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Coytee

Dow Jones... how much more? (very long)

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That is the basic question that everyone wants to know and no one does know.

Here's a thought for you. First, a touch of background... when I was in college I ended up taking a minor concentration in statistics.

My teacher encapsulated "what is statistics" by saying this

"Statistics is the process of making a guess and knowing how far off that guess might be"

In other words, if you are wondering how many widgets off the assembly line might be defective.... you make a guess and then statistically calculate how far off your guess is. You will NEVER know your exact number.

His other teaching point was that God will know exactly what the answer is but we mere mortals can't know what He knows. So, via statistical methods, we make our guess and have an idea of our defective rate "plus or minus" a variance.

Make sense so far?

OK, if so, then the next question is "just how far will the stock market fall" The basic answer is I, nor no one else, knows. God does. God (not that he/she might really care) knows that the Dow Jones (or insert index of choice) will NEVER fall below "insert number that only God knows". Think about this.... do you think the Dow Jones will EVER be worth say... 12? how about 100? Maybe 2,500? if we can agree it will probably never reach the value of 12 then what is a number you might think it will never go below?

God knows that it will never go below "X" so now what?

Well... the closer we are to "X" then the closer we are to the bottom, right? What if it might be a value of 8,900 (Dow is currently 8,979 as I type this)

Here's my point... there is in fact a number, only God knows what it is... that this market will NEVER EVER go below. Indeed, this value might be a dow jones of "2" but..... what if the value is actually 8,000?

The more the market falls, the closer we are to this number that God knows we will never fall below. The closer we get to this unknown number, the safer we are in our purchases because they won't go below this value.

I'm not suggesting the bottom is 8,000 since I don't have any more of a crystal ball than anyone else.

With all that said, I am finding some intrigue here now that we break under 9,000 today...

I've got a collegue who's a "technical guru" and according to him a week or so ago, the bottom was going to be 9,500. Lotsa good that did now that we're free falling again as I type this and we're at 8,888

yikes...what a day [:(]

I'm sure everyone here has had the 'little voice' in the back of your head speak to you every now & then. Perhaps for the better, perhaps for the worse. I've had it happen to me a number of times and I've almost always regretted NOT listening to it.

I had it happen once before the tech bubble and I actually used the words to a client "I think we're heading into a melt-UP" and I had NO idea the market would take the wild ride up that it took (I'll add that I didn't really position for it since it was just a "voice" in my head, so I'm NOT saying I am always right nor do I always listen to the voices in my head)

I also had same voice tell me to take people OUT of the market in what turned out to be the week PRIOR to the tech bubble meltdown. I actually had my mother on the phone saying "Mom, Ive' got a voice inside of me that is saying to put you into 100% cash". Instead of her saying "son...do what you feel you need to do" or something like that, she said "now, about my grandaughter...isn't she a pistol" or something off topic like that. Net effect, I didn't act on my voice and she rode the wave down with the rest of the world.

Last September my little voice acted up again this time I intended on listening so I went to 100% cash (but for a natural gas stock that rose like a rocket and fell like a stone with oil prices). Anyways.... I don't expect anyone to voice confirmation of my going to cash but I actually told someone on this forum exactly what I was doing (going to cash) and the basic reason why.... I thought we were heading into some rough waters. Not our typical rough waters of a market pullback but rough enough that I wanted to be totally out of the market. Anyone that listened to me was told that. I even moved my wifes work 401K to cash (where it was until SHE insisted to put about 50% back in several months ago)

Ok... well...when my little voice said last September to go to cash, it ALSO said "don't even THINK about looking at things for six months". Here we are a year later and in all honesty.... it's worse than I'd have thought

I've always maintained I'd rather be lucky than good... skill might get you above market returns, luck will get you some home runs (or miss some landmines) I do not deny some luck here.

Ok "so what" you're thinking by now....I know I'm rambling, I just think it's important that you have SOME clue as to the thought process, (or lack thereof) that went into this.... [;)]

The same "little voice" that has sprung up from time to time, cropped up again just the other day for me. It was before my friend said 9,500 was the bottom for the dow and in fact, the dow was still over 10,000 although I don't recall if it was 10,100 or 10,500. It was below 11,000 is all I can say for sure and somewhere between the two.

Bottom line.... my little voice saw visions of the dow jones hitting 8,000. Today we're at 8,888. Will this happen? I don't know. If it does happen will we cascade on down to 5,000? dunno.

Will it be near the proverbial bottom? dunno

I AM finding it fascenating to see happen though and in all candor, I'm finally starting to get interested in taking some accounts that have been sitting in cash for up to 12 months now and start to go "shopping"

Even if the knife hasn't fallen to the floor yet, we could go 100% invested and still be loads better off by having done what we've done.

dow 8,855 now.... (double sigh)

I just hope the little voice is right this time.

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I believe 7650 was the low following the attacks of 9/11/01, that would be the next level of support. Below that............

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Margin calls and hedge funds apparently were behind the big day today. Once the high rollers are shaken out, and balance sheets can be trusted, then the truth will show. Are assets really worth only this much? Even forward looking are things that bad? Warren Buffet just put a ton of money into a financial institution. If the world were that bad off a smart man like him would wait. It is really ugly right now no doubt. It's like a run on the market as opposed to a run on the bank. Heads must roll though to restore trust, and the rescues of world governments need to work through the system. My oh my what a brave new world with such marvelous people in it.

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I went 100% cash a little over a year ago in order to switch brokers and then got in a wreck and never invested back into the market til now. I went with a Diamond Trust ETF (Dow tracker) and an S&P tracking ETF. I wanted something easy to follow and duck out of if I wanted to and I like the volatility. I'm just back in at 15% of my account value with 85% still in cash. It sure looks like the down-side risk is less than the up-side potential right now so maybe it's time to go all (or mostly) in. I was just planning on going back in at a rate of 10-15% a week but a Dow in the mid 8,000s makes me think this might be a good opportunity. But then the dumb luck of going into cash last year saved me from a 30-35% loss already. Any advice?

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Thank good ness my broker talked me into staying fully invested when I discussed my strong feelings last October that we'd had a good run and it was time to set on the sidelines for a while.

The only one making money off my investments is my broker.

I hate this. [8o|] I was never greedy demanding big returns. I thought I was doing the prudent thing in investing my money for the future. I didn't know that I was taking it to Vegas. Because Vegas at least has showgirls.

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Any advice?

Since you asked...

I went with a Diamond Trust ETF (Dow tracker) and an S&P tracking ETF.

My .02 is why buy something that tracks the index when there are funds out there that have historically beat the index?

Yeah yeah..I know...some "do it yourselfers" are going to say "cause I don't wanna pay a broker" or something like that.

not all of them are broker related is one answer to that... my next answer would be... simply compare the funds returns. Hypothetically, if a broker put you into a fund that had a 10 year record of say, 12% and a lifetime of (for kicks) 8%, and I'm simply making these numbers up... what would you care if the fund paid your broker (or non-broker if it was a no-load) 40% commissions?

Many people get caught up in "I don't want to pay for any advice". Yes, I'm biased in my comments so take any/all of my comments with a grain of salt.

One comment for something you didn't ask about... regarding "no load" funds... just for the record, if anyone...ANYONE thinks a "no load" fund isn't charging you... then just ask yourself how are they paying their light bills, salaries, rent and the like.... There is never something for nothing and I'd suggest that it's better to have something with more disclosure, rather than less.

Aside from all this... perhaps investing in pristine McIntosh amps & sitting on them for 30 years might also make some sense!!! Be tough to track the income later on with those, so they'd be a tax deferred growth (or tax deferred decline?) vehicle with tax free access!!

[:^)]

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But then the dumb luck of going into cash last year saved me from a 30-35% loss already

Missed this one... this goes back to my comment, I'd rather be lucky ANY day than "good" Sorry about your accident though, perhaps this is your silver lining.

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Thank good ness my broker talked me into staying fully invested when I discussed my strong feelings last October that we'd had a good run and it was time to set on the sidelines for a while.

That sucks...I know. I'm sorry for your situation.

This won't mean much to anyone reading this but... I've been doing this for 23 years (in December). Moved to Knoxville right before the crash of '87 and the DAY of the crash in 87 was my first day at work (in Knoxville). New town, didn't know anyone and now I'm going to try to meet them & invest their money?

Sheesh... was a very difficult time. BUT...and here's the main thing... never ever in 22+ years have I "taken work home" with me. I've always been able to go to work, deal with happens and when the day is over, go home and essentially, forget about what happened. I don't get caught up in the news of the moment.

I think since I've always approached each person as an individual, explained the pros/cons of what we / they are doing, they've always known the risk potentials and the reward potentials. In fact, I tend to dwell on the risk potential because in all honesty... I don't ever want anyone accusing me of not telling them the truth. if they know the worst that can happen, then they've got both eyes open and there can never be any surprises. I don't like surprises.

What I am finding interesting is FINALLY, I'm starting to 'take work home' and have some deeper concerns that I've historically never had. Am I simply thick as a brick & stupid? Perhaps so. Is it finally time to panic? Although I don't think so (that time has past IMHO) one never knows.

I'm just finding it sort of interesting, in a morbid way, such like you might drive by an accident and (without slowing down) steal a quick glance over to the carnage.... My wife has always found it interesting how I've been able to divorce myself from work when I'm at home. I'm finally beginning to dwell on it and that's why I posted my thoughts above. Not to really accomplish anything but in part, to get my thoughts out as to my "vision" of the dow hitting 8,000. Not that I REALLY want it to get there but if it does, I'll be interested to see how much further below we go and down the road 'in hindsight' how right or wrong I was about 8,000.

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If this keeps up, I will be able to retire when I die.

Let us hope that you die a crotchety old man.... Well, at least old. We've already got Ole buckester to contend with [6]

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Not a pleasant year as far as the 401k goes. I got my statement today, and I am down 24%. OUCH!

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I heard about this 2 days before the downfall of Lehman(mid-end of September).......something told me to bail out of the market and slap those funds into the Retirement Money Market account.

Luckily, I saved a 2000 pt loss. We just shifted from Fidelity to Wells Fargo, so we had a shutdown period for 2 weeks.

Feel sorry for those unable to change, but I HAD A FEELING.

Money Market for now, but will soon be plowing back into this mess in another week or (2), VERY SLOWLY.

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One comment for something you didn't ask about... regarding "no load" funds... just for the record, if anyone...ANYONE thinks a "no load" fund isn't charging you... then just ask yourself how are they paying their light bills, salaries, rent and the like.... There is never something for nothing and I'd suggest that it's better to have something with more disclosure, rather than less.

Ahh.... Its called an expense ratio or management fees and load funds have them too, since they too have expenses and have to pay transfer agency fees (good ole DST/PFPC). The fact is the "Load" in the Load fund goes to the introducing broker and the fund underwriter, the underwriter often is a seperate division or corporate entity from the money managers. B-Shares (load funds), are the worst in expenses since they need to recoop the fronted load to the broker. I do agree that not all no load funds are not the same in terms of expense ratios and you are correct its important to be aware of how much you are loosing in terms of performance, that information is readily available to those how want to spend the time to read about it.

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you know that accident? I AM the carnage. Nothing like losing your job and your savings in the same year.

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$5000 Dow? $5000 Gold?

In the early 30s the Dow tanked and sold for 1:1 with Gold.

ONE ounce of gold would have bought the Dow.

It happened again in 1980.

ONE ounce of gold would have bought the Dow.

If it happened twice in the last 76 years, it can happen a third time.

Government meddling increased the length and severity of the depression in the 30s,

are we going to see an encore performance?

I forgot to replace the batteries in my crystal ball, so I'm in the dark here.

-----------------------------------------------------------------------------------------------------

Crash Proof: How to Profit From the Coming Economic Collapse

http://shop.ebay.com/?_from=R40&_trksid=m38&_nkw=%22crash+proof%22

(a good read)

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Ahh.... Its called an expense ratio or management fees and load funds have them too, since they too have expenses and have to pay transfer agency fees (good ole DST/PFPC). The fact is the "Load" in the Load fund goes to the introducing broker and the fund underwriter, the underwriter often is a seperate division or corporate entity from the money managers. B-Shares (load funds), are the worst in expenses since they need to recoop the fronted load to the broker. I do agree that not all no load funds are not the same in terms of expense ratios and you are correct its important to be aware of how much you are loosing in terms of performance, that information is readily available to those how want to spend the time to read about it.

Ok! You aren't so crotchety after all!!! I guess you'll die simply as an old man....perhaps broke....but old! [Y] [;)]

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Seems we took out 8,000. What was so utterly fascenating this morning is as I was watching the screen, the market showed to be down about 200 at roughly 8,300... then it "blinked" and showed 7,800 and in another blink of an eye, was right back up to 8,200. I swear, it was almost like my screen was reporting a mistake... it was just that quick. Now, just a handful of minutes later, we're back to 8,400...

Obviously no one knows what the future is going to bring but I like the way we bounced back up. Today is Friday though.... they (the "traders" you hear the news pundants talk about) usually like to take their cards home for the weekend so it might be interesting as the day moves forward.

http://www.foxbusiness.com/story/markets/futures-dive-markets-brace-trouble/

The Dow battled back from an early 650-point plunge but remained under intense pressure Friday morning as Wall Street continues to struggle amidst the worst financial crisis in the U.S. since the Great Depression.

The blue-chip index is on pace to suffer its worst weekly percentage plunge in its 112-year history even as new reports indicate the government is considering new emergency actions, including insuring all U.S. deposits and guaranteeing billions of dollars of bank debt.

Today's Market

As of 9:59 a.m. EDT, the Dow Jones Industrial Average dropped 232.50 points, or 2.65%, to 8353.62, the broader S&P 500 slid 23.60 points, or 2.35%, to 888.53 and the Nasdaq Composite was down 12.56 points, or 0.94%, to 1629.66. The consumer-friendly FOX 50 dropped 18.81 points, or 2.75%, to 666.35.

The blue chips briefly plunged below the 8000 level for the first time since April 2003 but have since recovered from those levels.

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That is the basic question that everyone wants to know and no one does know.

Here's a thought for you. First, a touch of background... when I was in college I ended up taking a minor concentration in statistics.

My teacher encapsulated "what is statistics" by saying this

"Statistics is the process of making a guess and knowing how far off that guess might be"

His other teaching point was that God will know exactly what the answer is but we mere mortals can't know what He knows. So, via statistical methods, we make our guess and have an idea of our defective rate "plus or minus" a variance.

Make sense so far?

No, It doesn't (make sense)

First of all, your "teacher" is wrong on both counts.

1. As the (Wall Street) saying goes "There are lies, and there are damn lies. And then there are statistics"

2. How is it that your so-called "teacher" knows that I know the answer?

And what's more important, is since I know the answer, why don't I share it who you, with someone, with anyone? When you finally know the answer to that, you'll realize why you don't need me.

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I'll gamble and take a STAB at the Market turning Tuesday, if possible small gains.

Personally, I definitely don't see the HUGE RALLY they forecast, but do see some stabilization once the financials get straightned out. CNBC!

Uncle Sam, we need that 700B ASAP

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