The Next Big Crash - Are You Prepared?

(10-02-2014, 08:53 PM)Layman A Wrote:

(10-02-2014, 05:57 PM)tikam buddy Wrote: Well, in a long term capital markets losing streak I reckon that gold could perhaps fall less than the other riskier assets, or store value for longer.

Does GOLD generate REVENUE like businesses do ?

Does GOLD give out DIVIDENT to the investor ?

Why Greatest Investor of all time Warren Buffet don't invest in GOLD ?

If the asset under play cannot generate any revenue by itself, it is nothing more than a zero sum game, right ?

Technically it is not because the world population increases more than the supply of gold. Hence, assuming everyone wants it, the price of gold will naturally increases over time. Gold is a valued object regardless of country/race, hence preserving its value over time.

http://www.marketwatch.com/story/scary-1...2014-02-11

Even down to 12,400, it would still not yet the bottom for DJI IMO

The Worst Is Over, For Now

By David Kuo | February 12, 2014

Dear Foolish readers,
David Kuo - Director, Motley Fool SingaporeIt would seem that the stock market rout of last week has ended - at least for the moment it appears to be over. Everything, for now, looks hunky-dory, again.

But what did you do during the stock market fallout? Were you, like many, gripped by doubt and uncertainty?

Did you wear a perplexed look as you licked the tops of your pencils, when you saw that the market value of some of your favourite shares had fallen below their intrinsic values? Did you question your own calculations? Or did you immediately whip out your cheque book and pen when you realised that stock prices were skewed in your favour?

Where did the money go?

Legendary investor, Seth Klarman, once said: "The stock market is a story of cycles and of the human behaviour that is responsible for overreactions in both directions".

We saw the worst examples of human overreaction when money was being sucked out of emerging markets and relocated somewhere else. Precisely where that "somewhere else" might be, remains a mystery to me.

It didn't go into the US stock market because American shares were down. It didn't end up in the UK or European markets because they were also down. Japan's stock market was firmly on the back foot, so we know the money didn't go there. And China was closed for New Year celebrations, so it didn't end up on the Shanghai exchange, either.

So where exactly did the money go?

It could have gone into bonds. But that would seem a little unlikely given the appallingly poor yields on fixed-income investments. It could have gone into property but that also seems questionable since real estate right now is hotter than the bottom of my laptop.

The rising cash mountain

So that just leaves cash as the remaining possible asset class that the money could have gone into. However, cash is a deeply unattractive asset class right now. It pays next to nothing in interest. Additionally, the real return is negative when inflation is factored in.

It is therefore unlikely that the proceeds of the snap share sale would remain as cash for any length of time.

There is something else to note too. America has not stopped printing money. It might reduce, over time, the amount of money that it will magic from within the Federal Reserve. But even at $65 billion a month, that still amounts to $780 billion a year to add to the trillions it has already created.

That might suggest the stock market bull-run could still have some distance to go.

Legendary investor Peter Lynch once said: "When yields on long-term government bonds exceed the dividend yield of the S&P 500 by 6% or more, sell your stocks and buy bonds".

Do gentlemen really prefer bonds?

Although I don't go a whole bunch on tactical asset allocation, I can appreciate the message that Peter Lynch is trying to convey. In fact, it is not too dissimilar to Warren Buffett's well-worn quip about fear and greed: "Be greedy when the market is fearful, be fearful when the market is greedy".

Currently, US 10-Year Treasuries are yielding 2.7% while the dividend yield on the S&P 500 is around 2%. That might change but it is unlikely to change any time soon. The point is this: the continuing penchant for safe-haven bonds, which is depressing bond yields, would suggest that the stock market remains the more attractive investment option.

Using Lynch's yardstick, we could still be some distance away from seeing bond yields surpass dividend yields by 6% or more. Or as Peter Lynch once said: "Gentlemen who prefer bonds don't know what they are missing".

Foolish best

David Kuo
David Kuo
Director, Motley Fool Singapore

(12-02-2014, 11:38 AM)valuebuddies Wrote: http://www.marketwatch.com/story/scary-1...2014-02-11

Even down to 12,400, it would still not yet the bottom for DJI IMO

The PE of S&P in 1929 was 32+. Current PE is still way below 32 right? So the likely hood it will continue to follow the chart is low unless earnings declined by half.

Mobius Says Emerging-Market Selloff to Deepen on Outflows - Feb 7, 2014 10:47 PM GMT+0800

Mobius Says Emerging-Market Rout Near End as Valuations Lure - Feb 12, 2014 12:58 AM GMT+0800

Another classic coming in. This guy is a genius. In fact, I became quite bullish right after he said selloff to deepen.

(12-02-2014, 12:44 PM)tau281290 Wrote: Mobius Says Emerging-Market Selloff to Deepen on Outflows - Feb 7, 2014 10:47 PM GMT+0800

Mobius Says Emerging-Market Rout Near End as Valuations Lure - Feb 12, 2014 12:58 AM GMT+0800

Another classic coming in. This guy is a genius. In fact, I became quite bullish right after he said selloff to deepen.

Haha, may be we can take him as a yardstick for Reverse Market Indicator ?

When he say SELL , we BUY !
When he say BUY , we SELL !

(12-02-2014, 01:19 PM)Layman A Wrote:

(12-02-2014, 12:44 PM)tau281290 Wrote: Mobius Says Emerging-Market Selloff to Deepen on Outflows - Feb 7, 2014 10:47 PM GMT+0800

Mobius Says Emerging-Market Rout Near End as Valuations Lure - Feb 12, 2014 12:58 AM GMT+0800

Another classic coming in. This guy is a genius. In fact, I became quite bullish right after he said selloff to deepen.

Haha, may be we can take him as a yardstick for Reverse Market Indicator ?

When he say SELL , we BUY !
When he say BUY , we SELL !

He is consistently advocating BUY and BUY recently. Are you selling now?

Quote:He is consistently advocating BUY and BUY recently. Are you selling now?

He is probably consistently a bull forever so when he said selloff to deepen so I knew some real stuff is happening. The biggest bull is bearish, probably a sign things will go up.

(12-02-2014, 02:34 PM)CityFarmer Wrote:

(12-02-2014, 01:19 PM)Layman A Wrote:

(12-02-2014, 12:44 PM)tau281290 Wrote: Mobius Says Emerging-Market Selloff to Deepen on Outflows - Feb 7, 2014 10:47 PM GMT+0800

Mobius Says Emerging-Market Rout Near End as Valuations Lure - Feb 12, 2014 12:58 AM GMT+0800

Another classic coming in. This guy is a genius. In fact, I became quite bullish right after he said selloff to deepen.

Haha, may be we can take him as a yardstick for Reverse Market Indicator ?

When he say SELL , we BUY !
When he say BUY , we SELL !

He is consistently advocating BUY and BUY recently. Are you selling now?

Actually when he say SELL, I BUY.
Now, when he say BUY, I am tempted to BUY more !

In the long run always good to hold on to some stocks and enjoy the juicy dividends, be it bear or bull market ^^