Odds favor a 10%-20% correction: Strategist

Posted by richrobinson 9 years, 11 months ago to Economics
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It seems the markets have been propped up so long that a correction could get really ugly.
SOURCE URL: http://www.cnbc.com/id/101582033


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  • Posted by CircuitGuy 9 years, 11 months ago
    It's very hard to control markets. They're a huge batch of people all making decisions. I reject claims that a few powerful interests control at what prices people will buy and sell businesses.

    Monetary policy is too tight/loose is not the same thing saying the value of everything is being suppressed/propped up.

    I am very bullish on stocks, large-cap and small-cap. My unreliable crystal ball says we have several more years of expansion and two more years of better-than-average stock gains.

    I am concerned somewhat about inflation. I want to see gov't use this low-rate expansion to retire debt. We're obviously not doing that.

    This does not change my prediction of above- average real returns on stocks.

    My crystal ball is really unreliable. I'm not sure I predict the economic cycle better than a cointoss.
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    • Posted by 9 years, 11 months ago
      You make good points circuit. What I found interesting was that we average a correction every 18 months. It has been 30 since the last one. I have heard calls for a market drop for some time but it has always been from the doom and gloom crowd. Seems more main stream analysts now expect a pullback. You could be right on the long term trend.
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      • Posted by Robbie53024 9 years, 11 months ago
        In a "normal" system, there would have been a correction, but with the Fed pumping billions a day into the banks what should have happened has been deferred. But it cannot continue much longer. And when it tanks, it's going to be very ugly.
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    • Posted by Robbie53024 9 years, 11 months ago
      You might want to get some cleaner for that crystal ball.
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      • Posted by CircuitGuy 9 years, 11 months ago
        I cannot predict market fluctuations. If you think you can and know my guess is wrong, you could write calls on ETFs that track the major indices. If you say you can't write naked calls b/c of your being wrong in the short-term, you could do a bear spread instead and pick longer expiration dates. If you think the decline in stocks will be masked completely by inflation, you could take a short position in bonds, to benefit from rising rates. If no strategy can work,

        Our boring strategy of investing in our own businesses and when something works pouring it into a portfolio that >50% S&P index funds works for the moment.

        If my guesses are wrong, I worked for incentive options in the 90s, so I know how to be wrong and get back up.
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