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Thread: Short selling is an obvious way of benefiting from market corrections.

  1. #51

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    Quote Originally Posted by oak333 View Post
    Facts are facts and the conditions are your best allies.
    Jesse Livermore-Reminiscences of a Stock Operator

    My note: Between opinions and facts, I always give priority to facts.
    The "facts" are to yet be determined. Your position is just an opinion the same as mine. If it were a fact you would never get into the market as the 1% would literally close you out.

    Just as a FYI in 2008 we were positioned 100% in bonds and doubled our retirement accounts by 2013. After 10+ years retired we remain with over double what we retired with in our investments and we have taken out over 1/4 million dollars. We started retirement with $332,000. in our retirement accounts.

    I believe you are probably younger than us (we will both reach 66 in 2018) and still in a growth mode while we are in a "income" mode in our investing.
    Last edited by Redrum; 03-31-2018 at 06:21 PM.

  2. #52
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    The Royal Road to success is to be a Bear in a Bear market
    and a Bull in a Bull market.

    W. D. Gann

  3. #53

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    Quote Originally Posted by oak333 View Post
    The Royal Road to success is to be a Bear in a Bear market
    and a Bull in a Bull market.

    W. D. Gann
    The real task for investors is the be correct in determining which "market" probability is most likely at any given point in time. I would categorize the current market status at 60% probability that the bull remains in charge until S & P at least 3100. In my analysis it is too early to move to cash. As always do your own due diligence as I do not have the ability to see the future.

  4. #54
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    Quote Originally Posted by Redrum View Post
    The real task for investors is the be correct in determining which "market" probability is most likely at any given point in time. I would categorize the current market status at 60% probability that the bull remains in charge until S & P at least 3100. In my analysis it is too early to move to cash. As always do your own due diligence as I do not have the ability to see the future.
    Good luck with your analysis. Tell Warren Buffett about it. He is 116 $ billion in cash.

  5. #55

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    Quote Originally Posted by oak333 View Post
    Good luck with your analysis. Tell Warren Buffett about it. He is 116 $ billion in cash.
    Berkshire Hathaway is not making any move to cash if you follow their SEC Form 13 filings. Yes, as of November 2017 they had 109 billion in cash which is about 25% of their holdings. Warren prefers to only have 20 billion in cash. I would have to investigate but I believe Berkshire Hathaway is actively looking to reduce their cash position currently. In November of 2017 I was over 45% in cash so "worse" than Warren.....

    Buying back stock and paying dividends aren't Buffett's preferred way of using Berkshire's capital, but he realizes that at some point they become better options than "do nothing."

    Berkshire's buyback threshold is currently set at 120% of book value, a point where the company's board feels that shares would trade at a significant discount to their intrinsic value. Currently, the stock trades for more than 145% of book, well above the current threshold. However, Buffett has acknowledged that the board could revisit this policy if the cash continues to accumulate.

    Finally, a dividend appears to be on the table now, much to the surprise of Berkshire's shareholders. Berkshire hasn't paid a dividend since 1967, but Buffett mentioned the possibility at Berkshire's shareholder meeting.

    On February 23, 2018, UBS, for one, thinks the company should make a splashy acquisition one that could exceed a whopping $160 billion. The bank arrives at that figure by factoring in the record $109 billion of cash Berkshire had on hand at the start of February, and combining it with the company's strong free cash flow. As for which industry Berkshire may pursue, UBS thinks utilities are a good bet. After all, the company's energy unit made an unsuccessful $9 billion offer for the electricity provider Oncor last year and may still be interested in the sector.
    Last edited by Redrum; 04-08-2018 at 12:35 AM.

  6. #56

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    Quote Originally Posted by Redrum View Post
    Berkshire Hathaway is not making any move to cash if you follow their SEC Form 13 filings. Yes, as of November 2017 they had 109 billion in cash which is about 25% of their holdings. Warren prefers to only have 20 billion in cash. I would have to investigate but I believe Berkshire Hathaway is actively looking to reduce their cash position currently. In November of 2017 I was over 45% in cash so "worse" than Warren.....

    Buying back stock and paying dividends aren't Buffett's preferred way of using Berkshire's capital, but he realizes that at some point they become better options than "do nothing."

    Berkshire's buyback threshold is currently set at 120% of book value, a point where the company's board feels that shares would trade at a significant discount to their intrinsic value. Currently, the stock trades for more than 145% of book, well above the current threshold. However, Buffett has acknowledged that the board could revisit this policy if the cash continues to accumulate.

    Finally, a dividend appears to be on the table now, much to the surprise of Berkshire's shareholders. Berkshire hasn't paid a dividend since 1967, but Buffett mentioned the possibility at Berkshire's shareholder meeting.

    On February 23, 2018, UBS, for one, thinks the company should make a splashy acquisition — one that could exceed a whopping $160 billion. The bank arrives at that figure by factoring in the record $109 billion of cash Berkshire had on hand at the start of February, and combining it with the company's strong free cash flow. As for which industry Berkshire may pursue, UBS thinks utilities are a good bet. After all, the company's energy unit made an unsuccessful $9 billion offer for the electricity provider Oncor last year and may still be interested in the sector.
    maybe he will buy chinese solar panels before they get targeted with a 25 pct tax and plaster the border wall with them. Would be a great deal.

    Golditiki2+++

  7. #57

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    Quote Originally Posted by golditiki2 View Post
    maybe he will buy chinese solar panels before they get targeted with a 25 pct tax and plaster the border wall with them. Would be a great deal.

    Golditiki2+++
    :-) I like your comment..... At least you have proposed a useful way to take advantage of a "border wall"..... He could use GE windmills above the wall too! :-)

  8. #58

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    Quote Originally Posted by oak333 View Post
    The Royal Road to success is to be a Bear in a Bear market
    and a Bull in a Bull market.

    W. D. Gann
    oak333 - Evidence is growing that indicates we remain in a Bull market so I hope you have not really gone full on Bear and shorting! As I have noted many times I see 3100 before we go to below 2350 S & P. You have never posted what sectors or market positions you hold based upon your convictions. I believe you should share your actual investment strategies so that others can give thought to how you are investing. To back up my perspective on the markets, I am an open book in my positioning.

  9. #59
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    Markets spooked by rising bond yields:

    https://www.marketwatch.com/story/th...-be-2018-04-21

    The yield curve is flattening, but not inverting so far.

  10. #60

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    Quote Originally Posted by oak333 View Post
    Markets spooked by rising bond yields:

    https://www.marketwatch.com/story/th...-be-2018-04-21

    The yield curve is flattening, but not inverting so far.
    For a change I totally agree with oak333 with a few points that should be noted in the overall context.

    1) This rise in bond yields is getting a lot of "retirement" based investing dollars specifically moving over to Treasuries which have their yield also being raised by "fear" China will dump their 1+ trillion in Treasuries onto the market to "punish" the US for imposition of tariffs.

    a) These dollars are coming from dividend paying equities in great part causing 52 week lows in many and many have dropped into "bear" markt type corrections of over 20% below their highs reached since the start of the great recession in 2009.

    b) This is creating a very significant opportunity for higher yields in REITS, Utilities and some consumer equities such as GIS, PG, KHC and CLX.

    2) The move to higher yielding bonds must be weighed carefully with the duration of the bonds as with the rise in commodity prices, the drop in the dollar (DXY) and the rise in oil prices are starting to have an effect on inflation.

    3) If inflation does rise the current yield on the bonds being bought into could literally drop below the rate of inflation.

    a) If inflation does rise the value of the investments being bought now will drop significantly.

    b) A rise in inflation will allow the equities represented in Utilities and some consumer equities such as GIS, PG, KHC and CLX to raise their prices and dividend payments to at least keep closer to the rising inflation rates while bonds in the bond ETF funds being bought cannot raise their payouts on anything but newly purchased bonds added to the funds.

    c) The problem with adding new bonds to existing funds in a rising inflation scenario is investors will make tough decisions to take losses on their bond holdings to invest back into Utilities and some consumer equities such as GIS, PG, KHC and CLX to have a chance to recapture some inflation protection.

    4) The fear that is causing investors to sell their dividend paying equities while in a significant correction and then buying bonds is opening the door to repeat huge losses twice in a relatively short period of time. These investors may very likely again go into fear selling of the bonds if in fact inflation does rise and cause huge losses in bond funds.

    The postings I make are my thoughts only and I am not a fiduciary so DYODD.
    Last edited by Redrum; 04-22-2018 at 10:15 PM.

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