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Stock market- Don't be freaked out. It's only a game

Discussion in 'Sidewinders Bar & Grille' started by Vindibona1, Oct 11, 2018 at 3:00 PM.

  1. Vindibona1

    Vindibona1 Most Honored Senior Member Strat-Talk Supporter

    I'm listen to the news as Chicken Little, disguised as a knowledgeable reporter talks about the stock market "crash" of yesterday. The sky is falling, the sky is falling! It's a game folks. The average "retail investor" is only along for the ride.

    I've included a chart of the S&P Futures and is a great example of how the stock market works. It's gone up and up and up... Why? BECAUSE THERE WAS NO OTHER safe PLACE TO PARK MONEY. If you invested in CD's or money markets you'd get a pittance of interest and be eaten alive by capital gains and real inflation. Then in 2016 corporate America came out of hiding and started re-investing in their business. But now the Fed sees that it no longer is saving America from melt-down and is normalizing rates after 10 years of virtually free money. A major correction is long overdue.

    Short term correction says we should settle in for the time. But if you look at the 15 year chart below we came a huge way, pretty much straight up in the last 9.5 years without a meaningful correction.

    I'm not giving any advice because it's confusing unless you're actively trading as I no longer do. I've been waiting for a correction so I can put more money in my diversified portfolio. But I'm certain not freaking out... because this is a normal occurrence within an abnormal era. Just sayin'

    [​IMG]

    [​IMG]
     
    Lone Woof, dbolt, davidKOS and 2 others like this.

  2. Vindibona1

    Vindibona1 Most Honored Senior Member Strat-Talk Supporter

    One more thing... The two drawings are 1) Fibonacci which show typical retracements and the "mountains" on the right which shows volume traded at given price levels. Thin areas of volume are places where price should move through quickly. More volume areas are areas where price movement tends to slow down and linger. I wouldn't be surprised to see S&P levels at 2075. But right now 2690 is the breaking point.
     
    dbolt likes this.

  3. wmachine

    wmachine Strat-Talker

    232
    Mar 5, 2016
    Ohio
    Yup, I come to guitar forums to get my financial investment advice!
    Now excuse me while I go down to Wall Street to go guitar shopping........
     
    Neil.C, tery, TheDuck and 1 other person like this.

  4. carver

    carver The East Coast Strangler Strat-Talk Supporter

    anything with a graph I avoid

    paragraphs

    graphs

    Giraffes are ok though.



    now a pie chart.

    I can get behind a pie chart. they are delicious
     
    Neil.C, Guy Named Sue, tery and 2 others like this.

  5. Vindibona1

    Vindibona1 Most Honored Senior Member Strat-Talk Supporter

    Tony Simms was right.
     
    dbolt, Chont, ocean and 2 others like this.

  6. Thrup'ny Bit

    Thrup'ny Bit Grand Master Curmudgeon Strat-Talk Supporter

    Age:
    59
    May 21, 2010
    Sheffield, UK
    I lost the plot at Chicken Little, but you heart rate seems to be getting very high judging by the traces on the graphs. Take it easy...
     
    tery likes this.

  7. tery

    tery Most Honored Senior Member

    Jul 31, 2014
    Tennessee
    Tomorrow when it is low they will buy back everything they sold yesterday when it was high and then sell and buy it again over & over pocket the cash and call it profit .
     
    AncientAx likes this.

  8. TSims1

    TSims1 Most Honored Senior Member Strat-Talk Supporter

    Aug 9, 2009
    Atlanta, GA

    See what I’m saying? Who ARE these people? Crazy.

    I found your post informative and interesting. It would do a lot of folks well to pay attention, frankly.
     
    rafasounds, Lone Woof, dbolt and 4 others like this.

  9. axis69

    axis69 Strat-O-Master

    Age:
    32
    966
    Feb 5, 2016
    LA
    Recessions come in cycles of 7-10 years.We are close to the 10 year mark of the Bottom of the last recession.
    The economy is super strong now but it always is whena recession hits.
    I would be super careful about investing in anything now.Now is the time to save cash,imo.
     
    ocean and RichieS like this.

  10. Passghetti

    Passghetti Strat-Talker

    157
    Sep 20, 2018
    Sin City
    Here is a graph comparing US GDP to stock market capitalization (Wilshire 5000)
    Note the dates. This shows an overvalued market. If an inflection is forming at the top, we might have reached a ceiling.

    cap-to-gdp.png
     
    ocean, CGHguitars and davidKOS like this.

  11. Passghetti

    Passghetti Strat-Talker

    157
    Sep 20, 2018
    Sin City
    I hear ya. The difference since 2008 is they used that financial "nuclear bomb", and dropped interest rates to 0%, and injected liquidity (cash) into the markets. So when rates were zero, its was free money for our economy. Now that rates are rising, those trillions are not so free and the 'minimum payments' get higher with every rate rise. This is why the US president called the FED crazy.
     

  12. Dadocaster

    Dadocaster Dr. Stratster Strat-Talk Supporter

    What would your suggested course be for the Fed?
     

  13. Passghetti

    Passghetti Strat-Talker

    157
    Sep 20, 2018
    Sin City
    Word! Here is one possible explanation for this week:

    https://www.investors.com/news/stock-buybacks-blackout-period-earnings-season/

    For a couple years, companies used their tax breaks to buy their own stock. Its like if you sell 1 million albums, but your mom bought 250,000.
     
    ocean and tery like this.

  14. RichieS

    RichieS Strat-Talker

    Age:
    38
    331
    Sep 1, 2016
    San Francisco Bay Area

  15. Passghetti

    Passghetti Strat-Talker

    157
    Sep 20, 2018
    Sin City

    what can they do? you need to raise rates or the long term (guv't) bonds turn just as risky as short term bonds. If they don't do anything, we will go to war with the East. (We might be heading to war anyway)
     

  16. 808K

    808K Strat-Talker

    347
    Apr 24, 2018
    Philly, USA
    Reminds me of something that happened in a casino some number of years ago.
     
    Passghetti likes this.

  17. Vindibona1

    Vindibona1 Most Honored Senior Member Strat-Talk Supporter

    Good chart. The market has definitely been "fizzy". I've been waiting for the correction to add to my portfolio. I'll probably put some in if this level holds. But I'm looking at the 38% retracement as the logical place to add more.

    The Fed is finally coming back to reality. They shouldn't have been forced to be in the position of being the savior of the economy. The problem is that business was so afraid of investment that they hoarded trillions cash that sat on the sidelines until the last two years. IMO they should not instituted Quantitative Easing I, II or "infinity". I believe the free market should have been allowed to remain free. I believe that the old rules that we used to have with minimum passbook interest should have been reinstituted.

    Their approach while benefiting one group harmed another and required everyone to play the "game". Think about Seniors who got decimated in 2008 and was afraid, kept them in "safe" investments earning nothing in interest. When the market recovered that left everyone else asking "am I going to put money in the market at all-time highs"??? Conservative Seniors ended up spending down much of the principal of their life savings. One needed to be a professional or seek professional help who would be happy to take a percentage of their money.

    Let's face it: Financially we're in the Wild West. There is no good answer, especially if you're an older American.
     
    Passghetti likes this.

  18. Passghetti

    Passghetti Strat-Talker

    157
    Sep 20, 2018
    Sin City

    Yikes 38%!!!! I did the math.....26000 * .62=16000. Yah its cool how you do the Fibonacci thing. that's a lot of trust for your method. its like voodoo magic to some! :thumb:
     

  19. Dadocaster

    Dadocaster Dr. Stratster Strat-Talk Supporter

    Indeed. There was a time when "average" people had little or no exposure in the market. Phase out of pensions and this long period of low rates drove more and more regular folks into the market and made for fabulous profits in the financial sector. That is where the problem comes in. Vindiwhatsit and others are correct to point out the cyclical nature of the economy and markets. Absolutely true. The problem is that the cycle doing it's thing is not a problem in the big picture, but can devastate an individual if the timing is bad. It's not chicken little if your retirement calculations take a huge hit and my take a decade to sort out. That is a reality in many cases.
     
    Mr. Lumbergh and Passghetti like this.