onion; layer after layer.

For some time now, I have fully expected the market to punish the bears to a larger extent than it has. Remember some of those massive rallies late last year?

We have a new administration now. And while some may say it's the same old Washington, that would only be partially true. The fact is the rich appear to be under attack. Taxes are going to increase for those making for than $250,000/year. We may think that's just fine, they should pay more, but that's not how it's been for a long time. We're talking about privilege here. A way of life few enjoy. It's been that way for them for a long time. They've been making all the rules for a long, long time. They ensure their continued success through contributions to political channels. Scratch my back and I'll scratch yours. Get it?

With wealth comes power. That power is now being challenged at numerous levels.

You think the big oil companies like the idea of green initiatives? Renewable energy? The administration is talking about cutting into their long held stranglehold on energy. It sounds good in theory, and it probably is, but I seriously doubt everyone is happy about it. And those that aren't happy about it will not go down without a fight.

Look at the banking, insurance, and investment industries (think Bear Stearns, Citi, Lehman, AIG, BofA, etc.) Look at how they have acted in the face of this serious financial debacle. They continue to operate as before. They're arrogant and above the common man. We owe it to them. They screw us with impunity and then have the gall to take taxpayer dollars without blinking. (Okay, Bear and Lehman we're taken out of the game). But the banks have not.

The medical sector better stand by too. It now has a big bulls eye on it.

And Wall Street is going to pay too. Regulation is coming. The problem is, we'll be feeling that same pain too as we rely in large measure on Wall Street to realize our retirement dreams.

And to think, the rest of the world is in worse shape than we are.

Yes, it really is that bad. I knew we were in for a rough time, but I thought it would take longer to play out. The new Administration is acting fast, and maybe it has to, but let's face it, they're making both friends and enemies in the process. There's a power struggle going on right now. Many who have enjoyed wealth and power are now having to fight to keep it. Their lifestyles are being challenged. Privileges are eroding. Yes, they deserve it, but we'll feel the pain too. I suspect this battle is far from over.

Yes, I'm out of the market now. In part because a new month starts Monday and I can change my mind quickly if things turn around faster than I now think they will. In the meantime I think this market has proven that market indicators are of limited use when no one has a clue what the new administration is going to do from day to day.

 

[tsptalk]

I "gave up" earlier this week, but the contrarian and "smart money" investor in me says, that waving the white flag and saying "I never want to own stocks again" is exactly what we have been waiting for. It is just a little scarier when we're in the market and it's going down rather than being neutral and looking in from the outside. Know what I mean?

I hate this market, but sentiment is getting close to reaching "that" point.

 

[coolhand]

Tom, I understand exactly where you are coming from. But the market you're referring to may not be the same market a month from now. Or maybe 6 months from now. I don't know. There may be a seismic shift underway that will significantly alter the playing field.

For now, I'm playing it safe, but I agree with you in traditional theory. However, we need to be mindful of the soft science principles of the market. The rules will be changed as required to push a given agenda. And the traditional market rulers are engaged in damage control, but old habits die hard. The administration is spoiling for a fight. Listen to the rhetoric. I don't think it's a bluff either.

It is still too early to say what will happen; like you I am watching from the sideline, and what I see I do not like. :worried:

 

[coolhand]

Just so I'm not being misunderstood, I am not saying I never want to own stocks again (although ETFs are the only thing that interest me anymore), I am only saying that the playing field appears to be changing. I have no idea what's going to happen. Any losses I have experienced I take with a grain of salt. It goes with the territory. I monitor a lot of folks, and I will say that many who have been bearish (and rightly so) are now taking neutral positions as a rally may indeed be getting closer. However, a rally does not change the dynamics of what's going on between the administration and private industry (not to mention the fed). Those dynamics are what I am monitoring and speaking to.

BTW, I've loaded up on ammo. I'm feeling better now. :laugh:

 

[tsptalk]

I am not saying I never want to own stocks again

Oh, I realize that. But the herd may be getting there. The TSP statements were delivered this week. I have a feeling there will be another mad dash to the G-fund. So, I expect some kind of explosive rally in March - that will likely not last, but it will confuse the masses. I am not sure I will be smart or lucky enough to catch that rally (I'm in G too), but we know it's coming.

 

[OBIWAN]

I've been in the TSP since its first began in the mid 80's. I have earned just $4k more than I have contributed($135k) playing the C(at first) then the S & I. A coworker just retired with less contributions, invested in JUST the G fund over the same time period, and left with almost $300,000. Interesting, huh?

 

[tsptalk]

That stinks obiwan. It's that buy and hold mentality that's forced down our throats, stay the course, etc. Sad.

Welcome, by the way!

 

[coolhand]

I've been in the TSP since its first began in the mid 80's. I have earned just $4k more than I have contributed($135k) playing the C(at first) then the S & I. A coworker just retired with less contributions, invested in JUST the G fund over the same time period, and left with almost $300,000. Interesting, huh?

When I was in high school, I worked in a pharmacy run by a husband and wife. The wife was a Pharmacist and her husband was a business major. This is back in the mid-seventies and the pharmacy was a privately run business, not a chain.

Anyway, Joe (the husband) was very business savvy. I learned not too long ago that he never invested in the stock market. Only cash vehicles. He said there was too much manipulation in the stock market (again, this was back in the 70's). He did very well for himself over the years without taking much risk.

I am not advocating staying in cash, Joe was able to get a lot more interest for his money back then. In today's economy we could not even keep up with inflation and it's been like that for quite some time.

Still, like you said, these are interesting observations. Buy and hold can be very rewarding or very humbling. It all depends on when one cashes out, and for many buy and holders it's basically comes down to luck as they usually do almost nothing to manage their own portfolio.