The Bear Market has begun

[Skram]

I don't think there is much to keep the market propped up with the Fed ending QE. Reality is starting to set in that this market has been held up by over a trillion dollars of  easy money. Brace for some rough months ahead on your 401k's.  Now with the price of oil dropping, earnings dropping on several companies, the dollar getting stronger, Europe and Asia looking pretty weak, there is just not much for the market to be optimistic on. My guess is there is probably a S&P 500 in the 1700's in our future.

I rode the 2008 crash to the bottom, I don't feel like doing it again.

I am not a bear, and I generally believe in riding the ups and downs of the market, but I don't see much upside here. It is an overpriced market with a lot of bad news on the horizon. I am taking my gains and going defensive for a while.

[Lhalo]

If things go bad the Fed will fire up the printing presses again IMO. Yellen seems to be a clone of Bernanke so the doves are still in control. It can't go on forever though and the shit will eventually meet the fan.

[acro2008]

I got out of the market when the 2008 crash started and bought ETF precious metals and also physical. I didn't have a 401k anymore so I didn't have to factor in withdrawal penalties. The problem for me is I lost none on the way down but didn't benefit from the mysterious ride up to the Dow record levels. Still, the more I learned the easier it was to stay conservative. I wonder what would have happened post 2008 if there were no bailouts and QE. We may have been well past recovery already(given we demanded full disclosure). I can hear Ron Paul's ""audit the Fed". At this point, IMO, any more Quantitive easing will only extend the inevitable and make the economy worse, especially when the reality that sound monetary policies were not being practiced and this awareness comes home to roost.

If too many Americans realize their economy has been propped up by policies that have NEVER worked historically, what will be the perception and what problems will be caused by a people who start to learn that they don't trust the financial system? Obama had been instructed to tell the country all is ok. In the meantime the US and UK are running drills for a bank collapse scenerio. http://in.reuters.com/article/2014/10/11/banks-regulations-collapse-idINKCN0I004Q20141011

Back in 2008 the Fed stopped printing the all important M-3 report. The report presented enough knowledge to determine how much money was in circulation. It sure makes it appear they diidn't want anyone to know how much $$ was being printed and the inflation that would result. The Fed claimed not printing M-3 was to save money. Since when did the government care about that. IMO, whether next month or 3 years from now, the problems are going to be much worse than 2008 but the silver lining is that the American people should be upset enough that hopefully the corruption keeping the US from being a much greater nation should get scraped from the bottom of our shoes.

Edited October 16, 2014 by acro2008

[Schildog]

This is horrendous for me. My retirement accounts are for short term purposes only.

Edited October 16, 2014 by Schildog

[Skram]

Well, I am not a conservative investor. I just think there is a correction coming, and corrections are brutal. The psychology and dynamics of the market always lead to the market being oversold and creating a buying opportunities, which is exactly what happened in 2008 and I have enjoyed the 17% return since then.

Historically, after any kind of government QE program ends, the stock market drops..alot, and not just in the US. 

I follow this stuff pretty closely so I am not afraid to try to get out early because I know I am willing to get back in even when the market looks brutal. I imagine myself getting back in too early, and not too late. I wouldn't advise this for everyone though, if it is your retirement money, and you have a long window, then I have no doubt the stock market will be higher 10+ years from now. 

 

 

I have no love for precious metals. They are a commodity, they are defensive, they do not produce anything and are based solely on supply and demand (and they have been brutal over the past year.) If you believe the collapse of the financial system is coming, then I doubt any investment will really pay off, even gold. The people who have gained truly gained wealth in this country did it believing in the power of our economy. I just want to try to sit out the correction this time around.

[Schildog]

wow i didn't notice the grammar in my previous post. i'm horrible at posting from my tablet...

 

2008 was completely different though.

 

bear stearns, lehman, wamu and countrywide collapsed. 

 

aig and all the other big banks had to be bailed out. 

 

i don't disagree about a correction. however, it's not going to be another 2008. the dow is only down 6.76% from it's high. 

 

are you a day trader?

[Catwhoshatinthehat]

Of course there's a correction coming as the market is full of ups and downs, always has been and always will be.  Whether it's fear driving the market down or the belief that nothing can go wrong driving the market up emotions impact the market and most investors can't separate their emotions from investing and it ends up biting them in the ass.  Obviously the fed involvement with QE is impacting the market and it will continue to do so until everything is unwound which won't be for quite a while.  Personally I'll continue to make bi-weekly 401K contributions and monthly contributions to my Roth IRA and taxable accounts because I'm a long term investor who follows a DCA approach.  Anyone trying to time the market isn't going to be successful 99% of the time.  Sure you may get out of stocks/mutual funds/index funds and move into a MM or bond funds to preserve wealth but then you have to try and time when to get back in.  I know people who did that during 2008 and 2009 and gloated when the market went down only to miss out on the upswing as they stayed in those investments too long. 

[Skram]

No, not a day trader at all, just an amateur investor who likes to follow this stuff. I have my retirement funds, some personal funds in mutual funds, and then some, shall we say "play money" in a brokerage account. For the most part, I am the guy who loves low cost mutual funds like the Vanguard 500 fund and rides out the waves. Until recently I have been adding more money on the dips. That has worked out quite well over the past couple years. 

And Cat, I agree this isn't 2008, that was a near meltdown. I don't usually, well, until now, never try to time markets either, I just see a market that is historically on the expensive side because of years of QE leaving no other viable investments. We are at the end of a bull run, and reality is starting to set in. There are really no factors to drive the market higher unless the Fed announces yet another QE program. But why would they do that, the economy is soft, but it isn't awful. If they did it they would basically be admitting their sole purpose is to prop up the stock market, and I am not sure how well that would wok out.

I won't stay out too long, I will leg myself back in on the downswing. I do not like being out of the market. I think about the 2 corrections I have gone through, 2001 and 2008, both went on much longer and were more severe than was actually warranted. That is the nature of markets. I am continuing to make contributions, I just pulled my money back to money market and short term bond funds for now. 

[Schildog]

i have ira money in that vanguard 500 fund too.

[acro2008]

"I have no love for precious metals. They are a commodity, they are defensive, they do not produce anything and are based solely on supply and demand (and they have been brutal over the past year.) If you believe the collapse of the financial system is coming, then I doubt any investment will really pay off, even gold. The people who have gained truly gained wealth in this country did it believing in the power of our economy. I just want to try to sit out the correction this time around."

 

 

I Should have added that I sold a bulk of the metals when they were around 1800 and bought real estate.  When gold tanked to 1200 I bought more but enough just to have as security not  as an investment.     I do have other investments (IRA) that aren't tied to the Dow because I simply don't trust the market anymore.  I agree that people who have truly gained wealth did it by believeing in the economy, however I believe we are living in unprecedented times and pretty much like you until certain indicators change that will effect my decisions and will remain defensive.