Who knew stocks would fall?

Investment Analysis Clubs Macro Economic Trends and Risks
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I did, I did! (Jumping up and down and waving hand like I did in elementary school when I knew the answer.) Yes, I looked at the charts, saw a bubble and sold my stocks. (Most of them.) Unfortunately, I also sold my XOM which I should have kept. Who knew?

https://www.wsj.com/articles/hindsight-bias-investing-11671206329

Mirror, Mirror on the Wall, Who Knew That Stocks Would Fall?

Wall Street Journal readers recently tried to remember what they were expecting markets to do a year ago. It turned out they were fooling themselves—and you might be, too.

By Jason Zweig, The Wall Street Journal, Dec. 16, 2022

…
Looking back at yourself a year ago, what you know now has indelibly altered your perception of what you knew then. …

Hindsight Bias Buster.

Forecast, as of Dec. 31, 2023:

· the closing value of the Dow Jones Industrial Average;
· the total return of the S&P 500;
· the yield on the 10-year U.S. Treasury note;
· the annual rate of inflation;
· the price of bitcoin;
· the price of gold;
· the price of crude oil;
· and the best-performing major financial asset.

It is all too easy to fool yourself into thinking you knew what would happen all along—which, in turn, can delude you into thinking now that you know what will happen next…
A year from now, look back at your answers. Suddenly what felt obvious may seem obscure; blame that appeared clear may turn ambiguous; certainty may seem silly…[end quote]

OK, I’ll bite. Even though I think next year will be volatile. And I’m staying far away from risk assets until either the stock market capitulates to a reasonable (historic) P/E ratio or the economy has clearly weathered the stagflation storm.

· the closing value of the Dow Jones Industrial Average; 30,000
· the total return of the S&P 500; -5%
· the yield on the 10-year U.S. Treasury note; 4%
· the annual rate of inflation; 4%
· the price of bitcoin; don’t know, don’t care.
· the price of gold; $1900
· the price of crude oil; $60
· and the best-performing major financial asset. Short-term T-bills

Wendy (anticipating a recession with the Fed continuing to raise the fed funds rate as inflation stubbornly persists)

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I must admit, a year ago I thought it was beyond bloomin’ obvious we were heading for a fall that, as the old saying goes, even a blind man could see coming. Not in any way bragging or I told you so’ ing. I have no powers of clairvoyance. I drink coffee so no tea leaves to dissect. Just look at the chart… and consider inflation… and Fed soliloquies… Since the COVID bottom an F-22 can’t climb that straight, that fast. There are limits to these things.

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Vouch. You have steadfastly advocated a cash heavy, risk off, ‘don’t fight the Fed’ approach this year. I hope that I have been equally clear. It was my intention at the start of the year, and still is my intention to remain overweight cash at least until the Fed takes its foot off the brakes sometime next year.

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Me with Wendy and crew. I was unhappy with what I saw as inflated valuations even before Covid, was amazed at the continuing strength of the market even with all sorts of reliable red lights blinking, and now the Fed has made it clear that they are not kidding.

Meanwhile, I think far more than the investment world is in for a “Rip Van Winkle awakes and discovers the world is changing” moment.

Putin’s insanely stupid delusional invasion, followed by Ukraine’s very old fashioned “I’d rather be dead than give in to you” patriotically driven potency and durability, and the EU (especially Germany) finally awakening from fuzzywussieland means

  1. The Russian Empire is toast, and rump Russia will be weak,
  2. China’s Xi and cohorts (and their dangerous “not my dog” pet dog of Kimland) is in ever deeper trouble with less room to do more than just try to survive
  3. And with those two Imperial monsters flopping like dying whales the entire world economic system is in for big vibrations.

d fb

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Anyone who has been in the market long enough. What no one knew is “WHEN.”

The Captain

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Um, I did, I did. And I bought more for me and more for my sister-in-law. :wink:

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Agreed. If I take a look at my IRA tracking spreadsheet over the last 6 years do you know how many notes I have with “panic” in them for that week’s entry? And those times of panic were all wrong.

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I knew stocks would fall.

In fact, I’ve successfully predicted 14 of the last 2 market crashes.

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Two to three weeks ago I as talking about when to sell XOM. I had been hunting for that moment with DB2 for most of this last year. But that moment is here.

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Follow the money.
XOM up 67% from the time oil supply was obviously going to be disrupted by the Russian Military Buildup on the Ukraine border.

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Echo the sentiment. But how will this cool $369b spending influence the markets?

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Not really. There was lots of speculation on the Berkshire board about the market being overheated, and several threads about which stocks would survive the coming fall better than others.

Nearly unanimous agreement that the so-called Saul stocks would take a beating, that Berkshire would be OK (big surprise), and lots for people asking others if they were out, and by how much. Now you might say “oh, market timing”, and I would respond “Yes.”

I’ve been around the Fool since the 90’s, and there are miscellaneous posts and there are trends, and prior to 2000, 2008, and again six months/a year ago the drumbeat of “market too hot” have come on like Tom-Toms on a cruise up the Nile.

Unlike 2000 and 2008 I didn’t dump everything, but as I posted in that Berkshire thread I took a different tack and decided to selectively lighten. So did others on this board, as I recall.

Nobody says your have to time it to the minute. Being out of the market a few months early won’t kill you. Yes, it’s possible yo9u might miss out on a few percent gain. It’s also possible you might save yourself a 50% haircut. Which of those is a better outcome?

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IIRC, the spending will be spread out over a number of years so that the effect on the markets will be diluted.

DB2

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By creating economic efficiencies in producing goods in the US. It is an industrial policy. In relative terms it means the building of US wealth. A faster growing economy. Exporting as a deflationary global force by US.

Not sure how anyone can miss that.

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Speculation and knowledge are not the same thing!

Speculation
the forming of a theory or conjecture without firm evidence.

The Captain

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1000×1400 130 KB

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Lux,

That’s what worries me a tad about even looking at the Mungofitch rule. How can you go wrong mid way up the rally? Just because you could not see where the truly beautiful lows are?

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Another wonderful meme, somewhat relevant to the thread

539×900 108 KB

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