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2018/2019 Bear Market
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The Beast1 Offline
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Post: #26
RE: 2018/2019 Bear Market
Ive seen this and I shook my head.

The fed always acts independently of the executive and legislative branches. Thats by design.

My gut feeling is telling me a rise in interest rates is causing funny money to flee to actual productive assets outside of FIRE and sillycon valley. We will probably be trading sideways for a bit before it moves back up.

We havent seem normal rates since 2008. It will be crazy to start seeing interest ratebpaents on savings accounts again.

Shalom Alechem!
12-21-2018 01:45 PM
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Post: #27
RE: 2018/2019 Bear Market
(12-21-2018 01:45 PM)The Beast1 Wrote:  Ive seen this and I shook my head.

The fed always acts independently of the executive and legislative branches. Thats by design.

My gut feeling is telling me a rise in interest rates is causing funny money to flee to actual productive assets outside of FIRE and sillycon valley. We will probably be trading sideways for a bit before it moves back up.

We havent seem normal rates since 2008. It will be crazy to start seeing interest ratebpaents on savings accounts again.

Don`t get me wrong, I`m actually in favour of rate hikes. But I question the motivation behind it! If they just raise rates to get rid of Trump and then lower them when they get their Socialist President in, then it won`t help the US economy of course. Although, there are ways of playing that scenario for the red pilled investor.

We will stomp to the top with the wind in our teeth.

George L. Mallory
(This post was last modified: 12-21-2018 01:51 PM by Johnnyvee.)
12-21-2018 01:51 PM
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Rotten Offline
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Post: #28
RE: 2018/2019 Bear Market
No kidding.

Sharp Rate hikes the year right before election year (to tank the economy and dictate the campaign year rhetoric) is the most predictable event ever.

Surely rate hikes have been needed in the past (Greenspan and Bernanke thought that the answer to any economic data was to lower interest rates). But these current year rate hikes are not made with the health of the American economy in mind.
12-21-2018 02:21 PM
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Post: #29
RE: 2018/2019 Bear Market
To Cut through all the Gloom and Doom Sky is Falling and World is Over Peter Schiff Crash Mania a few inconvenient and informative Positive facts:

My lead Stealth Trading Advisor for my DLT Trading Project (Extremely Wealthy and Successful Active Director of Global Trading for a worldwide institution). Trades Broad Indices and Commodities WorldWide:

S&P Chart we created 6 months or so ago (Updated Today) about the S&P 40 Year SuperCycle - The Market is doing What it is Supposed to Do - Notice Green SuperCycle wave 5 Transition up and Targets - just in time for Trump's Reelection!

Note how the Powerful 200 Weekly Moving Average is about to run right through the Major SubWave 3 target (Purple) A Strong Confirmation that MW3 will Bounce and Retest MW4 then Running down to Complete Major SubWave 5 and SuperCycle Wave 4...
Most recent 3 Weeks Classic Example of an impulsive 3rd Wave Down - best three weeks of the year with 50 to 100 point swings per day all predictable Intraday and Major Wave Turns - Puts/Shorts in the S&P SPY, SPXW Options and ESH2019 (ES1! continual S&P Futures chart) are accelerating and throwing off tremendous Short Term Profits - I have cashed in average 30% to 80% gains in the past 5 days. See SPXW Matrix following the 40 Year S&P SuperCycle and Major Wave Sub-Cycles Chart:

https://www.tradingview.com/chart/SPX/Ro...5-Targets/

Hint Next SuperCycle Wave 1= .618 of 5 Target is 2950/3000 a triple top and likely to be shorted as low as 1500 before it runs up to Wave 1 = 1.618 of 5 at 3400/3500 - So Volatility over the next several years = maximum trading profitability - Current Daily ATR is 50 points a day and 90 points a Week Average True [Trading] Range.

How do you think Pension Funds are able to survive with 8% PayOut demands in a ZIRP/NIRP Environment - Institutional Returns - See % Gains since Dec 10th:

SPXW PUT Options

Symbol LastPrice$ Change$ Change% Qty PriceWhenAdded DateAdded TotalGain$ TotalGain% Value$
SPXW Mar 29 19 $3000 Put 455.50 0.00 0.00% 1 218.03 12/10/2018 31,597.00 144.92% 45,550.00
SPXW Mar 15 19 $2900 Put 326.50 0.00 0.00% 1 149.70 12/10/2018 28,630.00 191.25% 32,650.00
SPXW Mar 29 19 $2800 Put 316.38 0.00 0.00% 1 219.50 12/10/2018 12,460.00 56.77% 31,638.00
SPXW Mar 29 19 $2700 Put 233.85 -10.80 -4.41% 1 148.10 12/10/2018 10,950.00 73.94% 23,385.00
SPXW Mar 15 19 $2600 Put 168.10 -6.90 -3.94% 1 112.80 12/10/2018 6,770.00 60.02% 16,810.00
SPXW Mar 15 19 $2500 Put 129.26 -6.39 -4.71% 1 44.80 12/10/2018 7,950.00 177.46% 12,926.00
SPXW Mar 29 19 $2400 Put 94.15 3.55 3.92% 1 56.00 12/10/2018 3,460.00 61.79% 9,415.00
SPXW Mar 29 19 $2300 Put 59.80 3.10 5.47% 1 39.41 12/10/2018 2,039.00 51.74% 5,980.00
SPXW Mar 15 19 $2200 Put 34.43 3.23 10.35% 1 19.10 12/10/2018 1,533.00 80.26% 3,443.00
SPXW Mar 29 19 $2100 Put 28.38 2.38 9.15% 1 17.60 12/10/2018 950.00 53.98% 2,838.00
SPXW Mar 29 19 $2000 Put 18.00 0.00 0.00% 1 8.37 12/10/2018 953.00 113.86% 1,800.00

SPY PUT Options

Symbol Last Price $ Change $ Change % Qty  Price WhenAdded Date Added Total Gain $ Total Gain % Value $
SPY Mar 29 19 $270 Put 27.90 1.55 5.88% 1 6.54 08/26/2018 2,136.00 326.61% 2,790.00
SPY Mar 29 19 $265 Put 23.94 1.40 6.21% 1 13.80 12/10/2018 1,014.00 73.48% 2,394.00
SPY Mar 29 19 $260 Put 20.04 1.86 10.23% 1 9.55 12/11/2018 1,052.00 110.16% 2,004.00
SPY Mar 29 19 $250 Put 14.41 0.67 4.88% 1 6.50 12/11/2018 787.00 121.08% 1,441.00
SPY Mar 29 19 $240 Put 9.80 1.14 13.16% 1 4.38 12/11/2018 542.00 123.74% 980.00
SPY Mar 29 19 $230 Put 6.62 0.18 2.80% 1 3.33 12/14/2018 331.00 99.40% 662.00
SPY Mar 29 19 $220 Put 4.41 0.14 3.28% 1 2.20 12/14/2018 225.00 102.27% 441.00
SPY Jun 28 19 $200 Put 3.92 0.43 12.32% 1 1.72 08/26/2018 220.00 127.91% 392.00
SPY Mar 29 19 $210 Put 2.93 0.36 14.01% 1 1.57 12/17/2018 138.00 87.90% 293.00
SPY Mar 29 19 $200 Put 2.00 0.35 21.21% 1 0.94 12/14/2018 106.00 112.77% 200.00

####################

This is a newsletter I subscribe to behind an expensive premium PayWall:

2019 Will be the Year of the Stock Snapback. Here are Three HUGE Reasons to Stay in the Game

‘Tis the season to be jolly.

But man, if you’re a trader… it’s been tough.

We’ve seen much more pain than gain lately.

After notching a new high, the Dow Jones Industrial Average has dropped 11% in the last two months.

The S&P 500 has dropped 12% — it’s second 10%-plus drop of the year.

And the Nasdaq 100 is down an eye-popping 16% from it’s all-time high.

Yikes!

The struggle is real.

But 2018 hasn’t been totally terrible.

Each of the market’s corrections followed rip-roaring rallies.

And here at Dollar Trade Club, we took advantage of the drops to buy stocks on the cheap… and sell into strength.

We booked a 286% gain on Crocs, Inc. (CROX), a 155% winner on Blackstone Group LP (BX), and a 115% profit on our Under Armour, Inc. (UA) position.

I’m not crazy enough to pick a bottom, but I see much more upside than downside for stocks in 2019.

Now… before you tar and feather me as a permabull that’s devoid of logic…

Here are three HUGE reasons to stay in the game next year…

Rally Reason #1 – Stocks are CHEAP
If I had a dime for every time someone has said stocks are overvalued this year, I’d be loaded!

But earnings growth over the last two years has more than justified higher stock multiples.

Analysts have cut earnings forecasts in 2019 over trade concerns and waning tax stimulus. But the S&P still trades at just 14.7 times forward earnings after last week’s rout.

Talk about cheap…

That’s below the index’s five-year average, and right around its 10-year average.

Better still, some big brand-name stocks are trading at incredible discounts…

Netflix Inc. (NFLX), one of the market’s most consistent growth stocks, is trading at 95.6 times trailing earnings. Of course, that’s well above the S&P… but the stock has delivered double-digit earnings growth in each of the last ten years.

This stock commands a premium valuation.

But…

After the market’s recent rout, the stock trades at its lowest PE multiple since 2015. And the ratio is down 77% from its peak in 2016 at 416.

Twitter Inc. (TWTR) — a company that just became profitable in 2018 — trades at 26.6 trailing twelve-month earnings. And its PE has fallen 75% from its high on the year (46.8).

The tech company Wall Street loves to hate, Apple Inc. (APPL), is trading at its lowest PE valuation (13.9) since early 2017. That’s even after analysts slashed earnings estimates on fears of slowing iPhone sales.

I know it’s hard to even think about buying stocks after the sea of red in November, but volatility equals opportunity.

The sharp selloffs are giving you the chance to buy stocks at multi-year discounts — putting risk to reward squarely in YOUR favor.

But don’t expect the sale on stocks to last long.

Analysts are forecasting S&P 500 earnings growth of anywhere from 10% to 20%.

To be sure, it’s a slowdown from 2018.

But double-digit earnings growth almost ten years into an economic expansion is still pretty damn good.

So take advantage of the sale in stocks while you can.

Reason #2 – The US Economy Is STRONG
You know…

Some of my analyst colleagues on TV are losing their minds talking up a truly crazy idea…

That is, we’re headed for a recession in 2019.

Give me a break!

Yes, growth is likely to slow moving forward. But it’s not going to fall off a cliff.

This year, we could easily see 4% real gross domestic product (GDP) annual growth. Sure, a big old tax cut helped.

But next year, Federal Reserve economists are forecasting 2.5% GDP growth next year. That’s a lower clip than 2018, but it’s still well above the ten-year average (1.6%).

Unemployment is sitting at less than 4% — and it could even go lower in 2019.

And inflation has NOT exploded like many market bears said it would.

So expect the Fed to significantly slow down the pace of its interest rate hikes.

According to CME’s FedWatch, fed fund futures are pricing just a single interest rate rise in 2019.

Put simply, expect the slowdown in rate hikes to fuel a rally in stocks.

Reason #3 – There are (Still) No Better Alternatives
As I write, the S&P 500 is down 2.7% on the year.

But factoring in already-reduced earnings expectations, Wall Street expects the S&P 500 to rise 17% in 2019, according to FactSet.

And I think the broad market barometer can soar even higher than that. (More on that later this week.)

When you look at the alternatives, you’ll quickly see why stocks are still the place to be…

The US ten-year treasury — the market’s most popular risk-free instrument — is currently yielding a mere 2.9%. On a total return basis, the note’s investors have enjoyed a negative 1.6% for their troubles.

You can hide your money in treasuries, but you won’t be retiring early on those returns.

What about cash, you might ask?

Pitiful!

The three-month LIBOR (a measure of short-term bank interest rates) has risen 77% over the last year, it’s still just a pathetic 2.8%.

Cash has outperformed during the market’s recent fall, and may continue to do so for a bit.

But with another year of big growth expected in corporate America next year… that outperformance is not bound to last.

In addition, the flight of capital back into stocks in 2019 could be a life-changing event for the brave investors that buy the dip here.

Here’s the bottom line…

If you’re looking for maximum return on your hard-earned capital, stocks are where you want to be in 2019.

And right now, you’re staring at one of the best buying opportunities you’ll get over the next twelve months.

Seize your moment.

Merry Christmas and Ring in the KaChing for a Happy and Prosperous New Year!

NOTE: These discussions and any associated thread posts are not intended as investment advice in any way shape or form and is mentioned for informational purposes only now that we are entering a Major 40 Year S&P Supercycle Wave 3 to 4 Top Turning Reversal. Seek competent professional advice to determine your risk tolerance before trading Options or Futures contracts. Never invest more than you can afford to lose.

Deepdiver - Nuke Boats Forever!
"You do not have to be a perfect person to be a perfect PATRIOT!"

Official Whitehouse.gov President Trump's achievements: https://www.whitehouse.gov/trump-adminis...lishments/

Communist Freaking Red China's Plan to Undermine the USA and the West:
https://www.whitehouse.gov/wp-content/up...18-PDF.pdf

The Naked Communists 45 Goals for the USA:
https://www.beliefnet.com/columnists/wat...-1963.html
(This post was last modified: 12-21-2018 03:14 PM by Deepdiver.)
12-21-2018 02:48 PM
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Laner
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Post: #30
RE: 2018/2019 Bear Market
You might want to read the recent article at GMO.com by James Montier. Lots of good charts. Long expansion since 2009 but also weakest GDP growth of any post WWII expansion. Real corporate earnings growth (not forecasts and not per share) extremely weak since 2009. All the per share earning growth due to massive swap of debt for equity, leveraging up with buybacks. Leverage is great on the way up, awful on the way down. Non-financial corporate debt as % of GDP has never been higher. 30% of Russell 3000 stocks show negative earnings (losses). 83% of IPO's this year had negative earnings. Price/sales ratio never been higher. All the above applies to the US stock market.

It's definitely a disaster in the making, though no telling when the bubble will pop. As noted, leverage hurts on the way down, so when the bubble does pop, it will be a long and steep decline, probably going well below fair value at some point. That said, next to impossible to time the market, so I just let my holdings ride. However, I assume that my current net worth listed at my brokerage is inflated versus my real net worth.

If you want good deals, go looking at Turkey, Russia and other beat down emerging markets.
12-21-2018 03:19 PM
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Deepdiver Offline
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Post: #31
RE: 2018/2019 Bear Market
FYI Example SPY Calls at 3:21PM EDT 21/Dec/2018
Symbol LastPrice$ Change$ Change% Qty  PriceWhenAdded DateAdded TotalGain$ TotalGain% Value $

SPY Mar 29 19 $260 Call 4.30 -0.83 -16.18% 1 5.70 12/20/2018 -188.00 -32.98% 430.00
SPY Mar 29 19 $270 Call 1.57 -1.03 -39.62% 1 2.72 12/20/2018 -115.00 -42.28% 157.00
SPY Jan 18 19 $290 Call 0.03 0.01 50.00% 1 3.35 05/08/2018 -332.00 -99.10% 3.00
SPY Jan 18 19 $300 Call 0.01 -0.01 -50.00% 1 1.35 05/08/2018 -134.00 -99.26% 1.00

I will be buying some 260 and 270 Calls for the Run back up to MW4 at 2600

Deepdiver - Nuke Boats Forever!
"You do not have to be a perfect person to be a perfect PATRIOT!"

Official Whitehouse.gov President Trump's achievements: https://www.whitehouse.gov/trump-adminis...lishments/

Communist Freaking Red China's Plan to Undermine the USA and the West:
https://www.whitehouse.gov/wp-content/up...18-PDF.pdf

The Naked Communists 45 Goals for the USA:
https://www.beliefnet.com/columnists/wat...-1963.html
12-21-2018 03:24 PM
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Arado Online
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Post: #32
RE: 2018/2019 Bear Market
Everyone is saying not to time the market.

This is what the market is up against:

1) The Fed is tightening via QT-balance sheet reductions
2) Fed Interest rate rises remain on the table,
3) No dramatic technological advances on the horizon
4) ECB also said they will end QE/bond purchases
5) 10 years since the end of the last bear market so we are at or near the end of the business cycle
6) Corporate leverage and debt way too high, record 250+$ Trillion worldwide debt, including 1.5 trillion student debt in the US
7) Housing and auto sales slowing,
8) Household wealth/GDP ratio out of line
9) Trade war and Europe remain unresolved.
10) Skyrocketing fiscal deficit eating up any excess liquidity
11) International economic slowdown and bear market started earlier this year

Given the above factors I don't see how a dramatic upside reversal is possible, though there will be plenty of mini bear market rallies.

What rationale is there to stay invested in the market when you can get a guaranteed 2% on treasuries, and then buy next year on cheaper valuations?
(This post was last modified: 12-21-2018 03:33 PM by Arado.)
12-21-2018 03:31 PM
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Post: #33
RE: 2018/2019 Bear Market
(12-21-2018 03:31 PM)Arado Wrote:  1) The Fed is tightening via QT-balance sheet reductions
2) Fed Interest rate rises remain on the table,

They may still change their stance given the 6% correction since their announcement. The fed obviously shifts its tone quite often, and although Powell has stated that he will not use the fed as a vehicle to bail out the stock market, if the correction continues to be this violent he will have to reconsider.

(12-21-2018 03:31 PM)Arado Wrote:  5) 10 years since the end of the last bear market so we are at or near the end of the business cycle

True. But why can't there just be a slow period of ~2-3% returns until the P/E ratios catch up to historical levels, and then the market rallies again?

(12-21-2018 03:31 PM)Arado Wrote:  6) Corporate leverage and debt way too high, record 250+$ Trillion worldwide debt, including 1.5 trillion student debt in the US

I agree with this being a ticking time bomb. But student debt and sovereign debt have been high as hell for many years. What makes you think that NOW is when the bubble pops? You could've made this exact same statement in 2013, and missed out on 50% returns.

(12-21-2018 03:31 PM)Arado Wrote:  10) Skyrocketing fiscal deficit eating up any excess liquidity
11) International economic slowdown and bear market started earlier this year

Same as above. We were running a huge fiscal deficit with Obama, and the stock market roared. And in 2016 the world economy also slowed. No major effect on the markets.

I actually agree with many of the things you pointed out, but no one thing has a direct correlation to market movement.

The truth is, nobody knows what is going to happen to the markets. However, the one thing I have learned is that it is good to be cautious when everybody seems to be on one side of the boat. The past week, there has been as much pessimism as I have heard in many years ("the market is crashing, run for cover!"). This suggests to me that it is a decent time to buy, if only for a relief rally.
12-22-2018 03:15 AM
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Days of Broken Arrows Offline
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Post: #34
RE: 2018/2019 Bear Market
One of the best-ever books on the stock market is Burton G. Malkiel's "A Random Walk Down Wall Street," which has been re-printed in eleven editions since it first came out in 1973.

In one chapter, he makes the point that the market always heads into a tailspin when interest rates are raised. He even links the big market crash of 1929 to this.

So the recent downturn isn't unexpected. And while it might hurt in the short term, it's likely a buying opportunity for the long-term. Because when you step back and look at a market chart for the past century, what you see is a rising market with the crashes look like blips.

The hard part will be finding where the bottom is and buying in then. We had a mini-pullback in Jan.-Feb. 2016, and I missed major buying opportunities. I'm gonna try to do better this time.
12-22-2018 04:58 AM
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The Father
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Post: #35
RE: 2018/2019 Bear Market
With the majority of the economic indicators still strong and the economy still growing well, this seems to be an overreaction. We certainly will get a recession in the next 5 years though. I wlll be holding through this, timing the market is a dangerous path. My tech stock holdings have taken a beating though.
12-22-2018 06:45 AM
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MongolianAbroad Offline
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Post: #36
RE: 2018/2019 Bear Market
(12-20-2018 03:23 PM)SamuelBRoberts Wrote:  The stock market hasn't been this low since... (looks at tradingview)
October 2017!

God, I remember that terrible, terrible month of October 2017. Breadlines, 30% unemployment, riots in the streets... I had to sell a kidney just to make rent.
I can only hope that this time around, it won't be the nightmare that it was last time.

^^ This.

Also, valuations haven't been attractive for a while, you could say the market's been "too high" for a while now.
(This post was last modified: 12-22-2018 08:14 AM by MongolianAbroad.)
12-22-2018 08:12 AM
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Post: #37
RE: 2018/2019 Bear Market
How long can an upcycle continue? FED is raising interest rates, so cheap american billions aren't available for economic growth.
Some global players are canceling christmas parties and force employees to use up their overtime account balance to improve cashflow.
Interest rates for companies are bad for business investments.
Don't see the party continuing.

The media is already writing about a down turn. Buy the rumor, sell the news. The movement has already started. If the European central bank raises the interest rates, everything is decided.
What they will do quite soon, is stop buying government bonds.
https://de.statista.com/statistik/daten/...hschnitte/

Brought to you by Carl's Jr.
(This post was last modified: 12-22-2018 09:11 AM by void.)
12-22-2018 09:02 AM
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Post: #38
RE: 2018/2019 Bear Market
Global debt hits all-time high of $184,000,000,000,000

https://www.rt.com/business/446526-globa...jOxD9f_gHM

"The world’s debt currently exceeds $86,000 per person on average, according to the International Monetary Fund (IMF). The US, China, and Japan are the top three global borrowers, accounting for more than half of the global debt.

That’s the equivalent of 225 percent of the world GDP in 2017."

It would be good to know in the current scenario what happens statistically if the FED raises interest rates. A projection on which companies according to their own data are set to fail payments if same conditions are mantained. Same for governments.

Bill Gross said when the interest rate is above GDP a recession is inevitable. But even before there must exist an indicator of the burden interest rates will have on companies, government and people. I will look for it. If I find it will post it here.

As conclusion there´s always valid arguments for recessions. But that doesn´t mean they happen. It normally takes time for a reality to set in. How much time? trillion dollar question.
12-22-2018 11:54 AM
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RoastBeefCurtains4Me Offline
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Post: #39
RE: 2018/2019 Bear Market
https://www.google.com/search?q=total+gl...e&ie=UTF-8

This link show current global debt is $233 trillion. Interestingly, if you search for total global wealth, it is roughly the same. Total global wealth = total global debt, by definition of the way the fiat banking system operates.

Alternate monetary systems are possible, but I think they have their pros and cons just as the fiat system has its pros and cons.

The biggest con with the fiat system seems to be that the super rich banksters at the center of the system pull too many of society's strings, and they do not have the well being of the masses as their primary interest.

Human societies produce the best quality of life for their peoples when traditional families and values are upheld, with a strong cultural identity and spiritual values. The modern banksters think it is more profitable to destroy all that. Hopefully the banksters will all be killed someday and a better system will be established. I'm not holding my breath though.

(12-22-2018 11:54 AM)fantome Wrote:  Global debt hits all-time high of $184,000,000,000,000

https://www.rt.com/business/446526-globa...jOxD9f_gHM

"The world’s debt currently exceeds $86,000 per person on average, according to the International Monetary Fund (IMF). The US, China, and Japan are the top three global borrowers, accounting for more than half of the global debt.

That’s the equivalent of 225 percent of the world GDP in 2017."

It would be good to know in the current scenario what happens statistically if the FED raises interest rates. A projection on which companies according to their own data are set to fail payments if same conditions are mantained. Same for governments.

Bill Gross said when the interest rate is above GDP a recession is inevitable. But even before there must exist an indicator of the burden interest rates will have on companies, government and people. I will look for it. If I find it will post it here.

As conclusion there´s always valid arguments for recessions. But that doesn´t mean they happen. It normally takes time for a reality to set in. How much time? trillion dollar question.

I'm the tower of power, too sweet to be sour. I'm funky like a monkey. Sky's the limit and space is the place!
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12-22-2018 12:19 PM
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Post: #40
RE: 2018/2019 Bear Market
Powell should raise rates. Since debt must be contained. But at a much slower pace. Giving time for economic operators to adjust. What he is doing is provoking an irresponsible massive raise in cost of money which will lead to bankrupcies. Maybe one rate per year. First seeing the consequences. And if the operators can cope without much disturbance continuing a normalizing path. Powell is an idiot. And Trump is right. Powell is also an irresponsible whose acts will have a incredible damaging effect. But it was Trump who hired him. So he´s in the end the one to blame. Trump should start thinking on hiring people from society. Instead of this bubble type personalities. At least as consultants. Really working people. Not their representatives. All society is corrupted. You need to talk with people directly vg just enter a store and ask which are they re problems. And eliminate problems which are created for the sole purpose of feeding parasites. Most of government officials are parasites. Communism is the filthiest economic organization ever created by man. And should be fought by all means. Trump was elected by the people. Powell is nothing more than a bureaucrat. Without any legitimacy.
12-23-2018 05:21 AM
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[email protected] Offline
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Post: #41
RE: 2018/2019 Bear Market
One of the few that accurately called the top for crypto says stock market is going down about 80%. For the Dow Jones that's 17671. Make your time.

https://mobile.twitter.com/PeterLBrandt?...r%5Eauthor

https://mobile.twitter.com/PeterLBrandt/...45/photo/1
(This post was last modified: 12-23-2018 05:43 AM by [email protected].)
12-23-2018 05:41 AM
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fantome Offline
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Post: #42
RE: 2018/2019 Bear Market
(12-22-2018 11:54 AM)fantome Wrote:  But even before there must exist an indicator of the burden interest rates will have on companies, government and people. I will look for it. If I find it will post it here.

Leverage ratio

https://www.investopedia.com/terms/l/lev...dium=email
12-23-2018 05:59 AM
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RatInTheWoods Offline
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Post: #43
RE: 2018/2019 Bear Market
THERE IS A SALE ON

BUY CHEAP
12-23-2018 06:29 AM
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edlefou Offline
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Post: #44
RE: 2018/2019 Bear Market
This isn't Volcker having the balls to push interest rates into the stratosphere in the 70s to get runaway inflation under control.

The Fed's monetary policy is supposed to adjust interest rates in order to keep inflation under control, provide liquidity, and keep the economy from overheating.

This guy decided to jack up interest rates when the current inflation rate is fine and the markets tanked.

At best the rate hike was a mistake, at worst it was a politically-motivated move to fuck with Trump.
12-23-2018 11:18 AM
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redpillage
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Post: #45
RE: 2018/2019 Bear Market
(12-22-2018 03:15 AM)RDF Wrote:  
(12-21-2018 03:31 PM)Arado Wrote:  1) The Fed is tightening via QT-balance sheet reductions
2) Fed Interest rate rises remain on the table,

They may still change their stance given the 6% correction since their announcement. The fed obviously shifts its tone quite often, and although Powell has stated that he will not use the fed as a vehicle to bail out the stock market, if the correction continues to be this violent he will have to reconsider.

(12-21-2018 03:31 PM)Arado Wrote:  5) 10 years since the end of the last bear market so we are at or near the end of the business cycle

True. But why can't there just be a slow period of ~2-3% returns until the P/E ratios catch up to historical levels, and then the market rallies again?

(12-21-2018 03:31 PM)Arado Wrote:  6) Corporate leverage and debt way too high, record 250+$ Trillion worldwide debt, including 1.5 trillion student debt in the US

I agree with this being a ticking time bomb. But student debt and sovereign debt have been high as hell for many years. What makes you think that NOW is when the bubble pops? You could've made this exact same statement in 2013, and missed out on 50% returns.

(12-21-2018 03:31 PM)Arado Wrote:  10) Skyrocketing fiscal deficit eating up any excess liquidity
11) International economic slowdown and bear market started earlier this year

Same as above. We were running a huge fiscal deficit with Obama, and the stock market roared. And in 2016 the world economy also slowed. No major effect on the markets.

I actually agree with many of the things you pointed out, but no one thing has a direct correlation to market movement.

The truth is, nobody knows what is going to happen to the markets. However, the one thing I have learned is that it is good to be cautious when everybody seems to be on one side of the boat. The past week, there has been as much pessimism as I have heard in many years ("the market is crashing, run for cover!"). This suggests to me that it is a decent time to buy, if only for a relief rally.

RDF, appreciate your input on my points. Here are some followup thoughts. I'm going to sound like a broken record droning on and on about the fed, but I really think Central Bank actions are key.

Fed Policy Reversal

Once it appears that the Fed will lower interest rates or stop the drawdown of the balance sheet, then I would be happy to reconsider my position. You can easily buy back into whatever index fund you were in once the policy announcement is made. You may not profit from the rally that will occur that day, but you will benefit from the subsequent expansions. For now though there is no evidence of a dramatic reversal in Fed policy.

Can't returns just be lower for the next few years?

Excluding inflation or a massive tech bonanza, the average returns over the next 10 years will probably be 2 or 3% so I agree with you there. However, if you look at a historical chart of the S&P, that is quite rare. What is more common are sharp declines in the indexes prior to and and during recessions.

The indexes usually don't just muddle along - smart money flocks to bonds and treasuries if they can get nearly the same returns with much less risk. However, people holding 401Ks and those who preach "time in the market is better than timing the market" are left holding the bag when the smart money gets out - the average guy gets screwed.

If you lose 50% of your portfolio's value, you need a subsequent 100% return to get back to just the original value. Likely to happen with post-crash Fed stimulus, but no guarantee that you won't lose a ton of value to inflation by then.

Why is debt all of a sudden a problem now? What about 2013?

Simple - from October 2012 till October 2014 - the time period you mention above, the Federal Reserve increased the size of the balance sheet from 2.8 trillion dollars to 4.5 trillion dollars during QE3.

[Image: fed%20balance%20sheet%20vs%20es%20DB.jpg]

Why isn't the impact of a worldwide slowdown similar to the one in 2015/2016?

Again, in 2015/2016 there was massive monetary stimulus from the ECB and BOJ to prop up the markets. This is the only thing that propped up assets once the Fed reserve stopped QE. In 2015, the Fed raised rates by a measly 25 basis points and the markets still freaked out until they were saved by ECB/BOJ.

[Image: 47769140-15092108444392734.jpg]

Other thoughts

I'm actually banking on a relief rally at least so that people can get their bearings and I can sell off the rest of my positions without taking too much of a loss. I forgot one point that I didn't mention earlier:

12) Yield curve inversion of the 2 and 5 year treasury bonds. 2 and 10 year spread is also extremely thin so could also invert in the near future. This is a very consistent recession indicator.

Obviously no one knows what is going to happen, but (as an extreme example) anyone that bought into the market in July 2000 didn't recover their value until October 2015. Dividends made up some of the difference, but were canceled out by inflation.

Peter Schiff has to be right eventually!
12-23-2018 12:58 PM
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redpillage Offline
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Post: #46
RE: 2018/2019 Bear Market
(12-21-2018 12:08 PM)TheFinalEpic Wrote:  
(12-20-2018 11:49 PM)nek Wrote:  
(12-20-2018 09:27 PM)TheFinalEpic Wrote:  Play volatility. It's been historically low since pretty much Trump got into office, good time to be selling options, long volatility indexes, looking into forex, etc.

I thought you couldn't invest in the VIX directly?

There are numerous volatility instruments, and you can use options on the VIX directly.

Incorrect. The VIX is not a derivative to anything. What you CAN do is to trade options on the VX futures and several IV exchange traded products (ETPs). They are however not perfectly correlated with the VIX (a computed index) which makes matters a bit more complex.

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"The sheep pretend the wolf will never come, but the sheepdog lives for that day."
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12-23-2018 01:05 PM
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redpillage Offline
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Post: #47
RE: 2018/2019 Bear Market
(12-21-2018 03:24 PM)Deepdiver Wrote:  FYI Example SPY Calls at 3:21PM EDT 21/Dec/2018
Symbol LastPrice$ Change$ Change% Qty  PriceWhenAdded DateAdded TotalGain$ TotalGain% Value $

SPY Mar 29 19 $260 Call 4.30 -0.83 -16.18% 1 5.70 12/20/2018 -188.00 -32.98% 430.00
SPY Mar 29 19 $270 Call 1.57 -1.03 -39.62% 1 2.72 12/20/2018 -115.00 -42.28% 157.00
SPY Jan 18 19 $290 Call 0.03 0.01 50.00% 1 3.35 05/08/2018 -332.00 -99.10% 3.00
SPY Jan 18 19 $300 Call 0.01 -0.01 -50.00% 1 1.35 05/08/2018 -134.00 -99.26% 1.00

I will be buying some 260 and 270 Calls for the Run back up to MW4 at 2600

Don't do that. See those percentages in your option chain segment? That's implied volatility which will get crushed on the way up and massively affect your premiums. What you CAN do instead is to grab an in the money (ITM) debit spread (look it up) that renders you somewhat vega neutral. Also, you don't want to buy January puts as theta burn (time value depreciation) will start going exponential. Unless you really know what you're doing don't ever buy any options that have less than 30 days until expiration.

Good luck ;-)

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"The sheep pretend the wolf will never come, but the sheepdog lives for that day."
– Lt. Col. Dave Grossman
(This post was last modified: 12-23-2018 01:13 PM by redpillage.)
12-23-2018 01:12 PM
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Que enspastic Offline
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Post: #48
RE: 2018/2019 Bear Market
Unless you know what you’re doing sit it out on cash in 2019.

You should already be heavy on cash
12-23-2018 01:18 PM
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Shinebox Offline
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Post: #49
RE: 2018/2019 Bear Market
Going from 2.25 to 2.5 isn't some kind of gaff. In a decent economy, this is a nothingburger. The fact that people are trying to bully Powell into changing his course is the proof that his course is correct. Push that shit to five tomorrow and let's get this circus over with. Pull-off the band-aid. Can't fight gravity or math. The day of reckoning will come.

(12-23-2018 11:18 AM)edlefou Wrote:  This isn't Volcker having the balls to push interest rates into the stratosphere in the 70s to get runaway inflation under control.

The Fed's monetary policy is supposed to adjust interest rates in order to keep inflation under control, provide liquidity, and keep the economy from overheating.

This guy decided to jack up interest rates when the current inflation rate is fine and the markets tanked.

At best the rate hike was a mistake, at worst it was a politically-motivated move to fuck with Trump.
12-23-2018 02:53 PM
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Foolsgo1d Offline
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Post: #50
RE: 2018/2019 Bear Market
(12-23-2018 05:41 AM)[email protected] Wrote:  One of the few that accurately called the top for crypto says stock market is going down about 80%. For the Dow Jones that's 17671. Make your time.

https://mobile.twitter.com/PeterLBrandt?...r%5Eauthor

https://mobile.twitter.com/PeterLBrandt/...45/photo/1

Isn't anything around 30% a depression?
12-23-2018 03:24 PM
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