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Thread: Black Monday

  1. #3441
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    just imagine the trillions coming back into the US if the tax around offshore cash is changed, imagine some will be used for buybacks - dow 30000 ?
    one step ahead of the herd

  2. #3442
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    Default Black Monday and the 1987 Black Swan

    Back in 1987.. NZ was rather economically sh1tty due to ongoing introduction of Monetary Policy / free market disruption and that 1987 Wall st crash made our already bear market even worse and it took years to fully recover no thanks to the self-afflicted double dip recession..but the USA markets were in a bull market cycle at that time and 1987 crash was over in a (slow!!) flash and the bull market regained itself and continued on.. and some lucky USA investors who had cash on the sidelines and courage of conviction got some real bargains...

    When I experienced it (as NZ investor at the time) and doing research on the DOW and S&P500 much later on as seen on the ST forum Investing in a secular bear market thread..strangely I never delved deep into the cause..just naturally thought it was a rare irrational panic correction across the board..but apparantely there was more market physics in play than I thought and in areas I didn't even know at the time existed

    I received an email article this morning from Jared Dillion (The 10th Man) about the crash of 1987 (5 minute read) He infers some saw it in advance so technically it wasn't a black swan event..but it draws on the fact that these things can happen and the problem begins when everyone in a crowded space starts to sell at the same time as he quotes “if some people do it, nothing bad happens, but if everyone does it, all hell breaks loose.”

    Hementions some crowded space areas and quote ".... I am not predicting a crash. I am saying that the conditions that could contribute to a crash are all present, and the likelihood has never been higher...."

    Another crash the size of 1987????......JAred did mention in his article "....The Dow falling 22.61% in one day was a “25-standard deviation event.” That is an occurrence so rare that if the stock market had been open every single day since the Big Bang… it still shouldn’t happen....."

    OK..no worries then...eh
    Last edited by Hoop; 04-08-2017 at 10:37 AM.

  3. #3443
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    Quote Originally Posted by Hoop View Post
    Back in 1987.. NZ was rather economically sh1tty due to ongoing introduction of Monetary Policy / free market disruption and that 1987 Wall st crash made our already bear market even worse and it took years to fully recover no thanks to the self-afflicted double dip recession..but the USA markets were in a bull market cycle at that time and 1987 crash was over in a (slow!!) flash and the bull market regained itself and continued on.. and some lucky USA investors who had cash on the sidelines and courage of conviction got some real bargains...

    When I experienced it (as NZ investor at the time) and doing research on the DOW and S&P500 much later on as seen on the ST forum Investing in a secular bear market thread..strangely I never delved deep into the cause..just naturally thought it was a rare irrational panic correction across the board..but apparantely there was more market physics in play than I thought and in areas I didn't even know at the time existed

    I received an email article this morning from Jared Dillion (The 10th Man) about the crash of 1987 (5 minute read) He infers some saw it in advance so technically it wasn't a black swan event..but it draws on the fact that these things can happen and the problem begins when everyone in a crowded space starts to sell at the same time as he quotes “if some people do it, nothing bad happens, but if everyone does it, all hell breaks loose.”

    Hementions some crowded space areas and quote ".... I am not predicting a crash. I am saying that the conditions that could contribute to a crash are all present, and the likelihood has never been higher...."

    Another crash the size of 1987????......JAred did mention in his article "....The Dow falling 22.61% in one day was a “25-standard deviation event.” That is an occurrence so rare that if the stock market had been open every single day since the Big Bang… it still shouldn’t happen....."

    OK..no worries then...eh
    But it is different this time -

    It is the most hated bull market in history , because no one believed it and many still dont

    also funds have huge cash positions relative to normal , cause they dont believe it

    record low interest rates different to normal

    record liquidity

    cash offers no viable returns

    steady growth and increasing earnings

    etc etc

    still 2 yrs to go i think to be the greatest bull market in history
    one step ahead of the herd

  4. #3444
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    Quote Originally Posted by Hoop View Post
    ...
    He mentions some crowded space areas and quote ".... I am not predicting a crash. I am saying that the conditions that could contribute to a crash are all present, and the likelihood has never been higher...."

    ...
    Sure - the conditions that would contribute to a crash are always present ... and the higher you get the more likely it is. Not quite sure how he measures that "the likelihood never has been higher". A number of parameters typically used for this purpose are high, but not uniquely high (like average PE) and others are currently even quite low (e.g. VIX). I recon Mauldin have as well problems to fill their publication during the eventless summer break. Maybe we should write more about Nessie ...

    Quote Originally Posted by Hoop View Post
    ...
    Another crash the size of 1987????......JAred did mention in his article "....The Dow falling 22.61% in one day was a “25-standard deviation event.” That is an occurrence so rare that if the stock market had been open every single day since the Big Bang… it still shouldn’t happen....."

    OK..no worries then...eh
    Whoever wrote that sentence is just demonstrating his or her lack of statistical knowledge and understanding of random events. While a 25 standard deviation event might be rare, this does not mean (as we see) that it should not happen.

    As well - an event happening once before has no impact at all on its probability of happening again. Google "gambler's fallacy" to check.

    So - what do they really want to say? It won't happen again due to the 1987 event or it will happen again due to the 1987 event? Either conclusion would be wrong.
    ----
    "Prediction is very difficult, especially about the future" (Niels Bohr)

  5. #3445
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    Quote Originally Posted by bull.... View Post
    But it is different this time -

    It is the most hated bull market in history , because no one believed it and many still dont

    also funds have huge cash positions relative to normal , cause they dont believe it

    record low interest rates different to normal

    record liquidity

    cash offers no viable returns

    steady growth and increasing earnings

    etc etc

    still 2 yrs to go i think to be the greatest bull market in history
    .

    "..still 2 yrs to go i think to be the greatest bull market in history..." yep and who wouldve thought this bull market could come this close to happening as Wall St is in its 17th year of its Secular Bear Market Cycle and the PE(10) should be around 12 and declining not 30 and increasing...(remember:.. PE(10) of 25+ has always been historically a market crash area)

    PE(10) trend indicates long term (generational) (secular) investor perceptions to the value of a stock investment...The (PE(10) values referred to here is reference to the DOW/S&P500 indexes.

    Shorter term (cyclical) I think worry is a good tonic for the Bull (probably why this bull has lived so long)..The "wall of worry" normally occurs during the middle stages of a Bull market cycle and it is this investor sentiment which creates caution to keep some cash on the sidelines (surplus "available" money).....The market operates on "available" money (buy/sell).

    However...


    The Market is just that "A MARKETPLACE" which is ruled by a certain species of herd animal with all the survival animal instincts hard coded into their DNA...that species is called Homo sapiens...Using FA logic to govern a market ruled by animals is futile.............Sentiment rules which often turns FA on its head
    Last edited by Hoop; 04-08-2017 at 11:55 AM.

  6. #3446
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    phase 2? of the bull market

    http://www.safehaven.com/article/412...-a-bull-market

    Phase II may be called the Mark-Up Phase. It occurs as the improved tone of business and rising price action begin to attract public and institutional attention. This second phase is the longest phase and most deceptive of the three phases.

    If we in phase 2 30000 dow not unrealistic , actually if you look at a very long term us dollar chart we may have hit the cyclical top around 103 and would suggest all downhill now so bull market will get tail wind of weak dollar earnings amped going forward
    Last edited by bull....; 04-08-2017 at 12:56 PM.
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    Quote Originally Posted by bull.... View Post
    phase 2? of the bull market

    http://www.safehaven.com/article/412...-a-bull-market

    Phase II may be called the Mark-Up Phase. It occurs as the improved tone of business and rising price action begin to attract public and institutional attention. This second phase is the longest phase and most deceptive of the three phases.

    If we in phase 2 30000 dow not unrealistic , actually if you look at a very long term us dollar chart we may have hit the cyclical top around 103 and would suggest all downhill now so bull market will get tail wind of weak dollar earnings amped going forward
    Quite possible ... I certainly don't see yet a "market mania" (which would be phase 3).
    ----
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    Quote Originally Posted by mondograss View Post
    Clinton did tax cuts, as did Bush which Obama carried on. But yes they do need fairly wholesale tax reform.
    Thanks mondo. Does no-one think this is a major issue , the promised tax cut carrot which going by what trump can't achieve so far is probably not achievable any time soon? I like to look at tangible things that will cause a correction, who know s when.Once USA realises this is not going to happen will that be a trigger. point.

  9. #3449
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    Quote Originally Posted by Joshuatree View Post
    Thanks mondo. Does no-one think this is a major issue , the promised tax cut carrot which going by what trump can't achieve so far is probably not achievable any time soon? I like to look at tangible things that will cause a correction, who know s when.Once USA realises this is not going to happen will that be a trigger. point.
    doesnt matter , the market didnt even fall when healthcare failed so i think nothing getting done is factored in now.
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  10. #3450
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    Default Nothing better to do on a Friday night RANT

    You are seeing market mania now..you don't realise it because of all the negative media....

    but the figures don't lie...S&P500 earnings (inflation adjusted) at same level as 2007 (expected to rise 2017-18)..very high PE Ratio being labeled as not over-valued by the majority investment groups with very low interest rates citing the "new normal" as the excuse..This looks to me like exhuberance in a complacient way..Have a look at the $VIX chart change $INDU to$VIX (a value <20 is calm) This indicator has been mislabeled by the media as a fear index, in reality the $VIX index is a measure of S&P500 options volatility..The VIX is at record lows showing extreme calm in the market.. however the VIX has been calm for years now apart from an occasional blip upwards and the investors have accustom themselves to this calm as being a long term normal event which history tells us this is not the case... Investors are deluding themselves into thinking stocks are priced about right while in fact the market is fundamentally overvalued with some measures in bubble territory..e.g Shiller PE Ratio

    Late stage Bull market sees a drop in "available" money as investors are fully emersed into the market and their debt funding is maxed out..This scenario shows up decreasing volume with rising prices..(lack of sellers- investor sentiment is bullish) see 5 year S&P500 chart change $INDU to $SPX, investor happiness at a high level and the majority now promising this bull market will continue for a long time yet (a minority promises this in Stage 1 50%/50% in stage 2) and low VIX values with lower value spikes (fear) reinforcing this investor contentness.. while the media dramatizes and hypes up the most trival non-effectual things into a pseudo-major event..eg worry this worry that..

    Good God!!!!!..even the weather forecasters are at it now..all in the name of gaining public attention and increasing market share of the public's attention.....

    Another way to show bubbles is the investor mania to borrow and beg to obtain more (available) money to buy stock at any cost through the stockmarket....While we all might be openingly grizzling about the market to the media..the truth is these grizzlers are borrowing big time and plonking it on the market...being able to borrow at lower interest rates and the US companies in recent years changing course and raising their dividend yield rates fuels this type of behaviour..Have a look at the NYSE margin Debt.....raw data here..inflation adjusted values here in historic chart form.... notice how the margin debt has doubled in the last 4 years and has increased that trend this year...Also notice on the charts the point when margins top out 2000 2007 and the last 3 years (yet to top out) all during boom times..as I said in my previous post the economy trend is a lagging indicator..History shows nearly all recessions occur after the stockmarket reverses into a Bear Market Cycle..Most investors include nearly all on ST forum (Winner69 excluded) think it is the other way around (false logic)/(layman's paradox).....This false logic is the major factor causing investor denial and all sorts of Cognitive Dissonances when the market reverses to bear and is the reason why 80% of the investors fail to exit the market and get mauled by the bear..(margin investors more severely due to margin calls)...Please read this ST thread there is 26 pages of valuable info to understanding how the sharemarket works..This thread could save you big time when the next Bear market arriveshttp://www.sharetrader.co.nz/showthread.php?5171-Investing-strategies-and-secular-bear-markets Note the start date of the thread, the end of the last bull market cycle

    I have a list which I have posted recently on ST (page 124 post #1853) the conditions which signal the top of a Bull Market Cycle..I continuously add to it as more conditions and correlated indicators are published by various well regarded experts in their fields...High margin debt is one on my list..another is high A&M (acquistions & mergers) which currently has been dropping in numbers...I have personally labeled each condition as a "duck"..we have high MD but A&M is average so not all ducks have lined up in a row yet suggesting this current Cyclic Bull Market cycle still has legs but it is definitely not Stage 2..it is in stage 3 and has been for 3 years now (rare length of time)..
    Last edited by Hoop; 04-08-2017 at 09:39 PM.

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