Stock Market - Post Election

Chocaholic · 11-01-2016, 05:38 AM

Any thoughts? Thinking about moving a chunk into the Money Market until the (potential) storm passes. But I'm no investing wizard. What say the brain trust?

KFC911 · 11-01-2016, 05:45 AM

My investment strategy does not include any short term guesses as to which way the wind might blow...YMMV.

aschen · 11-01-2016, 05:52 AM

Quote:

Originally Posted by KC911

My investment strategy does not include any short term guesses as to which way the wind might blow...YMMV.

yesir, im with you

Chocaholic · 11-01-2016, 05:54 AM

Some feel there could be long term effects as well. But I suggest that we should not rely on history as a guide to what may happen this time around for very good reason.

masraum · 11-01-2016, 06:11 AM

Quote:

Originally Posted by KC911

My investment strategy does not include any short term guesses as to which way the wind might blow...YMMV.

Ditto ^

Quote:

Originally Posted by Chocaholic

Some feel there could be long term effects as well. But I suggest that we should not rely on history as a guide to what may happen this time around for very good reason.

Depends on what you consider long term, a few years? That's not long term.

I've read many articles that suggest that the commonly used index fund over a period should average, let say, 8%, but that the average investor may make anywhere from 25-75% of that return. Again, what I've read is that the issue is that people get emotional or have hunches and try to predict the market or react to the market and end up shooting themselves in the foot.

Invariably, someone guesses correctly from time to time and says "I told you so. You should have listened to me." As we all know, even a stopped clock is right twice a day.

We occasionally have hiccups in the market where you'll see a short dip. If you have money to invest, maybe wait and see what happens to see if we get one of those dips. Of course, instead of a dip, we may get a small peak in which case, you aren't helping yourself by waiting.

Chocaholic · 11-01-2016, 06:24 AM

All good advice under reasonably normal circumstances. Which is not what we have today. So, let me ask it a different way. Regardless of your investing strategy, how will the markets react following Nov 8...and how far beyond that will it take to mostly stabilize? Any WAG's?

recycled sixtie · recycled sixtie's Garage

As the above says timing the market is a hit or miss thing. It rarely works.

To reduce the risk you can always $ cost average in or out. That means buying or selling a small amount each month and this averages out the highs and lows.

My caveat. I am not an investment professional but overall have done pretty well over 30 years. I am starting to come around to the idea of etf's rather than mutual funds.

Expect lots of volatility.

If you cannot sleep at night worrying about your investments it is best not to be in the market.

Jim Richards · 11-01-2016, 06:50 AM

I can help you with buying high and selling low.

Craig T · 11-01-2016, 06:57 AM

Yada yada yada...Of course the stock market should be a long-term investment with best result over decades of $-cost-averaging. Forget that for a second. Let's pretend we're all gamblers (and thats what day-trading is). Let's guess the knee-jerk reaction to the result of the election on the day after the election. He's mine:

Hillary...The market bumps up 1%-2% for few days. She's a known to Wall Street. On investment bank speaking payrolls. A relief that nothing changes.

Trump...The market drops 2%-3% based on the unknown and the fear of a disruption to international trade. Once the reality of government gridlock resurfaces, everything goes back to normal...valuation and forward looking PE.

Chocaholic · 11-01-2016, 07:01 AM

Any influence from ongoing QE?

tabs · 08:20 AM

Quote:

Originally Posted by Chocaholic

Any influence from ongoing QE?

Bingo you hit the bottom line. With 2.9% growth and the FED being the ONE institution still providing economic stability either way it goes won't cause too big a ripple. However if the politics starts to roil with uncertainity e.g. as in a contested election or even an on going investigation like Watergate you can expect choppiness in the Equity market.

Further with the Equities being stagnant at near all time highs for almost 2 years, and IF the economic data continues to be weak inspite of FED activist monetary policy the markets will begin to have a downward bias.The tide will begin to recede. The operative animal spirit narrative here will be a discouragement that things will not be getting better in the face of political instability. The countervailing force is that there is no place to invest capital to make an ROI and the FED is still guarnteeing the economy with an activist policy.

Then we have to take a look at exactly what kind of and how big of a bubble the banks have created with sub prime auto loans? DEUTSCHE Bank is out of money and the German govt says they are not going to refund them? Is this the beginning of a redux of 2008? As posted this last weekend the FED and US govt NO LONGER has the where with all to bail the banks out once again. It has taken roughly 14T USD of monetary expansion and debt in an ongoing policy to keep the economy stabilized. With 60% of the worlds cash reserves in USD any break in the USD is catastrophic for the US and global economy. The Chinese since 2009 have been moving slowly away from the USD hegemony. Chinese Oil trades are now being settled in RMB and not USD. The USD and Treasuries remain strong as they are seen as being the last best high ground in a sea of global economic and geopolitical turmoil. The modifying factor here is the new element of political uncertainity and INSTABILITY in the US. If this becomes an ongoing or worsening situation it will have an adverse effect on that global perception of the USD and Treasuries. .

Now what I have just assessed is worth a lot of money given my previous veracity of assessment of the state of the economy and equity markets. This is not with standing of my long term assessment of a negative global outcome in which this current assessment is part of the process of coming to pass. I am in essence giving you this for no compensation. You can not expect this to continue.

MRM · 11-01-2016, 08:05 AM

My crystal ball is a bit cloudy, but I think the following is a reasonable guess. And anyone who predicts anything about swings in the market is guessing, whether they admit it or not.

The day or two after the election the market will probably be up a few points simply because the uncertainty of the election is over. By a few points, I mean a hundred or so, or just a good day's gain. It will quickly average out.

In the short term, market trends are down because corporate earnings are declining across the board and US companies are facing headwinds with slow or nonexistent growth in Europe and Asia. Over the next year or two the market is likely to be flat or lower because of the stagnation in the world's markets. Eventually the end of QE and rising interest rates will trim stocks further. Again, these are headwinds, not the start of the bottom dropping out again. The market is a bit high right now and is likely to correct a bit over the next year or two.

Longer term, in two years or so, US companies will be on firmer footing with costs under control and Europe and Asia should start their way back from the business cycle. This will give US companies a double bonus of having more foreign sales and selling into a declining dollar, which gives back the currency losses US companies are experiencing now with the Dollar so high.

So if you really wanted to time the market, some exposure to European stock indexes makes sense now because the Dollar is high and Europe's stocks are low. As the dollar loses value and Europe's stock indexes rise you get your double whammy in your favor.

Or Brexit could cause Europe's markets to fall into chaos and drag the US down with it and you'll lose everything you put into European stocks right now. One or the other possibility is probably right.

MBAtarga · 11-01-2016, 08:32 AM

Quote:

Originally Posted by Jim Richards

I can help you with buying high and selling low.

Hey Jim - what do you have to sell?

I've got some stuff you can buy....

tabs · 11-01-2016, 08:42 AM

Quote:

Originally Posted by MRM

My crystal ball is a bit cloudy, but I think the following is a reasonable guess. And anyone who predicts anything about swings in the market is guessing, whether they admit it or not.

The day or two after the election the market will probably be up a few points simply because the uncertainty of the election is over. By a few points, I mean a hundred or so, or just a good day's gain. It will quickly average out.

In the short term, market trends are down because corporate earnings are declining across the board and US companies are facing headwinds with slow or nonexistent growth in Europe and Asia. Over the next year or two the market is likely to be flat or lower because of the stagnation in the world's markets. Eventually the end of QE and rising interest rates will trim stocks further. Again, these are headwinds, not the start of the bottom dropping out again. The market is a bit high right now and is likely to correct a bit over the next year or two.

Longer term, in two years or so, US companies will be on firmer footing with costs under control and Europe and Asia should start their way back from the business cycle. This will give US companies a double bonus of having more foreign sales and selling into a declining dollar, which gives back the currency losses US companies are experiencing now with the Dollar so high.

So if you really wanted to time the market, some exposure to European stock indexes makes sense now because the Dollar is high and Europe's stocks are low. As the dollar loses value and Europe's stock indexes rise you get your double whammy in your favor.

Or Brexit could cause Europe's markets to fall into chaos and drag the US down with it and you'll lose everything you put into European stocks right now. One or the other possibility is probably right.

You make bad assumptions. After 8 years of sub 2% growth there is no reason to believe that the FED will be able to raise interest rates nor end their activist monetary policy. The average growth for 2016 is 1.8% which since 2012 has been my projection as it is the rate of population growth. Which means no real growth.

Then we have to start to assess the drag that debt has on economies. In essence the EU, Japan and US are bankrupt. Deutsch Bank is out of money. Here we have to consider the effect that monetary expansion and debt creation has had in sustaining economies. Thus since 2009 the previous norm of the post WW2 business cycle has not been operative. Which means most of your conventional wisdom thinking is inoperative.

tabs · 11-01-2016, 08:59 AM

The factor that makes my assessments accurate is the length of my time line. Most people think back about 10 years and in general think in terms of what they have known in their own life times as being the operational norm. My time lines extends back from my own lifetime into the past as I have a working knowledge of history. This knowledge gives me an extended view of long term trends which one can then extrapolate trajectories and outcomes into the future.

Norm K · 11-01-2016, 09:08 AM

It seems at least somewhat likely that our new POTUS will be very lame-duckish irrespective of who wins - lots of obstruction and the like. Since markets tend to sorta like a lame-duck, things might go well market-wise in the short-to-medium term.

In addition, reports indicate that Millennials are finally beginning to enter the workforce in large numbers (there are now more Millennials than there are Boomers) a market phenomenon we last saw in the nineties, when GenXers were entering as Traditionalists were departing. In terms of perceived prosperity (and you know what they say about perception) the nineties weren't too shabby for most folks. And once those Millennials start having kids, they'll lose those minimalist tendencies they're currently known for: mini-vans, SUVs, larger homes, all the family trappings will trap them the same way they have the preceding generations. So over the next, say, 2-10 years they'll be pouring money into the economy to obtain all the stuff they now think they'll never want or need.

Bottom line though is, and as your folks probably told you a million times growing up ... we'll see.

_

tabs · 11-01-2016, 09:08 AM

What the purveyors of the conventional wisdom sic idiots in charge dont get is that the Post WW2 economic dynamic ended in 2008. Since then there has been a new underlying paradigm at work which is transitioning our way of life and thinking. You can not return to a past that no longer exists. Especially one where the dynamic that created it no longer exists.

302340 · 11-01-2016, 09:17 AM

I agree with MRM about the election results initially having little impact on the market. However, if the ACA is still intact and there is a downturn (as Tabs alludes to), US companies will begin to shed their workers; the average cost of ACA per worker is estimated between $4800 to $5900 from what I've read. If conditions worsen, the US consumer will pull back, starting a snowball effect, and the markets will tumble very quickly.

Lee

tabs · 11-01-2016, 09:18 AM

Quote:

Originally Posted by Norm K

It seems at least somewhat likely that our new POTUS will be very lame-duckish irrespective of who wins - lots of obstruction and the like. Since markets tend to sorta like a lame-duck, things might go well market-wise in the short-to-medium term.

In addition, reports indicate that Millennials are finally beginning to enter the workforce in large numbers (there are now more Millennials than there are Boomers) a market phenomenon we last saw in the nineties, when GenXers were entering as Traditionalists were departing. In terms of perceived prosperity (and you know what they say about perception) the nineties weren't too shabby for most folks. And once those Millennials start having kids, they'll lose those minimalist tendencies they're currently known for: mini-vans, SUVs, larger homes, all the family trappings will trap them the same way they have the preceding generations. So over the next, say, 2-10 years they'll be pouring money into the economy to obtain all the stuff they now think they'll never want or need.

Bottom line though is, and as your folks probably told you a million times growing up ... we'll see.

_

So the old model of conspicuous consumption is going to save us all? As the pendulum swings the Millennial reject conspicious consumption on one hand because they see what happiness and contentment it has brought and on the other they realize that scarcity is the new norm. That they will have to make do with what they have to work with. That is declining economic opportunity and that means a lessor life style. So why not just hang out in moms basement in a fatalistic sorta way.

recycled sixtie · recycled sixtie's Garage

That has been the history of economic events. Something new every so many years.
That is how the rich get richer. They are not overly fazed by changing events. I think the major corporations will do just fine in the long run as long as they do their research and change with the times.

I am an incurable optimist......