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White Friday As F T S E Closes In On 6000


Realistbear
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cash is good once in a while.

Cash is often a good choice, particularly in deflationary environments.

I remember comparing books in 2004 with a fund manager having been entirely in cash since 2000 while he had to invest in shares. I was winning big time.

Then again, at the same time properties were going through the roof. Identifying winners and losers is easy only for fools or and for the rest, with hindsight.

Edited by _w_
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Or, it's what I've done for a living for 20+ years.

Either way your descent into name calling shows only that you've lost the debate...

You're not debating, you're just posturing.

And 20 years of experience in this industry is not a guarantee of brains, perhaps the opposite.

Edited by _w_
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Now the rules of the game have changed. We are entering an age in which returns will be negative and you are guaranteed to lose on cash by some 3% a year...

Yep. And the process of mindset adjustment will be extended and painful for many, especially those with trenchant and inflexible views grounded in not-a-lot......!

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some of the stupidest and poorest people(in terms of debt/asset ratio) I know are in the city,mainly on the equities side it has to be said.It's always struck me as ironic that pension funds use them for their expertise.Many rebuilt their capital bases

after losing it all on scoot.com just in time to buy into the top of the housing market in 2007.

you must be in bonds?

And this is all because I had the temerity to disagree with your assertion that "equities are only good value when they go up" ?

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it wasn't an assertion it was a quick reply(dare I even suggest an attempt at being mildly amusing-Heaven forbid) that if I'd realised you were going to take literally and then get into a slanging match with some polite,long term posters,I wouldn't have made it.Honestly,I've not seen -w- lose his cool like that before.

the real reason I think you're an idiot is becasue you seem to believe that your view is final.it's the sort of attitude that has cost a lot of people a lot of money over the last ten to fifteen years.I've seen the paperwork of a good few 'private cleints' who've made their brokers rich and to be frankly honest,that's why I've always looked after my own money.

here we are fifteen years later and whaddya ya know,someone with twenty years experience is ramping equities.scuse me for being bored of it.33 weeks of consecutive mutual equity fund outflows in the US.The retail investor has left the building and the realisation is dawning on a host of sweating financial parasites that the game is over.

welcome to your future.

!

I haven't expressed a view. I have only pointed out that dividends are a major component of equity returns.

I haven't ramped anything, certainly not equities.

I haven't called anyone any names either.

But let's not let the facts get in the way of a good rant eh!?

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My thoughts on equities.

I do feel that the markets are "defying gravity" to some extent and vulnerable to sharp correction should there be any bank collapse or default. I see the FTSE being highly volatile for the next six months or so and see the current rise as evidence of that volatility rather than a trend (which I think is flat into 1st half next year). Lack of new lending will offset the effects of QE for a while keeping money supply from growing.

Having said that Ill be using dips to buy into dividend stocks that I will hold for the long term. Other things I'm into are gold and cash in decent interest bearing currencies (china & brazil) . I also intend to put some cash into zopa at some point but for now my main store of cash in CHF which has worked out well recently.

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My thoughts on equities.

I do feel that the markets are "defying gravity" to some extent and vulnerable to sharp correction should there be any bank collapse or default. I see the FTSE being highly volatile for the next six months or so and see the current rise as evidence of that volatility rather than a trend (which I think is flat into 1st half next year). Lack of new lending will offset the effects of QE for a while keeping money supply from growing.

Having said that Ill be using dips to buy into dividend stocks that I will hold for the long term. Other things I'm into are gold and cash in decent interest bearing currencies (china & brazil) . I also intend to put some cash into zopa at some point but for now my main store of cash in CHF which has worked out well recently.

The FTSE100 is only 10% above its 200d ma. This is not that excessive to imply a huge pull back. Dangerous pull backs usually occur at 20%+.

What method do you use to hold foreign currencies? Spread bets?

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The FTSE100 is only 10% above its 200d ma. This is not that excessive to imply a huge pull back. Dangerous pull backs usually occur at 20%+.

What method do you use to hold foreign currencies? Spread bets?

It didn't exceed 10% from '03 to '08. Less than than during '08 tops. 12-13% at Autumn '09 limits which led to the summer '10 sell off.

Has it been anywhere near 20% in the last decade?

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Montier%2012.23.jpg

The US market is certainly overvalued and not a place I would allocate to by buying the index.

The UK market is cheaper and for which you can stockpick at 5-7% yield and P/Es of 7-10. Hardly expensive.

Buying the indexes now is a poor choice but to say all stocks are based on what the Fed does and are expensive is incorrect.

There are plenty of real companies making real goods and offering real services to the world that are not based purely on the feds actions. The ubers will only grasp this when this thinking becomes mainstream, prices are double and their cash is 40% down in real terms.

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It didn't exceed 10% from '03 to '08. Less than than during '08 tops. 12-13% at Autumn '09 limits which led to the summer '10 sell off.

Has it been anywhere near 20% in the last decade?

bulls***.

The reason being it hasn't been in a full blown bull market this past decade.

It was a good 25-30% below its 200d ma in march 09. What happened next???

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The US market is certainly overvalued and not a place I would allocate to by buying the index.

Another interesting chart. If the US markets are finally allowed to correct they will bring all Western Markets down with them as in 08.

http://www.zerohedge.com/article/smithers-co-finds-sp-now-over-70-overpriced-based-cape-and-q

smithers_0.jpg

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Another interesting chart. If the US markets are finally allowed to correct they will bring all Western Markets down with them as in 08.

http://www.zerohedge.com/article/smithers-co-finds-sp-now-over-70-overpriced-based-cape-and-q

smithers_0.jpg

The problem is you guys only look ever look at the market price rising or falling, oblivious to everything else that affects the companies that actually make up the index that you track.

You always totally forget the other variable at work here; the earnings.

There are two independent variables that make up a ratio graph.

I do think the US market is somewhat overvalued (30-50% approx). There are far better markets out there to own.

Nonetheless with REAL companies generally in EXCELLENT health, with massive cash reserves and continually improving earnings, the P/E or cape could easily fall through earnings increasing at a faster pace than stocks go up.

so lets say earnings increase at 20-30% for a few years but the market price only rises at its historical 5-10% rate then that CAPE will fall significantly to its norm without the need for the market to crash.

We are undobteldly still in a secular bear market on the basis of how long they usually last, but as I've said before, this doesn't necessarily mean the market has to crash to its low again in order for the market P/E index to reach fair value or less. Likewise with the markets still 10-20% below their previous price peak, we could see a few years of stagnation as valuations (price to earning and book), fall in order for the next bull market to commence at the previous market peaks.

Stocks could easily tread water for 5 years with earnings improving far quicker. This is at work currently with a lot of real stocks (ie defensives that offer the world something real and tangible, ie not trash banks or consumer rubbish).

Anyway buying the index is a mugs game, as is waiting in cash at -3% real return as the government steals your wealth.

Who wants to lose in real terms 20%-30% of their savings in cash or bonds waiting for the market 'index' to correct over the next 5 years?

Likewise who wants to own half an index of trash cyclicals when there are:

CURRENTLY mega cap defensives that are:

- Cash Rich

- Internationally diversified

- Emerging Market diversified

- Yielding twice the 10 year Gilt Rate

- On historically low P/Es of less than 8

- Inflation Protected (ie can, will and are raising their prices)

- Priced 20% to 150% below their 2000 peak price (Seriously regressed to their mean value or below)

??????

Edited by ringledman
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The problem is you guys only look ever look at the market price rising or falling, oblivious to everything else that affects the companies that actually make up the index that you track.

You always totally forget the other variable at work here; the earnings.

Us guys do not overlook earnings, they concern us greatly. Earnings were fantastic in the credit bubble generating real and large earning growth. The credit bubble is burst and real earning growth can not be printed. Inflation and low wage growth with drastic impact earnings. The last 30 years were fantastic for real returns in stocks the next 30 will not.

Edited by Confounded
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Us guys do not overlook earnings, they concern us greatly. Earnings were fantastic in the credit bubble generating real and large earning growth. The credit bubble is burst and real earning growth can not be printed. Inflation and low wage growth with drastic impact earnings. The last 30 years were fantastic for real returns in stocks the next 30 will not.

The world is going from 6billion to 9billion citizens this next 30 years. The middle class will become exponentionally large. Opportunities for good companies will be amazing this next 3 decades.

I don't invest in UK centric consumer stocks.

Real earning growth in the UK is totally irrelevant to whether my global energy stocks, pharmaceutical, utilities, telecoms, tobacco, food retailers, do well. Totally irelevant. All are growing market share due to the new world demand and recovering old world.

Massively cash rich, low P/E values of 6-10, yielding twice the gilt rate with inflation protection.

In fact there is probably a negative correlation between western gdp and earnings growth verses globally diversified defensive stocks that have large foreign earnings.

Stick to cash and bonds the next decade and face the GUARANTEED loses of 40% of your wealth through negative interest rates.

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