US Stock Markets Continue To Reach Record Highs- Thanks Obama!

[Teddy B 17,252]

[Expat1 971]

Make it short and sweet as I believe most EMS will participate in the carnage.

Just another buying opportunity

I'll have it medium rare, dress the baked potato, and honey mustard on the salad.

OH and diet coke. Thanks

[GandD 5,966]

Diet coke

[Expat1 971]

Diet coke

Isn't it hilarious when the triple-cheeseburger at Whataburger gets ordered with a diet coke? LOL

[OriZ 3,157]

Just another buying opportunity

That it will be and a huge one at that..

Isn't it hilarious when the triple-cheeseburger at Whataburger gets ordered with a diet coke? LOL

lol yes...and especially when diet is not that good for you to start with

[Teddy B 17,252]

Why 100% of your investment portfolio should be in stocks

By Jeff Reeves

Published: Nov 11, 2015 5:01 a.m. ET

Ignore standard advice — stocks are your best bet

Getty Images

I recently wrote an article for USA Today about asset allocation strategies and the rather antiquated notion of a 60% stocks/40% bonds portfolio. For it, I interviewed several financial experts who advocated a heavy allocation in stocks — including as much as 100% of your portfolio — even if you're in your 40s.

Unsurprisingly, I heard from many readers who considered that advice irresponsible. Their logic is simple: If you’re 100% in stocks, it’s nice while the market goes up, but your savings will be cut in half or worse when the market inevitably crashes.

UBS’s Axel Weber on emerging-markets correction (1:38)

The correction in emerging markets should be ‘pretty orderly,’ says Axel Weber, Chairman of the Board of UBS Group, during an interview with WSJ EMEA editor Thorold Barker.

This seems logical on the surface, but anyone with a deeper understanding of the market should realize a 100% stock portfolio is not a strategy designed for a market with no risks — but rather a strategy designed specifically with many risks in mind.

Here’s why — and how — a 100% stock portfolio can work for you:

Buy-and-hold works: Of course a 100% stock portfolio can be a killer if you buy at the top and sell at the bottom, so don’t sell based on short-term trends. If you look at total returns for the S&P 500 SPX, +0.15% across the past 70 holding periods of 20 years, starting with 1926-45 and ending with 1993-2014, not a single 20-year period has posted a loss. Furthermore, a mere eight of those periods posted annual average returns of less than 2% across those years, while 18 posted annual gains of 10% or more. The worst 20-year stretch in modern market history was 1962-81, with just shy of 11% in total returns, while the best run was more than 1,200% from 1980-99. A promise of being kept whole with the possibility of upside like that makes a long-term bet in stocks a no-brainer.

Don’t forget to average in: Of course, all those statistics are pretty meaningless because nobody deposits one lump sum into the market. Most of us average in, through regular contributions to a 401(k) or with our annual IRA deposit around tax time, for example. Investing like this smooths out returns and reduces your risk long-term.

Stocks are diverse: It’s also important to point out that a portfolio that is 100% in stocks can (and should be) in a wide array of investments that vary in geography, sector, market capitalization and income potential. Just as you shouldn’t time the market, you shouldn’t put all of your money in just a small handful of stocks.

Bonds are unattractive: Speaking of income potential in stocks, a “new normal” in the bond market means little relief for income investors. The yield on the 10-year Treasury TMUBMUSD10Y, +0.00% has tumbled from a peak of more than 15% in 1981 to just over 2% currently, and the chart has been in almost constant decline for 35 years. So why not consider REITs or utility stocks with double the yield of investment-grade corporates or the 10-year T-note? Consider AT&T T, -0.15% which currently has bonds maturing in 2045 yielding 4.35%, while the stock yields 5.75% in dividends, with payouts growing each year. What would you rather hold for the next 30 years?

Longevity risk: It’s also important to note that while you should eventually think of dialing back your risk and protecting your nest egg, many Americans jump the gun on this and get too defensive too soon. People are living longer than ever, with the average life expectancy now up to 79 years, so that nest egg needs to last much longer than you might have thought. At the same time, you have much longer than you might have anticipated to wait out any short-term downtrend and see your portfolio bounce back. While the idea of losing a lot of your hard-earned savings when you’re just 10- or 15 years from retirement can be scary, equally disturbing is the prospect of running out of money in your golden years and living another 10- or 15 years on Social Security alone.

I will readily admit that eventually there comes a time when investors need to think about capital preservation and income. But for most people that time does not come until your 40s, or in some cases, your 50s.

That’s not just because of the reasons above, either. The sad reality is that Americans are so woefully unprepared for retirement that they need to be aggressive if they have any hope of retiring at all.

A 2014 Bankrate.com survey showed more than a third of American adults haven’t saved a penny for retirement — and when you break that down by age, more than a quarter of those aged 50 to 64 hadn’t even started to save yet

So before you pooh-pooh a 100% allocation in stocks as irresponsible, it’s worth acknowledging the reality of long-term returns for patient investors and the rather burdensome price tag of the typical retirement.

Taken in that context, the question isn’t whether you should risk being 100% allocated in stocks. The question is whether you should risk not being so heavily weighted in the market.

http://www.marketwatch.com/story/why-100-of-your-investment-portfolio-should-be-in-stocks-2015-11-11?dist=beforebell

[OriZ 3,157]

HAHA. When I read stuff like that I KNOW things are dire.

Once lil Jeff decides everybody should sell that's when I'll know the bottom is near.

[Teddy B 17,252]

HAHA. When I read stuff like that I KNOW things are dire.

Once lil Jeff decides everybody should sell that's when I'll know the bottom is near.

[Expat1 971]

HAHA. When I read stuff like that I KNOW things are dire.

Once lil Jeff decides everybody should sell that's when I'll know the bottom is near.

I know right? What an idiot

[Expat1 971]

Uhhhh now that this is our thread you have to pay cover to come in here. Pony up

[JohnR! 5,495]

Markets go up. Markets go down. Who wouda thunk?

[Teddy B 17,252]

Uhhhh now that this is our thread you have to pay cover to come in here. Pony up

All my cash is tied up in pork futures and meat commodities. How bout I give you a big ole sausage?

[OriZ 3,157]

Markets go up. Markets go down. Who wouda thunk?

Here's the thing though. Markets are way overvalued and overbought. Every period throughout history that had today's valuations led to anywhere from a 30% to 90% decline in the market. While I'm not expecting the latter, I do expect a similar outcome to that of 2000-2003 and 2007-2009. As in a roughly 50% decline from current levels(meaning, not AFTER going up another 100% from here, although while not probable, it is possible to see another 10% or so rise first).

If you don't care about that, and are a completely passive investor, that's fine. I have no objection to passive investment strategies, provided that they are pursued with discipline and a full understanding of the periodic risks they unavoidably include. My view is that even passive investors should still be careful to align the effective duration of their portfolio with the duration of their future spending plans. Accordingly, I believe that passive investors are being given a very large but possibly fleeting opportunity here to rebalance their duration. Even without any view about future market direction, investors with a 25-year future spending horizon should not have much more than half of their portfolios in equities here.

One might object that changing the allocation as valuations change is market timing and not passive investing. I strongly disagree. Aligning the duration of one’s investment portfolio to be consistent with the expected spending horizon is one of the most basic principles of sound financial planning. I certainly don’t have a problem with people adhering to a passive investment discipline if it fits well with their investment views and financial goals, but I do think that many passive investors overestimate their ability to maintain discipline in a downturn, and fail to align their portfolio with their investment horizon.

The bottom line is this. Think carefully about your own tolerance for risk, with a clear understanding that a 40-55% market loss from the recent high would be a historically run-of-the-mill reversion to quite ordinary valuation norms. Also think carefully about your investment horizon. If you need to spend the funds within a short number of years, you really shouldn’t have more than a modest fraction of those assets in equities here, unless you want the ability to follow through on your spending plans to be highly sensitive to market outcomes.

If your portfolio is well aligned with your risk-tolerance and investment horizon, given a realistic understanding of the extent of the market losses that have emerged over past market cycles, and may emerge over the completion of this cycle, then it's fine to do nothing. Otherwise, it's time to set things right. If you're taking more equity risk than you can actually tolerate if the market goes south, setting your portfolio right isn't a market call - it's just sound financial planning. It's only fun to be reckless if you also turn out to be lucky. Market conditions are now one of the most hostile in history. Can you tolerate a 40-55% market loss over the next 24 months or so? That's not the worst-case scenario under present conditions; it's actually the run-of-the-mill historical expectation.

Edited November 11, 2015 by OriZ

[X Factor 1,112]

Here is why I am bullish in the near term and looking to buy the dips.

November is biggest buyback for stocks since bonus depends on stock prices. Plus the CEOs get to rip off the companies. See http://www.ritholtz.com/blog/2015/10/buyback-burst-seen-as-salvation-from-goldmans-sp-500-decline/

The end of December and/or early January depending on market conditions I plan to short certain large cap stocks and sell puts against it for the fat premiums and to finance the short stock positions. Of course this is done with appropriate position sizing. Trade smart folks and know your risk parameters.

Edited November 12, 2015 by X Factor

[OriZ 3,157]

Here is why I am bullish in the near term and looking to buy the dips.

November is biggest buyback for stocks since bonus depends on stock prices. Plus the CEOs get to rip off the companies. See http://www.ritholtz.com/blog/2015/10/buyback-burst-seen-as-salvation-from-goldmans-sp-500-decline/

The end of December and/or early January depending on market conditions I plan to short certain large cap stocks and sell puts against it for the fat premiums and to finance the short stock positions. Of course this is done with appropriate position sizing. Trade smart folks and know your risk parameters.

I don't think there are too many serious traders here. Or people that even know what really drives the economy for that matter.

It's not what CNBC will try to tell you does...