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Thread: Birchtree's Account Talk

  1. #1

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    Default Birchtree's Account Talk

    The goldilocks economy is intact. Now is the time to make preparation for the leg up we dont't know how far it wll go, but who cares for the moment-I just want to be on board for the rocket ride.


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  3. #2

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    You are so optimistic that its catching... Good for you to start posting your moves... Thanks...

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  5. #3

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    Thanx Pyriel- we need some more Roth IRA talk.

    The Goldman Sachs financial-conditions index which attempts to measure how much stimulus there is in the economy, stands right about where it was when the Fed starting raising rates last year. After the 8th Fed tightening financial conditions suprisingly have not become much tougher. Yet. This is a reason to be bullish.

    The Fed is searching for neutrality, not actively trying to suppress a mild bout of temporary inflation. The Fed wants the option to be able to reduce rates in case of another unforseen problem arises that is an economic threat.

    The consumer is still spending, only not as much lately, but we are in transition to increasing capital spending by industry. The economy is not to hot or to cold. The GDP in the area of 3.0-3.5% can last a long time without igniting rampant inflation.

    Many companies are buying back their own stock and increasing dividends. Income has become important to the investor once again. I have to be bullish in this environment-we are at the cusp of a back to back secular bull market which may well last ten years like the last one.

    There are so many reasons to be a renegade contrarian-color me BULLISH.

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  7. #4

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    The Fed rate of 3.0% is still historically low, even 4.0% is low, and the Fed remains accommodative. They did say longer term inflation expectations remain well contained. This bull market leg (only the second leg) wants to take as few people with it on the upside as possible-that's how it works. The sp500 is trading at under 16 times estimated earnings for the next 12 months. Certainly a value play in my book. Let me get as much of it as I can now so I can sell some to the bears later at much higher pricing. It actually fun being a lonely bull.

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  9. #5

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    The Fed continued the statement as previously stated that it could continue to raise rates at a "measured" pace. "Measured" has come to mean by no more than a .25 point a meeting. The operative word here is (could). I personally think they are done. I learned many years ago that you watch what they do, not listen to what they say. "Measured" is not etched in stone. And they are not my friends. The market will however give clear signals because the market knows all. It is a discounting mechanism for the future. Come the end of June for the next Fed meeting the markets will be alot higher. I'll be ready and waiting to play the next short term correction when it arrives.

    And remember just in case someone continues to worry about inflation, that productivity growth remains strong, enabling businesses to offset higher input costs with operational efficiency. Real wage growth is nowhere to be seen and productivity gains stll have capacity. When was the last time anyone got more than a 4% raise?

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  11. #6

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    I know sometimes I can be a nat buzzing around, but that is what a renegade contrarian does and unfortunately all I see today is super good news everywhere. I ponder the question that seems to be consences: should I abandon my true nature and jump to the G fund and lock in a few wee dollars? Nope. As my wife would say that was quick. I'm to greedy, I've been waiting since Jan'04 for a continuation of this secular up cycle. As a matter of fact I plan today to buy some more rasberries (stocks) while the Bears are huddled, looking up and pointing. Asking the perplexing question; what is it, a bird, a plane, no it's Wonder Woman on the rebound.

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  13. #7

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    I'm going to stick my neck out -way out, but I have enough investing experience to recover my self confidence if I am wrong in my direction. This is how a contrarian makes and sometimes conserves capital. Here is a look at my current strategy and it comes with no warnings. Right now the concenses appears to be toward a markedly bearish slant. Even junior bulls of recent think we are in a trading range ment to buy and exit at the first sign of trouble again. A lot of savy pundits and players believe that because we now have a good jobs number, finally it happens, with revisions upward of the 2 prior months, that there may not have been a soft spot in the economy after all. The anticipation of the soft spot was primarily evident from some weak retail sales numbers. Everybody (50 million Frenchmen) always over reacts and that reaction may have precipated even further damage in the most recent correction. Lots of agendas to make a market. We have bottomed recently and will more than likely(sometimes one has to hedge) will move up now strongly, catching many players off guard. Thr majority stll believe the Fed will continue to increase rates the later part of June and continue forward even more until they reach 4% by the end of this yea

    As an official card carrying contrarian as myself, I will have none of this silly stuff. There are so many reasons to be bullish. For one I have yet to see Chicken Little anywhere abouts.



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  15. #8

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    The primary reason to be bullish is I don't fear the Fed. I firmly believe they are with the tightening cycle, only they aren't going to tell me that. You have to be pre-emptive and prepared to take advantage of the coming economic and political changes that may yet be evident to us. The omnipotent market will discount the future and wll advance rapidly, many folks will not believe the up move, still looking for a choppy market like we have had from 1/04 until recently. The negativism that developed durung this recent correction was of an extreme nature equalling several previous periods in recent history. In 10/02 the Dow had been down 3 consecutive years, ending down in 10/02 16.9%. It ended down 17.3% in 1977. 10/02 was only the 4th time in its107 year history that the DJIA fell for 3 or more consecutive years, the previous declines were 1901-03, 1929-32 and, most recently 1939-41. The Dow put in a very painful tripple bottom starting 7/02 10/02 and finally 3/03. I could tell you what the numbers were, but I don't want to be a bore. The Dow then proceeded to rise 3000 points from 3/03 until 1/04. That was a 25% gain, from 10/02 the gain was 43%. I would br bragging if I told you how much money I made. I did however have a guy at Merrill tell me my account appreciated 123% in 10 months.



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  17. #9

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    I'm loaded up and ready to go another 3000 points. You must remember the market doesn't want to help you, it will throw you head fakes, it doesn't want you on board for the ride. It likes to take as few people with it on the upside as possible and everyone with it on the down side. As a TSP member your best bet is to be 100% C fund-donit trade, just ride and be sure to buckel up. If the move takes a year to complete there will be some shallow down drafts, but try to ignore them. The 3/03 bottom was a 14.9% decline-after that there were 6 other corrections on the way up, the deepest was a -6.2%, that was the first one in 4/03, the rest were monor until 2/04 with a -5.7% correcyion. Then we traded side ways with 4 cyclical corrections that basically tried to wash out some of the pent up enthusiasm that developed in 03. So far 05 has been a repeat pattern only this last correction was based on fear of the Fed, and it hit negative sentiment extremes. Now is when I start to get excited, I mean renegade excited. I took my hits to be sure but my portfoloi is large enough to absorb the punishment and allow me some very nice stock purchaseson the lows of around Dow 10079. I frankly like bargain shopping for things others no longer want to own, even though I end up causing myself more pain, it is only temporary.


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  19. #10

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    I believe, and I stand alone here, that we are participating in a back to back secular bull market. If my strategy works and I am correct about this move I plan to make a great deal of money-oh perhaps between 400000 and 500000$, that's right hundreds of thousands-remember i do not fear the Fed. Let's hedge, if I 'm wrong anthe move is a cyclical bull market that is getting on in age I won't make as much, but I'll be happy. I have enough flexibility to trade if necessary-gotta watch them taxes though. I will concentrate on building dividend income that helps to ride the roller coaster. The upcoming rocket ride will produce many appreciating assets. There is even greater clarity in the economy now than in 03-sometimes it simply boils down to either faith or foolishness-can 50 million Frenchmen be wrong-you bet!

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  21. #11

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    Here is something to ponder. Did anyone watch the Kentucky Derby? Do you realize the two

    horses with the longest odds (less favored out of 18 other horses) actually placed number 1 and 2. The odds were like 50-1 and 72-1. A$2 bet returned $100. A $2 bet on the trifecta returned over $100,000. These bets were primarily a contrarian play. I wish I was a gambler because I sure would have hit the target.

    The wife thinks we should start going to the track and throwing money a way on contrarian bets. I think I'll just stay with stocks and TSP.



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  23. #12

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    Testing my avatar.

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