Fat Lady Singing "As Good As It Gets"

The irony of the day comes from headline news on Caterpillar, 3M, and Coke.

I think something may be lost in translation here -- not everything is literal in the English language. It's about nuance. Mish has never claimed that he runs a market-timing / trading service. May I suggest his comment be interpreted as: it's beginning to look ugly out there -- time to be cautious :)

The banking industry is quitting LIBOR reporting... I can't wait to see wait type of scam they are going to replace the scam with.

Big one-day declines don't mean a bear-market has started. It is big one-day rallies that indicate that we are potentially in a bear. As long as the one-day declines are reversed by small rallies spread over 2 or 3 weeks or more, there is no real danger for the bull-market. But once big one-day rallies start, then all bets are off!

Not sure what exactly you meant with "diversified" here?

I thought that Warren Buffet alread won his bet that S&P 500 index based fund will on average outperform hedge funds that try to cherry pick stocks. Maybe you don't consider SPY and VFIAX as "diversified"?

Stock market has been looking ugly for Mish like since what - 2012? So yeah, I don't consider this article in 2018 as an attempt to time stock market crash.

I would consider it as an attempt to time market, if Mish was bullish all the time and in 2018 turned bearish.

Hey Lege. You’re pretty close. “Every time I feel the need to peer into the thoughts of a solid middle-class 50+year old man, I look for your comments.” Upper middle-class might be more appropriate, but why quibble. The reason I agree with Okie is that my long term diversified portfolio has made me wealthy. Trying to time the market is a losing game for the vast majority of investors.

Da Vix, she ain't dead yet.

The Elliott wave count for CAT shows bear Wave 2 flat from early February 2018 to today. Expect the price to drop at least down to the $90 area over the next 6-8 weeks in what will be Wave 3. The SPX and Industrials don't have as clear wave count as CAT, so they might be in a bull Wave 4 triangle. Expect an explosive move one way or the other.

Agree. As I said before, short term to me is around 5 years. I like to wait for a nice established trend to develop. We just finished a 30 + year down trend in interest rates. Just waiting to see if that's over, or if we go flat for the next half decade. Short duration is where it's at right now. That, and some shiny insurance. Let the cowboys like Lacy Hunt bet the house against the Fed.

If you don't listen to Mish, you are a fool. A fool listens to only people he agrees with, and thus ends up with a single view, one that is most likely wrong. You should always listen to as many people as you can, with as varied of opinions as possible, and then from those, glean the relevant facts to form your own opinions. What I love about this site is Mish brings to the table facts that you might not see in the mainstream media (yes, I read that, too), and a different view of the facts. Sometimes I agree with him, sometimes not. Even better, the comments section adds additional opinions and views, and interesting dialogue.
Unlike some of the others here, I'm not a buy and holder (HODLer?). Sometimes I'm long, sometimes short. Sometimes I stay with a position for years, sometimes for days. I started doing this in 1996 to prove that you can't beat the market, but I failed to prove that, so I've continued at it. Last year was a good year for me, but this year I'm barely over break even, though I must say that today was a good day for me, since I was short the market and long gold. It erased my losses on the short side from the last couple weeks, and put me back in the black for the year.
By the way, it's exceptionally rude to not only blast the host, but to also link to spam in your post.

Hi Carl. I also like to listen to as many opinions as possible. And I agree with Mish on many topics. But I do struggle with his investment advice: essentially bonds and gold. I understand his desire to be sensational and a little over the top (to attract viewers), but I get a little tired of his repeated calls for a crash every time a market drops a bit (stock market, real estate, crypto currency etc). One thing I do appreciate is his willingness to say he was wrong on occasion.

Realist, but that is exactly why you make a perfect counter-view to Mish, as does Blacklisted, for different reasons. Mish argues that the market is high based on the PE ratio, and that in time they will return to normal levels. You argue that the economy will muddle on at 2% a year growth, unless tariffs do the economy in. Blacklisted argues that other places are even worse, so money will flow in from overseas, and keep our markets stronger than other ones.
So, where am I? I think PEs are a function of interest rates (PE=1/i), and that as the Fed raises interest rates, the PE will fall. I think that the economy could keep growing at 2%, but I think that the tariffs will end that. I think that foreign money will flow in, and that when it does, it will mark a clear top. I don't, however, have any way to determine that. Taking these three together, I think that the stock market will muddle along, moving lower more than higher, showing higher volatility than in recent years as it drifts lower. Based on that, I expect to continue to trade back and forth, long at times, and short at other times, and try to be on the right side more often than not.

Carl. That is a well thought out analysis. Thanks for sharing.

I will admit to trading the dips and rips occasionally, but only with a tiny percentage of my overall portfolio (mostly for fun, as I’m not a big risk taker).

Realist, there are other options, too, if you expect a choppy, mostly sideways market. A traditional approach is to move a portion of your assets to bonds and/or gold. For example, if you have a portfolio of 70% stocks, 20% bonds, and 10% gold that is going to be less volatile portfolio than 100% stocks. Then if one asset class outperforms, the others, you periodically re-balance.
Another option would be to sell some out of the money covered calls. Because the volatility is high, the prices for covered calls should be high. If you sell them well out of the money, you won't get a lot, but it will be like a second dividend. I never recommend anyone buy options, but selling them is not necessarily a bad idea. Because the market makers take a big cut, you definitely don't want to trade them, but rather sell them high and out of the money, and then let them expire worthless. If your stock does get called, since the price was high, it means that you did get a nice profit in the process.

As food for thought, how many "Stay the Course-Invest for the long term" prudent prognosticators on this board have ever lived through a 15 year Secular Bear Market? Got to ask yourselves, do you have the stick-to-it-ivness to hold out for that long, before capitulating and selling way off the highs previously achieved in the preceding bull market?

Another name for buy-and-hold is: saving. That would be a wise thing to do in a healthy economy, because there would be a positive yield on safe investments. But yield is exactly what the Fed has destroyed. There is no yield, and saving is dead. Wealth creation has been systematically squandered. Your local bank's CD rates tell the whole story. The "investors" who are making gains in this environment are not capitalizing on yields, but on speculating against the next guy. It's a game of grab the better chair on the deck of the Titanic. It still looks a lot like investing and saving, and that is part of how the Fed pulled it off, because if everyone felt their capital-earning power going down the toilet, there'd be outrage. As it is, those with assets still feel like their "investments" are doing well. Who knows how long this can go on. But over time the fact that the real economy (which is not numbers in computers!) has no real yield will be a problem felt by more and more people.


"The "investors" who are making gains in this environment are not capitalizing on yields, but on speculating against the next guy."

Just like everyone is speculating with gold, because it does not have yields at all?

"real economy (which is not numbers in computers!)"

Actually those "numbers in computers" are real economy too. It is called technological advancement where our governments don't have to waste paper anymore to print IOUs (we could have cut some trees to make some paper, but, thanks to computers, we did not have to. How cool is that that we saved on human labor?). And thanks to those "numbers in computers" at least taxation becomes somewhat fairer, because while one can hide paper notes, he can't hide "numbers in computers". Though, agreeably tax system could be improved even more, but that is different story.

Wagner, you are right that computer systems are real capital. I hope so, I work in software. I meant the numbers in computers which represent dollars: those have a precarious relationship to the real economy, especially since going off the gold standard. An example is the numerical dollar value of one's TSLA shares in a Fidelity account -- given that what Tesla does in reality is miss targets and burn capital.