02-28-2014, 06:50 PM
Good points, Tom.
The stock market seems to be a good enough leading indicator of where the economy is heading but I'm not sure it's a good gauge of magnitude. You can have a wildly up market and the economy takes a slow curve up like it appears to have done over the last few years. Other times the market doesn't appear to respond as well as the general economy. I think part of it depends on where you start and end the "guage". The Great Recession, and the public and government responses, really was a major event which may have distorted a lot of measurements.
As for sentiment, I don't know what statistics are best for measuring it. It seems polls are notoriously inflated when you ask people about themselves rather than measuring their real-life responses. Everybody seems to be a better saver and investor and a bargain hunter when shopping and then you see the aggregate numbers come out from the government or some research company and the opposite seems to be the case.
Last fall I mentioned to an RIA I was talking with that I thought we were beginning a "secular" bull market. We just kept climbing this wall of worry with lots of negativity and there was no breather along the way. Seems we're still doing that now. Of course, we really won't be able to judge that well until it's over which could be many years from now. Frothy? No, I'm not feeling it either although I do think the bargains we saw over the last few years are long gone for a while and have to settle for fairly to slighly overvalued (at present) stocks or trade around the momentum which I'm not wont to do.
I thought for a long time (the 00's) that what we went through in the late 80's and 90's was a once-in-a-generation event but now I'm beginning to wonder. I also don't know if that is good or bad.
That being said, my plan is to continue doing as I've been doing for the last 5 years -- concentrate on finding fairly valued companies that I believe can thrive for the long term and hold them. Re-balance as necessary and watch. The test will be the next big down draft and how I'll handle it. I think I'll be OK but you never know until you are there.
I wish I had the stomach to trade around those high-yield issues such as BDCs, CEFs and MLPs like Alex does but don't have the expertise, time or inclination to do that now. Maybe closer to retirement I'll have more experience watching them and taking a flyer or two. I'm just getting comfortable with REITs now. My retirement budget so far is OK with what I'm holding so speculating without confidence in my judgement may not turn out well. There's always something to learn.
The stock market seems to be a good enough leading indicator of where the economy is heading but I'm not sure it's a good gauge of magnitude. You can have a wildly up market and the economy takes a slow curve up like it appears to have done over the last few years. Other times the market doesn't appear to respond as well as the general economy. I think part of it depends on where you start and end the "guage". The Great Recession, and the public and government responses, really was a major event which may have distorted a lot of measurements.
As for sentiment, I don't know what statistics are best for measuring it. It seems polls are notoriously inflated when you ask people about themselves rather than measuring their real-life responses. Everybody seems to be a better saver and investor and a bargain hunter when shopping and then you see the aggregate numbers come out from the government or some research company and the opposite seems to be the case.
Last fall I mentioned to an RIA I was talking with that I thought we were beginning a "secular" bull market. We just kept climbing this wall of worry with lots of negativity and there was no breather along the way. Seems we're still doing that now. Of course, we really won't be able to judge that well until it's over which could be many years from now. Frothy? No, I'm not feeling it either although I do think the bargains we saw over the last few years are long gone for a while and have to settle for fairly to slighly overvalued (at present) stocks or trade around the momentum which I'm not wont to do.
I thought for a long time (the 00's) that what we went through in the late 80's and 90's was a once-in-a-generation event but now I'm beginning to wonder. I also don't know if that is good or bad.
That being said, my plan is to continue doing as I've been doing for the last 5 years -- concentrate on finding fairly valued companies that I believe can thrive for the long term and hold them. Re-balance as necessary and watch. The test will be the next big down draft and how I'll handle it. I think I'll be OK but you never know until you are there.
I wish I had the stomach to trade around those high-yield issues such as BDCs, CEFs and MLPs like Alex does but don't have the expertise, time or inclination to do that now. Maybe closer to retirement I'll have more experience watching them and taking a flyer or two. I'm just getting comfortable with REITs now. My retirement budget so far is OK with what I'm holding so speculating without confidence in my judgement may not turn out well. There's always something to learn.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan