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Thu Dec 8, 2016, 10:52 AM

The US under Obama has outperformed the world &the market thinks Trump can do better: SELL 8Dec016

The Dow and S&P500 are testing all time highs again. I am selling equities and rebalancing my portfolio toward corporate bonds or cash.

Trump is offering "infrastructure" in the form of long term financing for private tollways and toll bridges. Such financial structures already exist and are bonafide. However, Fat Bastard has nothing that can create public or private spending this year or even next year. Obama put almost a trillion dollars into "shovel ready" projects like the Cuyahoga Innerbelt Bridge that started immediately and finished ahead of schedule. Kudos for Ohio DOT, btw. I don't expect impact for five years and it will be so subtle as to be lost in the mud at the bottom of the data stream.

Corporate tax rates will be cut. Ok, that should free up capital for buying factories and hiring people. However, companies don't know what to do with the profits they have. Some bought up their own shares, which is a zero sum game. Many sat on the cash or created extra dividends: that did not boost the economy with extra sales to those capitalist class consumers. What is surely lacking is a stronger consumer market. Depression of wages has stunted that. American wages feel the pressure of new workers of the world entering the workforce.

Trade. Pence said at Trump's "F--ked You Rally" in Cincinnati that there would be more trade deals. But Fat Bastard campaigned against trade deals. Fat Bastard may have mastered the art of building golf courses, but he is willfully ignorant in matters like international negotiations. He is going to flub trade.

President Obama had an objective and action for doubling US exports in about a decade. Expect that to flatline and that US exporting companies with high value products that create wealth in this country will not be able to add high paying jobs.

Attitude. Republicans think that some sort of dam has broke and that now things will be set to right. They are buying equities on faith. I am going to take advantage of them now. I just have to decide on what is my threshold to buy back in. I am going to sell in lots of the next month. I will probably buy back from those fools if there is a correction of 10%.

Disaster. Fat Bastard likes to taunt the Chinese. His attitude does not reflect that he has some muscular skill of talking tough with our rivals. Au contraire, he is just stupid. He is going to blunder us into an international incident. I would not be surprised if one of those nukes owned by Pakistan finally gets put to use. That would crash everything. How would he deal with a hurricane or earthquake? In any case, the people of Syria are going to be crushed by Putin's boy Assad and we will never vanquish the soul of Islamic State in Levant.

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Response to Kolesar (Original post)

Thu Dec 8, 2016, 11:36 AM

1. Myself as well

Very small time player. Just my retirement portfolio, but I've been exchanging some fund shares for cash.

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Response to Kolesar (Original post)

Thu Dec 8, 2016, 12:16 PM

2. I sold off over 6000 shares of my bank stocks.....equity fund..

and insurance stocks. They wired my bank last week and a check arrived here yesterday for more. My niece said one of their brokers wouldn't recommend much more than locking down as the market is too volatile. Cash is good...

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Response to Kolesar (Original post)

Thu Dec 8, 2016, 12:24 PM

3. Moi aussi. nt.

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Response to Kolesar (Original post)

Thu Dec 8, 2016, 01:35 PM

4.  Trumps Infrastructure Plan Is a Full-on Privatization Assault

https://www.thenation.com/article/trumps-infrastructure-plan-is-a-full-on-privatization-assault/

Trump wants private investors to basically direct $1 trillion in infrastructure projects nationwide through a “revenue neutral” financing plan, which banks on financing from private investors, allegedly to control deficit spending (which the GOP generally deems wasteful, while promoting tax breaks as a wiser redistribution of public funds into corporate coffers). To draw some $167 billion to jumpstart the $1 trillion, 10-year infrastructure plan, Washington would grant a giant tax break “equal to 82 percent of the equity amount.”
...
Trump’s job plan will yield relatively substandard jobs by mowing down longstanding regulatory protections, including environmental review process (a critical tool activists use to challenge developments that involve public-health threats) and prevailing wage regulations.

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Response to Kolesar (Original post)

Thu Dec 8, 2016, 02:19 PM

5. Sell, Rebalance or change allocation ???

Since equities had gone up recently, I just completed a re-balance of my portfolio. This was a move back to the mix of cash, domestic and foreign stock and bonds I previously determined was proper for my goals. The allocation is now slightly more in bonds as I am a year older and more dependent on the income from my portfolio.

In the long term I am very comfortable with holding stock index funds regardless of current politics.

I don't manage these assets to fixed allocation percentages. I have a number of years of expense in cash, money for a number of additional years in U. S. government bonds and the rest in stock and corporate debt.

I have learned the hard way, that no matter how obvious it seems to be, it is impossible to predict the top, bottom, depth, or timing of market fluctuations. I am doing nothing different for this administration than with any other administration. I will sell a portion of assets when they are up and buy when they are down. This is what a periodic re-balance of assets does.

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Response to Yonnie3 (Reply #5)

Thu Dec 8, 2016, 03:02 PM

6. That was quite well written

I am calling the market, I think we are at a top. The high market may be due to the exchange rate per Warpy: http://www.democraticunderground.com/111679300#post3.

I asked myself if I am ready to risk 31% of my portfolio when all the business shows are saying this rally is the "new president rally". For years I have been hearing that equities were overpriced and the strong market was an illusion based on gimmicks by the Federal Reserve (low rates and QE). Now the business shows are saying that the federal spending stimulus is nigh and the government will act. But I know that nothing improved and in fact prospects are worse. Now I feel like a retiree who is comfortable with only 25% of my assets in equities.

Yes, this is a bit of a rebalancing because equities grew a bit since last year when I retired and thought I had the right mix.

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Response to Kolesar (Reply #6)

Sat Dec 10, 2016, 04:39 PM

7. It is hard to be completely comfortable with any allocation.

I have been underemployed and semi-retired for almost 13 years, so my investments are vital to me. I didn't plan it that way, it just happened. I worked in manufacturing facilities for more than 25 years. I've lost my job twice to offshoring. Once to Japan and once to Mexico. I forced myself to save when I was employed and paid off all my debt.

You think we are at the top and will act on that thought. I hope you are correct. I am firm in my belief that I just don't know what will happen. "For years I have been hearing that equities were overpriced ... " is akin to me saying every morning, "It will rain today", both of us will be correct eventually.

The cash cushion I maintain means that I will not be out on the street if the market tanks. This protects me from large losses but also means that I can never achieve anything near the gains of the markets.

It's all about comfort.

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Response to Yonnie3 (Reply #7)

Mon Dec 19, 2016, 12:11 PM

10. For years I have been hearing that Obama's success was only due to "easy money"

Sullen financial types kept calling the market overpriced. Now that the real estate sham man is in, they call it oppositely. But nothing has changed. They are nothing more than pundits, except for pessimistic Trahan in my post today.

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Response to Kolesar (Reply #10)

Tue Jan 10, 2017, 01:43 AM

17. Only reason Shiller PE is near 1929 numbers is....

 

ZIRP. There has been simply no other place to put the money. Bonds are riskier at these interest rates than unprotected sex in a bath house.

Shiller PE reached 30 just before the 1929 crash. Right now it is at 28. It has not been this high since 1929 except for one short period during the internet bubble.

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Response to Kolesar (Original post)

Sun Dec 11, 2016, 04:01 PM

8. Did that before the election.

I can afford to miss the uptick, the top may go higher and that's a good thing. It's not in my comfort zone at this point. The question I asked myself is risking 85% worth a 2% return, a 5% return, 10% return. The answer was no, maybe, and that rally is pretty much done.
Post election, there was that explanation as to why Trump won. It's the economy stupid! If that's the case, the market isn't representing the state of the economy in its broadest form. It happens. When it does I look at where the divergence might be. Given the cost to borrow is cheap in historic terms and the FED brought the walking dead back to life, the market isn't reflective of anything but that intervention. It's a edifice built over a sinkhole. Like a Trump casino.
While I don't think Trump's policies will take the market down, I tend to think an external event will. The black swan returns. An unknown unknown.
The FED is over due to raise rates. I expect them to push increases as fast as they can. If I miss this bus it's OK, another will be by soon enough.

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Response to Kolesar (Original post)

Mon Dec 19, 2016, 12:07 PM

9. The Purchasing Managers' Index is above expectations: that won't last

The rise in the PMI gave us a good 2016, but that won't be there in 2017.
http://www.tradingeconomics.com/united-states/business-confidence

Wall Street’s number one ranked strategist, Cornerstone Macro’s François Trahan makes a stunning call. The bull market is almost over and it’s time to get defensive.:
http://wealthtrack.com/trahan-stunning-bearish-call/

His advice included buying US Treasuries. When the equities market falls, sell the Treasuries that rose in face value due to weak interest rates and buy back into the equities market. Let's go!

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Response to Kolesar (Reply #9)

Mon Dec 19, 2016, 12:29 PM

11. He made a similar call in 2015

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Response to Yonnie3 (Reply #11)

Tue Dec 20, 2016, 08:01 AM

12. wouldnt be surprising to see U.S. equities down as much as 20 percent in the first half of the year

Lost about five percent in the next fifteen months as seen in the middle of this chart. I would call the year flat.

https://realtimebigchart.gtm.idmanagedsolutions.com/custom/fidelity-com/chart.asp?symb=.SPX&type=256&size=2&style=2324&time=3yr&freq=1dy
Thanks for the link. If you have anything insightful on bonds, I wanna see it.

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Response to Kolesar (Reply #12)

Tue Dec 20, 2016, 10:56 AM

13. Insight on bonds? Don't I wish.

Last edited Tue Dec 20, 2016, 11:44 AM - Edit history (2)

It seems that bonds just aren't sexy enough for the media. Web pages I used to go to in order to see daily price and yield are not even bothering to update data regularly.

The bond market ranges from US Treasuries, through Agencies, to Corporate Debt, to high yield (junk) bonds, so it is hard to make a one size fits all guess. I believe that bond investors are waiting to see what the new administration actually does.

The only action I have taken (other than normal re-balancing) is increasing my exposure to short term TIPS.

The only thing I've read that stuck with me was "If your time horizon is longer than the duration of a bond fund, then you stand to benefit. " from https://personal.vanguard.com/us/insights/article/barrickman-bond-moves-112016 This is in regard to rising interest rates, I believe.

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Response to Yonnie3 (Reply #13)

Tue Dec 20, 2016, 04:23 PM

14. "The bond market sell-off is an indication investors are continuing to digest unknowns, ...

... which include projections that U.S. economic growth could see a short-term boost "

So, bond traders are going to cash on a hunch. I know what to do with that. I could buy their bonds at my price and get better yields. Heh heh

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Response to Yonnie3 (Reply #13)

Tue Dec 20, 2016, 04:24 PM

15. Tipswatch.com is fun

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Response to Kolesar (Original post)

Mon Jan 9, 2017, 11:43 AM

16. Summers Warns of Financial-Crisis Risk From Trump Economic Plans

the president-elect’s plans for deregulation were setting the stage for the next financial crisis.

“The deregulation in some areas like finance is hugely dangerous,” Summers said Sunday in an interview on Fox News Channel. “Who wants to go back to the era of predatory lending? Who wants to go back to the era of vastly over-levered banks?”
...
Summers, former chief economic adviser to President Barack Obama and Treasury secretary under President Bill Clinton, also took aim at Trump’s protectionist rhetoric. That’s already caused a plunge in the Mexican peso, giving Mexican manufacturing an extra advantage over U.S. competitors.

“Every business deciding whether to locate in Ohio or Mexico is finding Mexico 20 percent cheaper,” said Summers, who’s now a Harvard University professor. “That’s a huge tilt against the United States.”

The peso has lost 14 percent against the dollar since the Nov. 8 election.
...
Trump’s plans to reduce corporate taxation, Summers said, would “hugely increase inequality” and could also help strengthen the dollar, further hurting U.S. exporters and the people who work for them.
...
While Summers favors a big increase in infrastructure spending in the U.S. as a way to boost productivity and growth, he called Trump’s plans on that front “a Potemkin village of nothing.”

Trump’s proposal called for filling an estimated $1 trillion “10-year funding gap” of spending on bridges, highways and airports through private investment and tax credits. Prospects for the plan in Congress among Republican lawmakers are unclear.

https://www.bloomberg.com/news/articles/2017-01-08/summers-warns-of-financial-crisis-risk-from-trump-economic-plans

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