Is the stock market over heating?

jabba42

gadgetmind wrote: »

Maybe, but 90% of what he says is completely wrong.

Pretty much no-one is thinking the way that he claims they are thinking, so his predictions of the future are based on a misunderstanding of the present. Even those with a better grasp of current reality don't have a clear view of the future no matter what they claim.
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He usually gets it right, maybe a few months early but in my experience Adam makes pretty good calls.

Also he gives pretty good ratios on the S&P, sentiment now is in the extreme.

"Stock-market selloffs come in different sizes. The smallest are less than 4%, and aren’t considered material. They usually consist of a few down days that quickly reverse. Bigger ones from 4% to 10% are classified as pullbacks. They are common within ongoing uplegs, scaring away greed so the upleg can continue higher with rebalanced sentiment. And the largest selloffs over 10% are known as corrections.

Corrections don’t occur within uplegs, but between them. Greed grows excessive enough after major uplegs that a serious injection of fear is necessary to restore balance. And only sharp and large selloffs can introduce real fear. These corrections run between 10% and 20%, and generate so much fear that the majority of traders wrongly assume the bull is over. And anything above 20% is a new bear market. "


And for those that think this can go on forever

"As of Wednesday, the flagship S&P 500 stock index (SPX) had rallied to new nominal record highs in 11 of the past 13 trading days. It blasted 4.8% higher over this short span. If sustained for an entire year, this blistering rate of ascent would nearly double the stock markets! This latest euphoric surge extended the cyclical stock bull that was born way back in March 2009 to a massive 145.2% gain over 50.2 months."

Just this week, the SPX stretched to 1.12x its own 200-day moving average! Seeing the SPX more than 10% above its 200dma is pretty rare, and 12% is truly extreme. Whenever this broad benchmark index surges far enough and fast enough to hit such levels, its advance is not sustainable. Excessive greed has pushed the markets to a level where buying exhaustion emerges, so the stock markets fall sharply.


This time I guess it is different guys, ftse 8000 here we come and we are all going to be rich.:eek:

jimjames

pqrdef wrote: »

Strangest bull market ever - where are the bulls? It's more a case of people finding excuses to hold equities.
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If anything that is a good sign. The worst market is the bubble when everyone thinks it is a sure fire winner that you cannot lose on. Much like late 1999 and early 2000.

With so much scepticism at the moment it could still be a good time to get in.

Thrugelmir

jimjames wrote: »

If anything that is a good sign. The worst market is the bubble when everyone thinks it is a sure fire winner that you cannot lose on. Much like late 1999 and early 2000.

With so much scepticism at the moment it could still be a good time to get in.

Perhaps we are witnessing the bubble of 2013. Next year will see the correction.

cepheus

I suspect the stock market represents the fortunes of the richest 10% who haven't suffered any recession and are looking forward to ever greater excesses. Remember most people possess few direct stock market savings.

gadgetmind

Shaolin_Monkey wrote: »

Someone who sold out of equities (or at least heavily reduced exposure) anywhere up to mid 2008 and subsequently re-invested some time in 2009 would almost certainly be in a better position now than someone who'd simply not taken any action at all.

Absolutely, and when doing the lottery, only buy winning numbers.

When markets fall it tends to happen much faster than it took to rise.

The rises can also surprise people with their pace, intensity, and duration. If you miss the rises, then you might have well remained invested.

The other possibility is a rebalancing portfolio that forces you to sell off some of your gains to safer assets during the good times and vice versa.

This is pretty much the only approach that has been shown to work. The reason it works is that it doesn't require the hyper-accurate crystal ball of market timing and it also protects us from our (flawed!) animal instincts.

gadgetmind

jabba42 wrote: »

He usually gets it right, maybe a few months early but in my experience Adam makes pretty good calls.

In which case, he should fairly soon own 90% of the entire assets of the planet. I'm surprised he doesn't already.

jabba42

gadgetmind wrote: »

In which case, he should fairly soon own 90% of the entire assets of the planet. I'm surprised he doesn't already.

Well you seem to know and say he is 90% wrong. I guess you should also.

TCA

jabba42 wrote: »

I would keep a healthy eye out at these levels for taking some profits off the table if you have been in since November or before.

I convinced myself of the passive investment approach in October and have been feeding monthly cash into various Vanguard index trackers since then. I struggle psychologically because I can't help but keep checking my investment and when I see I'm "up" 11% in 6 months, it does make me think something is about to go pop! The temptation is to bank the gains and stick the money in a savings account (at 2% gross), but for how long and when do you go back into the market? I'm going to fight the urge to cash in my chips for now.

jonesMUFCforever

LOL have you thought of Bitcoins!!!

Thrugelmir

TCA wrote: »

when I see I'm "up" 11% in 6 months, it does make me think something is about to go pop! The temptation is to bank the gains and stick the money in a savings account (at 2% gross), but for how long and when do you go back into the market? I'm going to fight the urge to cash in my chips for now.

Switching to cash is where I'm heading if the market goes any higher.

I'm currently looking at a 58% gain in the past 12 months on an investment in European Investment Trust.

Soon to be time to leave the markets to the herd.