2015 Or 2016 For The Stock Market Crash?

[jiltedjen]

Read an interesting article so thought i would share:

http://www.marketwatch.com/story/you-can-put-the-next-stock-market-crash-on-your-2016-calendar-now-2014-12-27?mod=MethodeStories&link=sfmw

i can see the thinking that an american election will burst the bubble in 2016, however personally i cant see the wall climbing dow to survive whole additional year of gains. Either way we are sure due a correction in the next 18 months if not much sooner, as nothing has changed from the previous crisis.

how many bail outs (and bail-ins?) will it take for real regulation to kill off the banking parasite?

Wonder what form the HPC will take, how can sterling survive.

[billybong]

It will happen again. Losses bigger than 2000 and 2008 combined. Think I’m kidding? Bet against this at your peril. Jeremy Grantham’s already on record predicting that “around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.” That could translate to the DJIA crashing — which on Friday posted the week’s (and history’s) second close above the 18,000 level — to around 10,000.

The previous two peaks happened about a year before the presidential elections of 2000 and 2008 so if that's repeated then the next peak is likely to be sometime next year. Maybe during the second half of next year.

Edited December 27, 2014 by billybong

[Killer Bunny]

No idea but... Govt bonds don't normally soar, as they did 2014, w/o a major hit to share prices. Also, ¥ looks ready to rally from right about here. Wld be -ve for stocks. Interesting that the ¥ collapse didn't make stocks soar, only rise a little.

Any market that doesn't do what it 'should'...

[crashmonitor]

No idea but... Govt bonds don't normally soar, as they did 2014, w/o a major hit to share prices. Also, ¥ looks ready to rally from right about here. Wld be -ve for stocks. Interesting that the ¥ collapse didn't make stocks soar, only rise a little.

Any market that doesn't do what it 'should'...

Exactly Angus Campbell's worries here concerning the FTSE 100...hasn't done what it should have and finally cleared its December 1999 marker, have to agree when other Western Markets not only beat that peak years ago but have carried on the party this month extending to new all time highs.

So some downbeat predictions here re. the FTSE 100 for 2015 (and some bullish ones too)

http://www.independent.co.uk/news/business/analysis-and-features/predictions-the-ftse-100-faded-in-2014--but-what-will-it-do-in-2015-9945940.html

[Killer Bunny]

Exactly Angus Campbell's worries here concerning the FTSE 100...hasn't done what it should have and finally cleared its December 1999 marker, have to agree when other Western Markets not only beat that peak years ago but have carried on the party this month extending to new all time highs.

Actually I was talking about pretty all developed markets. ATHs shure on S&P but not soaring as ¥ absolutely collapsed

[R K]

2014 apparently. 100% guaranteed.

[zugzwang]

2014 apparently. 100% guaranteed.

Says the guy who advised us to buy the dips at 6850.

[R K]

Says the guy who advised us to buy the dips at 6850.

There wasn't a dip at 6850. But if you think I said that link it up.

Buying the dips in Feb, Aug, October, Dec this year has been very profitable though.

I recall some posters advising shorting into those lows. Clearly they must have lost a considerable % of capital if they actually did (even ignoring carry/funding costs and dividend costs)

http://stockcharts.com/h-sc/ui?s=$FTSE&p=D&yr=1&mn=0&dy=0&id=p84366831696

http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=1&mn=0&dy=0&id=p00257415214

Edited December 27, 2014 by R K

[jiltedjen]

Nothing wrong with buying dips, It's the day when a dip becomes a crash is the worrying thing. RK has balls.

I think all the various government market props and bail-outs low interest rates etc, have all worked as the markets were cycling upwards. and they threw everything at it, even then at times it looked to be turning.

but with much less in the toolbox, When the next crash comes they will either finally let it run its course. or throw everything at it and then some.

negative interest rates, huge huge QE, Forced to buy schemes, Renters tax, Free funding for BTL. Bail-ins everything. As far as I can see in a market like that everyone looses. I'm clutching my gold, but when it shoots up I won't be selling. so hard to realise gains when you don't trust fiat sterling.

Just hope I can have the means to buy at reasonable value when the time comes.

[jiltedjen]

The previous two peaks happened about a year before the presidential elections of 2000 and 2008 so if that's repeated then the next peak is likely to be sometime next year. Maybe during the second half of next year.

Excellent 2015 is right on que. happy to wait a few more months to prepare for it. at least we all have a better idea what to expect this time around! in 2008 I had never expected QE and all the various props.

[Venger]

Read an interesting article so thought i would share:

http://www.marketwatch.com/story/you-can-put-the-next-stock-market-crash-on-your-2016-calendar-now-2014-12-27?mod=MethodeStories&link=sfmw

i can see the thinking that an american election will burst the bubble in 2016, however personally i cant see the wall climbing dow to survive whole additional year of gains. Either way we are sure due a correction in the next 18 months if not much sooner, as nothing has changed from the previous crisis.

how many bail outs (and bail-ins?) will it take for real regulation to kill off the banking parasite?

Wonder what form the HPC will take, how can sterling survive.

Jeremy Grantham’s already on record predicting that “around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.”

Spent time last night reading up on GMO (Jeremy Grantham and his other GMO staff) thoughts and positions from stock markets to energy / energy2 fracking / energy 3 - I'm uncertain because I can't see why costs (wages etc) of extracting energy can't also fall. They are smart people at GMO, but reflation has run and run, and big difference between knowing how to act, whether it's their 'purgatory or hell'.

UK HPC? Noticed on latest 'UK Current Account' thread, some hpcers who are the most active in expecting/hoping for a champagne ripple of HPI out of London, are the strongest advocates of Governments to pick up the spending to create jobs/money velocity in any downturn. Into the beginnings of any new hpc, just watch out for repeat of 2007-2010 with many of the same hpcers then, trying to repeat the throw everyone else under the bus in the name of some fool with jumbo mortgage, trying to protect the 2 in 3 households with no mortgage - only interested in maintaining their own short-term strong VI positions even when continuation risks total collapse. Maybe central banks don't have the stomach for it either; always seeking inflation, hpi, etc.. 'go take a student loan young people, as we seek even more hpi'. (S&P500 latest close 2088)

Quarterly Letter - Third Quarter 2014 http://www.gmo.com

[..]JG: Some would mention the very substantial overpricing of the U.S. market at the top of the list but, surprisingly, overpricing has had no material effect on third-year returns or the particularly sweet seven-month subset: an average of 17% for seven months becomes 19% if cheap and 15% if expensive. Big deal. Value, however, is very important for the other three years in which the cheapest 25% have produced a respectable return of +12%, and the other three quartiles are absolutely not worth having, all three together averaging almost exactly nil! More disturbing to me than the obvious overvaluation is the large and growing number of other negatives – technical and psychological – put together by Hussman and other market experts. Nevertheless, despite my nervousness I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2250) before a very serious decline.1

1. In the interest of full disclosure, Grantham Foundation has tilted toward the Presidential Cycle by using out-of-the-money calls. But, caveat emptor.

The End of Normal by James Galbraith

[Grantham:] Which is code for I agree with almost everything he writes. Galbraith claims, for example, that the resource price rise to 2008, especially for oil, played an important role in the economic setback and deplores the fact that nobody mentions this. Sadly, he is not a reader of my quarterly letters but, hey, nobody is perfect. Let me leave you with the advice to buy and read this book, along with this quote from page 104 (underlining added):

“There is no reason to believe that the democratic decision made by the living in

the face of their present needs and desires will be the decision that would maximize

the chance of long-term system survival. The unpleasant conclusion is that it is

possible for a society to choose economic collapse.”

http://blogs.marketwatch.com/thetell/2014/07/21/yellen-encourages-fully-fledged-equity-bubble-says-jeremy-grantham/

http://www.forbes.com/sites/steveschaefer/2014/06/18/jeremy-granthams-investing-advice-dont-try-to-be-warren-buffett/

Bull vs Bear (GMO's James Montier)

http://time.com/money/2795416/are-stocks-overpriced/

[Renewed Investor]

I am expecting the DOW and S&P to climb 25% next year. Dont forget that run up years to elections are full of optimism and the market is already irrationally optimistic.

So 25% run up to a blow off top and then a dead cat bounce around Xmas time is what I am expecting for 2015. 2016 is the year that the bubble gets dumped onto the next President IMO.

Also, the market is fairly cyclical. It tends to take a nice dump every 8 years or so. In the mean time I am picking up some Jan 16 Calls with the intention of dumping them around Autumn at which point I will roll half the profit (assuming I make profit) into Calls on one of the leveraged inverse DOW ETFs.

[Killer Bunny]

You've been listening to either Armstrong or Tepper, eh?

[200p]

I think it's worth digging out the Stan Weinstein books, and taking a look at where we are now.

The world stock index:

We are in a period of some congestion, and until the VT clears 65, then we can be a bit more bullish. Below the last swing low of 58 and we're looking more bearish.

[Killer Bunny]

VT?

[gf3]

VT?

Vanguard Total World Stock ETF (VT) maybe?

http://finance.yahoo.com/q?s=VT

[Killer Bunny]

thx

[Guest_northshore_*]

You've been listening to either Armstrong or Tepper, eh?

Armstrong's been writing about 2015.75 for a long time, but conveniently never outlines how exactly he interprets that downturn beyond a 'crisis in government' but possible 'trend reversions' or something like that.

[oracle]

Read an interesting article so thought i would share:

http://www.marketwatch.com/story/you-can-put-the-next-stock-market-crash-on-your-2016-calendar-now-2014-12-27?mod=MethodeStories&link=sfmw

i can see the thinking that an american election will burst the bubble in 2016, however personally i cant see the wall climbing dow to survive whole additional year of gains. Either way we are sure due a correction in the next 18 months if not much sooner, as nothing has changed from the previous crisis.

how many bail outs (and bail-ins?) will it take for real regulation to kill off the banking parasite?

Wonder what form the HPC will take, how can sterling survive.

2017. would work with normal election cycles.

3rd and 4th year are generally ok(lots of pre-election bribes)

1st year usually treads water

2nd year takes a hit.

[anonguest]

I am expecting the DOW and S&P to climb 25% next year. Dont forget that run up years to elections are full of optimism and the market is already irrationally optimistic.

So 25% run up to a blow off top and then a dead cat bounce around Xmas time is what I am expecting for 2015. 2016 is the year that the bubble gets dumped onto the next President IMO.

Also, the market is fairly cyclical. It tends to take a nice dump every 8 years or so. In the mean time I am picking up some Jan 16 Calls with the intention of dumping them around Autumn at which point I will roll half the profit (assuming I make profit) into Calls on one of the leveraged inverse DOW ETFs.

That's a staggering amount, in one year, by any historical measure!

Just what do you see, so confidently, as being the driver/catalyst for this??!!!

[jiltedjen]

really hard to call, the 7 of 8 year cycle is screaming for 2015 to be the crash year. But with every sign of even a slight cooling of a few % the fed or BOJ pump again.

the central banks have really backed themselves into a corner, Seems like we may well get a fall of 4-5% (spooking many investors) Followed by more Fed press realises, then an almighty rally like a rocket (blow off top) then the crash can begin.

[Renewed Investor]

That's a staggering amount, in one year, by any historical measure!

Just what do you see, so confidently, as being the driver/catalyst for this??!!!

There is growing mania for US Assets right now due to the Euro and Yen devaluation. i only expect that to get worse for the first half of the year until the Fed are forced to intervene and weaken the USD before the import and export market goes kaput.

Right now it appears to be that people, even the "crash is just around the corner" perma bears are starting to believe that the market will just go up for ever or at least for the next few years. When this "dumb money" piles in the Banks that are keeping this bull market climbing will start pulling out towards the end of the year I think. If the Banks are allowed to drop lending standards in the USA next year then the Banks will look to move back into mortgages en masse instead of bidding up the equities back and forth amongst themselves.

So that is a stripped down reasoning from me.

[Killer Bunny]

Except the ¥ is ripe for signifcant reversal.

[anonguest]

There is growing mania for US Assets right now due to the Euro and Yen devaluation. i only expect that to get worse for the first half of the year until the Fed are forced to intervene and weaken the USD before the import and export market goes kaput.

Right now it appears to be that people, even the "crash is just around the corner" perma bears are starting to believe that the market will just go up for ever or at least for the next few years. When this "dumb money" piles in the Banks that are keeping this bull market climbing will start pulling out towards the end of the year I think. If the Banks are allowed to drop lending standards in the USA next year then the Banks will look to move back into mortgages en masse instead of bidding up the equities back and forth amongst themselves.

So that is a stripped down reasoning from me.

On the first highlighted point I concede that, in the very short term this may well raise all dollar denominated asset values.....but the resulting continued/relentless rise/strength in the dollar on the forex markets, as you allude to, will surely significantly impact the overseas earnings of the Dow companies and many of the S&P 500 companies. Wasn't that long ago we were all being told by pundits how the declining dollar was good for the DOW/S&P 500 cos they earn most of their dollars from outside the U.S ??? Bonds may be dragged higher in price through money inflows to dollar assets but for the DOW/S&P 500 to rise 25% would imply that market participants don't believe earnings will be impacted negatively at all - and in fact actually prosper!

On the second point if, as you allude, this really is the case at present then surely that is a perfect indicator of the 'last bears' having turned - and thus a decline is imminent?!

Edited December 28, 2014 by anonguest

[Renewed Investor]

My point was that fundamentals are pointing to a reversal on the horizon whilst for the meantime "dumb money" seems to be pouring in thus keeping things going for the short term. So a blow off top is expected and then fundamentals force a reversal whilst "dumb money" takes the hit later in the year.