Stocks up, gold down - time for a change in thesis?

[cobben]

Re: Stocks up, gold down - time for a change in thesis?

"The relative value of stocks and gold does indicate that a re-allocation of some Treasury bond positions is needed."

??

How does a change in stocks/gold relative value imply a reallocation between treasuries/gold?

[cobben]

Re: Stocks up, gold down - time for a change in thesis?

http://www.itulip.com/forums/showthread.php?t=8536

(You can't hardly make this stuff up. I believe this guy beat out such as Faber also, haven't checked.)

__________________________________________________ ___

We have a new leader in the newsletter clubhouse - in cash since 1986


There's been a change in newsletters' long-term rankings, We have a new leader in the clubhouse

MARK HULBERT There's been a change in newsletters' long-term rankings

" . . .
Allmon has been almost completely out of stocks for more than 20 years. It was in late 1986, in fact, that he became convinced that stocks were becoming overpriced, a belief that in turn led him to sell almost all of the stocks in his newsletter model portfolio and put the proceeds in cash.
With only one or two exceptions, his model portfolio has remained primarily in cash ever since. It currently owns just three stocks that collectively total 11% of total portfolio value, for example; the other 89% is parked in a money market fund.

. . .

[Sharky]

Re: Stocks up, gold down - time for a change in thesis?

It is quite impossible to do business with unethical people, and just as impossible to invest in financial system controlled by unethical people. Until the above events occur, we do not see how we can invest in the U.S. stock market.

This is such an important point. As the level of systemic corruption becomes more well-known, it seems to me that this fact could drive market prices more than the traditional mechanisms such as earnings.

This is one reason I'm much more bearish than most people I talk to. How can anyone believe anything companies say about earnings, ratings, book value, etc, etc when the system is corrupt? How can you predict trends when there are massive market interventions? The whole concept of "off balance sheet assets" is just bizarre. Now we're seeing evidence of extensive side letters with AIG. Insanity!

[santafe2]

Re: Stocks up, gold down - time for a change in thesis?

I hope you're right on this, because it'll be another widows and orphans shorting opportunity...:p

I don't like to short but if economic indicators are about the same, unemployment continues up, bonds stay strong, Cramer keeps screaming that the 'depression is over', and the stock market continues up during the spring - that's about as easy a call as anyone could ever make. Call grandma and tell her to short the market...

[santafe2]

Re: Stocks up, gold down - time for a change in thesis?

I remain steadfastly bullish oil, especially with dividends while I wait. All of the solar energy rubbish and wishful thinking from the Obama Administration just makes me more bullish oil, nat. gas, and atomic energy.

"Drill, drill, drill."

I know we're standing on the opposite side of the fence but there's no reason to hate any type of energy. We're going to use every type of energy we can put our hands on over the next 40-50 years while we transition to whatever economy we're transitioning to. I can't imagine a world where we won't pull every bit of energy out of the ground but let's be smart about how we use it. Personally, I'd like to look out two generations and think they've got a good shot at a reasonable transition. That's going to include oil, NG, nuclear, coal, hydro, ground source, emerging renewable energy and energy sources we've not yet considered.

The politics of energy is useless BS, we need to focus on winning. This is not going to be an easy transition.

[santafe2]

Re: Stocks up, gold down - time for a change in thesis?

It is quite impossible to do business with unethical people...

This is a core principle in our business. We interview our customers for ethical practices along with an ability to pay. As our competitors continue to be taken by their unethical customers we can count one in the last year that slipped through our radar and we're actively pursuing repayment. Everyone pays for the thefts of the unethical.

[aaron]

Re: Stocks up, gold down - time for a change in thesis?

There is something to be said for not feeding the machine. Every time I do NOT trade a stock, "invest" in the market, or fund some account, I am doing my part to say "no". And, I have the added benefit of not losing any more money.

[metalman]

Re: Stocks up, gold down - time for a change in thesis?

next poll, pls add item... 'refuse to put a dollar into the scumbag casino'.

[blazespinnaker]

Re: Stocks up, gold down - time for a change in thesis?

I have to sign up for this thesis also.

Lukester, you didn't vote!

[blazespinnaker]

Re: Stocks up, gold down - time for a change in thesis?

I believe in pretty much 99% everything itulip proposes, except that I also believe these sorts of conditions have been around for the last 1000 years or so. Or at lease since money was invented.

Things have always been screwed up like this. It's the nature of human kind. And yet, we progress, we innovate, we move forward.

[Down Under]

Re: Stocks up, gold down - time for a change in thesis?

Ej writes in:

The system under which the U.S. and global economy have operated for over 20 years is systemically corrupt. The current systemic financial crisis ultimately arises only indirectly from systemic risk. The root cause of the systemic risk is systemic corruption of the financial system and the private and public institutions that comprise it.

Appreciate the comment, EJ. In the past, this is one criticism [not voiced] I've had of iTulip. The message I got was that "there was no point in attaching blame, we simply need to fix the problem".

But now, you're laying it on the line. This is extremely important because a lot of people are going to be seriously hurt before this is over; people who had nothing to do with creating the mess in the first place.

There needs to be accountability. Well said, and keep up the good work, from down under.

[Down Under]

Re: Stocks up, gold down - time for a change in thesis?

next poll, pls add item... 'refuse to put a dollar into the scumbag casino'.

Yep; exactly right.

[nero3]

Re: Stocks up, gold down - time for a change in thesis?

Seasonally, 4/19, (really Friday 4/17), is a good place to draw a line in the sand. Since I haven't really dusted off my TA Ouija board in about 10 months, I thought I'd take a look this morning and see if I agree with either the, A)new bull market thesis or B)bear market bounce is over thesis. After a quick review, I find neither point of view compelling.


I see absolutely nothing in the economy that would lead me to think a new bull market will emerge here. The run rate for our economy is about 33% lower than it was in the spring of 2007 and still moving down about twice as fast over the last 12 months as it did 2 years ago. Actual GDP will fall to meet this run rate if there's not a turn around very soon and I don't see a catalyst for this turnaround. As an example, we've lost over 5MM jobs in the US and job loss is still accelerating. I would say the chance that this is the beginning of a new bull market is less than 1%.

Disclaimer: I'm not longer meaningfully invested in the market.

1 % ?

It's more than a 70 % chance that we are in a bull.
Job losses should be accelerating and getting worse, when you notice improvements and get your head out of the sand, the market will be up maybe 50 %

Please take the unemployment numbers from 74-75, and compare with the dow jones index from that era. Based on a comparison, we should be at least 1 month into a bull.

[nero3]

Re: Stocks up, gold down - time for a change in thesis?

I was really trying more to point out where the DOW / GOLD and the S&P / GOLD appear to be at this juncture - which is pretty far along apparently. Or are you wise permabears of the opinion that the above charts signal large potential for the DOW and the S&P to plunge a lot further against gold? I don't think Nero3 was talking about any "trading" here - looking at this juncture as a trader you are going to have different conclusions that would someone planning to make buys here to hold for a good deal longer.

But of course right now, the idea of looking at this market as an investor apparently seems absurd to most people here.

You guys really want to bet on a deflationary result in US markets with this scale of monetary distortion going on? The markets much more plausibly need to rise in response, not fall - over a five year time frame. And whether that is to be in nominal or real terms right now is potentially irrelevant to the short term as it's likely to be quite a large move if we go by the scale of the money distortion. Those DOW / GOLD and S&P / GOLD charts are hinting the excesses of the past 30 years don't get unwound in a single market collapse leg down.

The fifteen year long bear market from 1966-1980 was very fragmented. Suggesting our current bear market needs to be one long bear market run to it's conclusion without long interruptions is out of sync with that historic precedent - we are much more likely to resemble the 1966-1980 progression that way with big interruptions.

I think Nero3 was just suggesting this looks like a good candidate for an interval of stock outperformance over gold - you have to dial your time frame out past the "noise" of violent short term up and down to get why we could see the same multi-year rallies as the 1970's. Sure we may get a few more legs up and down, even large ones - prompting skeptical guys like C1ue to step quickly out of their short term trades.

So while Santafe2 and GRG55 are evaluating this with for might constitute slightly longer trades, Nero3 was asking why exactly people imagined this market should not be sharply net up from here in five years. I think most people are too shellshocked by the horrific recent market action to even entertain this idea right now. It's evidently regarded as absurd here. Meanwhile we've got this DOW / GOLD chart that is so far along in correcting down, that continuing down this way for too much longer is starting to more than a little complicated.

So, just how much overshoot on the DOW / GOLD are you permabears counting on here?

It's like a scene in a horror movie. A little bear sterns dip, a lehman dip, even a geithner dip, small event's but to the masses it's like a slow motion horror movie where everyone is paralyzed, and the psycho's is thriving and going around stealing from the scared masses. It's like full moon, where the vampyres are out. It's robbery, that the fed and treasury have helped these bandits by being so brutally incompetent, lowering stock prices to such low levels.

As the discount disappear, I assume the premium on gold will disappear, meaning the gold price will retrace further. But I think it could hold above 800. It depends on how fast the inflation starts to get ugly. I think there will be a bull first, then stagflation and a rising gold price after the stock market have flattened out.

[nero3]

Re: Stocks up, gold down - time for a change in thesis?

Lukester- "What is the basis for the (very popular here) assumption that "market fundamentals alone" can permit any renewed sustained uptrend? Since when have market fundamentals driven shorter term market action? The very expression "The fundamentals must always reassert themselves" - clarifies the point by implication: fundamentals play an eventual game of catch-up to what the vagaries of the market produce. In the 1970's the markets staged numerous very sustained market moves which were in no way tightly correlated to any fundamentals. Also the mention that "the Mainstream Media is cheerleading this rally therefore this is another sure fire indicator it must be false". Since when do we consider the marginal contrarian value of what the mainstream media is spouting to be a reliable indicator of anything, contrarian or otherwise?

How many of the markets' most famous speculators have repeatedly pointed out the markets are composed of well over 50% mass psychology? We've had a highly compressed world class bear market even just this far. We quite possibly indeed are due for another severe leg down - but that is not the definition of being in the middle of a long term bear market."


Couldn't agree more.

In addition most underestimate the ability of the market to precipitate improvement in fundamentals. Often discussed as a magical 'discounting' mechanism but that misses the point that rising (or falling) stock prices themselves will alter the fundamentals (a fact NOT lost on the FED). The more psychology has shifted in the extreme the greater the possibility of a reversal in markets and sentiment.

With cash levels (AAII) at 20 year+ highs I think we know which is the crowded trade here.

My time I assume is shorter than most at itulip. I don't mind trading from either side- but when psychology becomes too lopsided I have found that the easier money is made taking the other side. I have read very little by itulip that I disagree with- and have grave concerns about the long term direction of our country. But itulip is taking a longer term position from an investment perspective- I do not view my positions in the market as investments. Just trades. So I am comfortable taking an aggressive long position at times (always with a stop loss discipline) for a trade based on psychology, market action and seasonal tendencies... in spite of my agreement with itulip's observations.

I agree, I think the reflexivity term Soros use is perfect to describe it.

If the dollar weakens because the market believe in recovery and people move out of cash, and the yield curve steepens because bonds sell off, then that action will actually promote recovery, as the market perceptions shape the event's, that again will influence perceptions, that again will influence the events. This dynamic is lost by so many, that think the fundamentals is like some pre destined thing, disconnected from the perceptions of the different players in market.

Deflation? That's not what the market is saying.
http://finance.yahoo.com/echarts?s=T...urce=undefined