Is investing in this market a wise choice??

Discussion in 'Stock Market Forum' started by norms options, Aug 8, 2015.

  1. norms options

    norms options Well-Known Member

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    I just wanted to get some opinions on this topic because they seem to be so varied among investors in the current market. The issue of being in the seventh year of a bull market is the primary concern involved. So, I am curious to hear your thoughts on whether it is wise to invest now or if it is better to wait for a pullback. There is a school of thought that says if you are an income investor, then do not worry about price or valuations, just concentrate on the income it provides currently and the growth potential of that income in the future.

    I am looking forward to your thoughts.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I am pretty "bottom-up" in general... basically neither too bullish nor bearish overall, more "agnostic" - the market will do what the market will do - I just look to go long in companies (and industries, to a lesser extent) where there appears to be value and growth potential, and to a lesser extent carefully bet against companies (and industries, to a lesser extent) that appear overvalued, in a decline fundamentally, or broken.

    The markets in general have somewhat of an upward bias to them in the mid to long term.

    The fact that the market has had a great run up over the past 6 plus years, and that valuations are pretty robust does make me a little more cautious than I would be if the market was just turning around from a big, long bear market like we saw from late '07 to early '09 and where everything was dirt cheap.

    I am always long some companies; always a little short at least a few companies; always have some put options protecting more volatile longs and as bets against other volatile companies where I have no long positions; always have some cash; always have a few bucks in at least a couple of commodities ETFs; and usually have a few bucks in a short index ETF such as http://www.morningstar.com/etfs/ARCX/SH/quote.html as a hedge.

    With overall valuations where they are these days, I do have a little more in puts, shorts, cash, etc, and a little less in long stock positions than I have had in the past. But I'm never anywhere near 100% cash, 100% short, 100% in commodities, or even 100% or more in long stock positions. I'm always at least somewhat "hedged"... Ray Dalio speaks of the "all weather" portfolio.

    I never pay attention to those who are always trying to time the market, or who sit in 100% cash or gold for years on end because they're overcome with fear or pessimism. At the same time, I don't pay any attention to those who are perma-bulls, who believe that the market will go up and up indefinitely because they say so and think they know everything and can predict the future.

    Nobody knows whether the Dow will be at 17-18k in a year or 2, or at 22k, or 10k, or anywhere higher or lower or in-between. It's foolish to assume or try to guess. I just mainly try to find good investments I believe I can make money in long (and short, to a lesser extent); dollar cost average with new money each week; and try to keep fear, greed, and ego in check as the markets do whatever they will do.

    Most of my time and money is geared towards mid to long term.
     
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  3. ScooterBrandon

    ScooterBrandon Senior Investor

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    Even the smartest people on the planet cannot time the market.
    We could be on the cusp of a pullback, of we could be in the middle of a bull market with lots of room for growth.
    There is value to be found in every market.
     
  4. Andy

    Andy Member

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    Nobody has a crystal ball and history doesn't necessarily repeat, but what can we find in history to provide context for this bull market?

    Relying on my memory, I believe you'll find...
    Only two secular (10+ years) bull markets in at least the last two hundred years. Otherwise the max is about eight years.
    An average bull market run of about 4.5 years.

    What is currently a little harder to harder to find...
    Broad participation in the bull market run up to this point. To me this implies quite a bit of leverage has driven prices higher. So when prices do reverse, they have the potential to do so pretty quickly.

    Based on that, am I going to stay out of the markets or take only shorts? No, that would be ignoring the CURRENT trend. However, I'm not going to have all my eggs in one basket and I'm going to try to stay fairly liquid.
     
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  5. crimsonghost747

    crimsonghost747 Senior Investor

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    I'm looking at things from the long term perspective. And while a lot of the shares are pretty expensive nowadays I still think there are some companies out there that are decently priced. I'm always on the buy side of things though the amount of money going into the market depends on many things. Currently I'm investing a little less than I could... simply because there aren't too many bargains around.
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I know some people who have been out of the market completely and totally in 100% cash for years - some as much as 6-7 years. It's foolish to do this. No harm in taking SOME profits, of course. But to convince oneself to be totally out of any investments, or even to be 100% short, or 100% in gold or whatever for any length of time is foolish. Better to have a pretty balanced portfolio and a longer term big picture view.

    One old guy told me some 5 years ago that he was "waitin' for the bottom". He was about a year too late. :D
     
  7. petesede

    petesede Guest

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    There are always opportunities, the entire market has not been bullish for 7 years, just the majority. There are always bargains. I don´t think I would invest in an index fund at the moment, but there are certainly sectors that are undervalued right now... and with the crazy oil prices going on right now, that creates opportunities

    I have friends similar to JR who thought Obama was going to kill the stock market, so they went mostly cash, or very conservative when he was elected, and every time you mention what they have been missing, they come up with some other reasons to be bearish. I am very bullish on the US market mainly because despite our issues, we are still way ahead of anyone else as far as stability and safety.
     
  8. PipCurrencies

    PipCurrencies Well-Known Member

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    Bullish & bearish are terms that concern timing the market for in & out trades. I just find a good solid company and invest for the long hall - but I am also not currently looking to pay my everyday bills with my stock market trades.
     
  9. MoneyFiend

    MoneyFiend Member

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    I always look for long term returns and one of the risks of long term investments is the bumpy ride along the way. I think there will always be ways to make profits from the market whether the market is on a rise or fall. Predicting the market is theoretically impossible but we do what we can to ensure the risk stays low. Lets not forget that even if the market crashes, there is still plenty of money to be made.
     
  10. petesede

    petesede Guest

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    Yep, and one of the biggest lessons new investors need to learn is to not panic during the bumpy road. Using emotions when you invest is a big mistake. Pick your companies, know the reasons you like that company, and if nothing about that changes, there is no reason to sell during a dip.
     

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