do you think we will have another down turn in stocks?

[cantretire]

One business reporter made a great comment yesterday that businesses need to start showing that they can make more money by selling more product rather than just by cutting costs. Most of the current recovery in stocks is attributable to cost cutting - reducing the workforce, oil prices dropping, outsourcing to cheaper labor markets, etc. A real, sustainable recovery is based on actually doing more business.

Problem is - no one has the $ to buy the products.

[Broken Arrow]

Problem is - no one has the $ to buy the products.

And hence, we get to the core reasoning why I have my doubts about the sustainability of the current market!

It simply doesn't make any sense that the current market could sustain such a long bullish run, and at the same time, still have one of the most astonishing record lows in unemployment in American history. It doesn't compute until....

You factor in the fact that there is a massive amount of stimulus money being injected into our markets. Governments all over the world are injecting stimulus money-- borrowed taxpayer money that they do have to pay back somehow, especially Social Security-- in order to jump-start our global economy.

HOWEVER, the giant pool of investor money (a large portion being Sovereign Wealth Funds) that is pulled out of the markets and is sitting on the sidelines is roughly valued at more than $80 trillion US dollars! And yet, the global GDP of all the major governments around the world totals at "only" $15 trillion per year. Naturally, the stimulus money being injected is only a small portion of that total GDP, and it simply is not enough offset the amount of investor money that have been pulled out right now.

So, when I was predicting that the market was going to run flat, I was actually being optimistic and bullish, because if you stop and think about the numbers involved, how could anyone in their right mind think that the stimulus was going to be doing anything?

And yet, the market is a funny thing. After having beaten down and tormented by the chilly climate for so long, I guess bullish stalwarts were willing to take any shred of hope and run with it!

On the bright side, the governments don't actually have to fill in that entire pool of investor money. They only have to inject just enough to "jump-start" the market again; to make it enticing enough for investors to put their money back in.

But most haven't jumped back in yet because, when it comes down to it, they don't see increases in consumer demand yet. And how can anyone expect consumer demand when unemployment is as high as it is right now?

Now, I'm not trying to scare anyone here, because our economy is far from dead. It's simply shedding off a lot of excess baggage and grime accumulated through decades of wanton spending and borrowing. Hopefully, when we emerge from the other side, we will be a smarter, leaner, and more sober economy. It's either that or we slide back into our old, drunken habit of conspicuous consumption, and that's no way to get back on our economic feet.

[jIM_Ohio]

I was kinda down about my portfolio going south around oct 08 and the following months.
I stayed the course. I think I might have traded about 10% of my stocks into bond type investments only but before it really bad. I wanted to wait it out and I saw some returns, yes, but I am not where I was.

I have about (who knows exactly) 1 or 2 years EF in the bank. However, the job situation for me and dh is very unstable. (Go Michigan)

I was thinking of trading more of my portfolio out of stocks.
(401K and ira is all I have)

I think you are painting two pictures here
1) market outlook for retirement
2) job situation

don't paint them together. You might use the same brush and same colors, but you need to isolate each issue.

1) EF- you states 1-2 years worth. If you don't think this is enough, add to it.
Best guess is you keep this money "safe" in savings accounts or similar, and you are not chasing return with ANY of this money.

2) retirement- you are still not comfortable with your asset allocation. What is your asset allocation (% stocks and % bonds) and do you think your current allocation represents the risks you are comfortable with.

I plan to retire in about 17 years. I need there to be 2 more market downturns for retirement to be in 17 years and not 25 years. I need market to give me some "buy low" opportunities between now and then. The sooner it gives me a buy low (like 2008) the more likely I can retire in 17 years.

[jIM_Ohio]

One business reporter made a great comment yesterday that businesses need to start showing that they can make more money by selling more product rather than just by cutting costs. Most of the current recovery in stocks is attributable to cost cutting - reducing the workforce, oil prices dropping, outsourcing to cheaper labor markets, etc. A real, sustainable recovery is based on actually doing more business.

"You cannot cut your way out of a recession". My CEO said that 2 weeks before we laid off 10% of our workforce. He said the cuts were needed, but a company will always need a critical mass to execute the various phases of the company which include sales, development, and implementation.

[jIM_Ohio]

Well, the usual caveat here is that you can't time the market.

However, I think it's perfectly fine to "rebalance" your portfolio to match your true risk tolerance. In which case, feel free to convert more stocks into bonds, but once that's figured out, I would recommend to stick to it.

In my own asset allocation, I've mostly stuck to a passive, diversified mutual funds. I know I've spent a lot of time talking about trying to time the market, but I only attempt to trade with a small portion of my money.

There is so much truth to this post, it deserved a special reply.

I look at my money in many ways
... short term money in the bank savings...
... the money I need to pay my bills this month and next month...
... the money I already have invested...
and my big one "new money I will invest this month and next month and this year and next year...

Most of you know I have a good chunk of change invested for retirement already, and best hope is I can retire at 53 and never work again (work is a 4 letter word to me).

90%+ of my money invested follows the asset allocation advice I blogged about and that you can read on most financial web sites...

but new money is something different. Most new money goes to the 90% above... if we invest 20k per year (might be 24k) all but 5k per year goes to normal asset allocation. But we put 5k (wife's Roth) into the momentum like BA mentioned as well.

1-2 times per year I adjust what the new money in the Roth goes to. For later 2008 and most of 2009 it was financial stocks and real estate. Now its health care and real estate. Trying to "buy low" to get a better IRR than just dollar cost averaging into large caps, small caps, foreign funds etc...

[linkteam1C]

The marketing society is the only organization, not just in one place but in the world that takes marketing in its broadest form and provides an exchange of ideas and information; it is the best to keep up with trends in marketing and also a fantastic place to learn and meet people.

[linkteam1C]

If you are successful in attracting a large agency, you have to understand that the attention you receive will be commensurate with the amount you bill. So it will be difficult to harness the real brainpower within the agency until you're big enough to get their attention. And chances are, you won't get big unless you can get your hands on some great marketing along the way.