Stock Market V36: Return of the Bull, Part IV

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Stock Market V36: Return of the Bull, Part IV, Bull defies Newton's Law of Gravity

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dreamer101	Aug 8 2009, 11:35 PM Return to original view \| Post #1
10k Club Elite 15,855 posts Joined: Jan 2003	QUOTE(danmooncake @ Aug 8 2009, 10:24 PM) No, AIG is a trap. Stay away. The price will eventually go down and collapse under toxic asset when tons of those ARM rates reset again early next year. The only thing propping up its price is because of those short sellers that got caught. Does US really have "less bad" unemployment data? The "worse is over" they spin this? True unemployment figure is already over 16%. http://www.foxnews.com/opinion/2009/08/07/...t-unemployment/ The fact is, many people already given up looking for jobs and some already past their 13 weeks of unemployment claims and those numbers won't get reported. danmooncake, http://www.chrismartenson.com/blog/unemplo...stortions/24080 It is a lot worse than that as per unemployment number. http://www.chrismartenson.com/blog/fed-buy...y-auction/23880 Things got so bad that Fed has to buy their own treasury auction to fake the demand. By the way, normally, the big crash is in October. So, expect a big one in this October. Dreamer
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dreamer101	Aug 9 2009, 02:45 AM Return to original view \| Post #2
10k Club Elite 15,855 posts Joined: Jan 2003	QUOTE(SKY 1809 @ Aug 8 2009, 12:00 PM) Those days , i used to hear about 1/2 leg into the coffin theory, do not realise it is also applicable to Stock Market. 1/2 Leg, i try to associate with Asset Allocation Model according to Valuation and Risks. AS the share price goes higher, the risk is getting bigger generally, unless the fundamentals of the companies improve. So it might be time to realise your gain slowly by converting to Cash ( FD/BONDS ). 50% cash/50% share starts when the market reaches a fair valuation , let say PE of 18X ( just an example ). Buy more shares if fair valuation increases or share price drops, sell more shares if over valued, so your risk level is intact. I just oversimplify as the subject of Asset Allocation is lengthy and And most investors are concerned with whether their shares would fly to the moon or not. You are right in that sense. P/s : it is just an investment model, does not mean all have to agree. SKY 1809, You TOTALLY messed up as to what is ASSET ALLOCATION model. http://www.investopedia.com/terms/a/assetallocation.asp In asset allocation model, you stick to the SAME RATIO regardless what the market is doing. You REBALANCE to the same ratio every year or based on 5/25 rebalancing rule. So, if you 60/40 (stock / bond), in a bull market, you sell stock to buy bond. In a bear market, you sell bond to buy share. The RATIO stay the same. It does not change. In 5/25 rebalancing rule, you sell an asset if A) 5% the asset increase more than 5% of its ratio or B) 25% The asset increase 25% What ever come first. So, if you do 60/40, you sell stock when it is 65% of your portfolio. In ANY CASES, asset allocation model do not care about P/E and etc.... Dreamer
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dreamer101	Aug 9 2009, 08:02 AM Return to original view \| Post #3
10k Club Elite 15,855 posts Joined: Jan 2003	QUOTE(SKY 1809 @ Aug 9 2009, 07:46 AM) Hi Dreamer, » Click to show Spoiler - click again to hide... « AS I said earlier , I just oversimplify it and it is adopted from Public Mutual which is copyrighted. And what is a bear or bull market ? If CI is trading at 1500 pts, do you think it is a bull market ? So should one be fully in Bonds ? And what is a bear market ? Subjective to me also. Which part of Bear Market is more or less bearish to invest ? The Public Mutual Asset Allocation ( the one I differ to ) is quite difference from the original model I study in Financial Planning , as a matter of fact. First PB used CI points as the model but CI as you know may not represent the fair valuation of your investments. Besides, if at 1600 pts let say, then it would be at uncharted area , the model ceased to be effective. So Public Mutual switched to PE as a modification of Asset Allocation to reflect a better picture, not a perfect model either. At first, I disagree but it does actually make sense, so I adopt it. Investment tools are " dead" if we do not consider the current situation such as "IF we were to be at 1600pts or so." The methods we use just another way to measure Bull or Bear, neither a perfect model, but do considering the risk and return factors. You can disagree of course. Your model could be America's model, therefore tends to be more original. Use which is comfortable to you. No point to argue further SKY 1809, 1) Then, just mentioned it that what you are saying is "Public Mutual Asset Allocation" model. It is NOT what normal people known as Asset Allocation model. 2) I have full access to Vanguard mutual funds and US ETFs. Hence, I am NOT limited what Public Mutual has to offer. Dreamer This post has been edited by dreamer101: Aug 9 2009, 08:05 AM
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