Guess I've been too busy working to notice this thread. Will contribute

Also, I made a macro play 9/9 and shorted gold. Otherwise, I'm maintaining core and tactical allocations for a bit longer...depending on noise around US elections.

oldarmy1, I did some digging and found out that the most "cash-like" option I have in my 401K is John Hancock's Federated Capital Preservation Fund83,142,144. I'll be honest, I read it and I have no idea what the implications are if the market sees a major correction.

Do you have any knowledge or advice to weigh in on this fund? My initial thought process is that I move into this for 3-6 months and then realign back to my old investment strategy (a target 2050 fund). Of course I would try to monitor the market before jumping back in but I honestly feel like I am blindly throwing darts at a board.

Thank you for all of your help and wisdom.

I'm interested to see what happens with interest rates next week once the 2a7 rules on money funds kick in.

I'm very familiar with Federated money funds. The new rules suggest that virtually any money market fund could deviate from $1.00 NAV, but funds such as this one are unlikely to do so with any regularity if ever. Fund invests primarily in GICs and Synthetic GICs from large institutions - primarily insurance companies. It is probably as good as you can do for a cash proxy. It's been returning about 1%/yr and will improve with higher interest rates.

jh0400 said:

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I'm interested to see what happens with interest rates next week once the 2a7 rules on money funds kick in.

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Me, too.

Stagecoach said:

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I'm very familiar with Federated money funds. The new rules suggest that virtually any money market fund could deviate from $1.00 NAV, but funds such as this one are unlikely to do so with any regularity if ever. Fund invests primarily in GICs and Synthetic GICs from large institutions - primarily insurance companies. It is probably as good as you can do for a cash proxy. It's been returning about 1%/yr and will improve with higher interest rates.

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This! Nothing else needs be said.

jake2011 said:

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What ETFs do you guys like for your bond allocation? Combination of terrible yield at the shorter end and terrible principle risk at the longer end right now. Just seeing what others use.

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None. But Jake you already know that about me.

Jake what would you think about taking some of your bond money and buying high yielding MLP's and KMI? That's what I did long ago. The yields are so much better and you have a great shot at the stocks appreciating. I realize the stocks can go down but bonds can default too.

If I was issistent on buying bonds I would buy corporates, individual issues.

Thank you Stagecoach and OA1... If I am reading this correctly than this is a safe place to sit my money for a short time that will not be negatively effected by a loss in the market or rising interest rates??

Thanks again

Correct.

Macro call:

Bad news will be suppressed by global elites trying to get Hillary elected. The bad news will come out sometime after the election including increasing interest rates, increased tax rates to keep entitlements afloat, big Obamacare premium increases for everybody and markets will correct meaningfully. Then the Fed, the EU and Japan will print paper money at increasing rates to get the inflation they must have to service expensive debt with paper money of ever decreasing.value.

So the plan is to maintain a higher cash position than normal and then when the meaningful correction comes to buy and hold those high PE great companies that I wasn't smart enough to buy when they were cheaper. Global companies that sell into China, India and emerging markets without being Chinese or Russian type companies whose financials are total crap.... just made up really. Of interest to me are companies that have pricing power to keep up with the inflation central bankers are so intent on generating. But, at least for now, gold is dead.

I currently maintain a 25% investable cash position which is very high for me.

Question to the crowd: how high do interest rates have to raise to cause a meaningful correction?

I understand how our economy has been falsely propped up, but I believe that a raise of 25-50 basis points over the next 6 months will point to the economy being "strong" and leading to another bull leg in the market.

Gator2_01 said:

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Question to the crowd: how high do interest rates have to raise to cause a meaningful correction?

I understand how our economy has been falsely propped up, but I believe that a raise of 25-50 basis points over the next 6 months will point to the economy being "strong" and leading to another bull leg in the market.

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Historically you are exactly correct. Stock markets continue upwards in the early stages of interest rate rises in anticipation of the big recovery. But previous recoveries were based on the return of real prosperity, meaningful job creation and meaningful income increases. But it's my contention this "recovery" is based almost solely on ultra low interest rates. So when interest rates go up, the real reason the stock market has been going up will be taken away. Just look at what happens to the markets when the Fed tries to raise interest rates now. It tanks. I believe it will tank again. The Fed's in a box. They need to tighten to normalize interest rates but the market will tank and end the "recovery" if they do.

To achieve a true recovery our politicians in DC needed to reduce tax rates, drastically reduce regulations, reform entitlements, get rid of Obamacare and reduce the size of government. Obama and Congress did exactly the opposite so here we are with only the near zero interest rate "false recovery". People had no where else to put their cash except stocks, real estate and gold because we couldn't get any interest appreciation on our cash we were forced into these other investments.

Quote:

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Question to the crowd: how high do interest rates have to raise to cause a meaningful correction?

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This is a loaded question because we have to understand the root cause of an interest rate rise to answer that question.

Interest rates can rise somewhat without causing long-term discount rates to be adjusted if market participants expect rates to move back down or stay relatively low for an extended period of time.

If interest rates rise due to increased inflation expectations, then we have to understand the root cause of increased inflation. Is it being caused by excess money printing or due to increased money velocity as economic activity picks up?

If the general consensus that we are in an extended period of low economic growth continues while interest rates are being increased, it's reasonable to conclude that discount rates will have to be adjusted, and thus equities will suffer.

(Too many "ifs" to achieve a conclusion, IMO)

DJIA bottomed at 18065 and now around 18120.

herewegoagain said:

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DJIA bottomed at 18065 and now around 18120.

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Yup...it held 18100.

oldarmy1 said:

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All you need to know for now on a Macro basis. While traders are frolicking buying the lower and selling the higher range angles those ranges continue to narrow. It's as if this is determined to form a complete point right up to Nov. 8th. A move below 18100 would be significant to watch as would a move above 18450.

Bottom line - Condition yellow (caution with 401k's sitting it out at appropriate levels) still in effect.

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What do you recommend on 401ks. Obviously continue to contribute but would you move all of your investments to a fixed income or maybe just half? I have fixed income options of a bond backed option and a government securities option (Government National Mortgage Association obligations...ginnie mae). The government seems more risky. Would you make the move sooner rather than later?

planoaggie123 said:

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oldarmy1 said:

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All you need to know for now on a Macro basis. While traders are frolicking buying the lower and selling the higher range angles those ranges continue to narrow. It's as if this is determined to form a complete point right up to Nov. 8th. A move below 18100 would be significant to watch as would a move above 18450.

Bottom line - Condition yellow (caution with 401k's sitting it out at appropriate levels) still in effect.

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What do you recommend on 401ks. Obviously continue to contribute but would you move all of your investments to a fixed income or maybe just half? I have fixed income options of a bond backed option and a government securities option (Government National Mortgage Association obligations...ginnie mae). The government seems more risky. Would you make the move sooner rather than later?

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I've tried to lay out positions as best I could. If you are over 55 then I'd be 75%+ in cash and if you could focus that remaining 25% exposure into dividend heavy holdings then great. If 35-55 I'd be 50-75% cash and under 35 25-50% cash. All depending on income, accumulated account valuations, etc.

That is a condition yellow suggested model. A condition red would result in a 100% move out even though you're likely to get hit with a 2-4% portfolio "hit". Green would signal a suggested 75%-90% market entry, dependent on all the age and current financial status.

Hope that helps further clarify that we entered condition yellow back when posting the pre-400 point drop that verified that status.

Lastly, you absolutely should continue to max out your 401k. Accumulate the powder, even as you keep it dry.

China concerns and interest rate chatter has futures bright red. Some key support levels being tested if these numbers hold.

Is a close below 18100 what we're watching for today still?

tx-ags14 said:

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Is a close below 18100 what we're watching for today still?

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No, that was the narrowing channel ranges. Key long-term support is 18k DOW and/or 2120 SPX.

I've exited almost all my positions the last few days. So I expect everything will turn positive again soon.

BBYD09 said:

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I've exited almost all my positions the last few days. So I expect everything will turn positive again soon.

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I'm still in so it won't turn positive until I sell too.

pfo is holding up this whole show! Darn you pfo!!!!

oldarmy1 said:

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planoaggie123 said:

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oldarmy1 said:

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All you need to know for now on a Macro basis. While traders are frolicking buying the lower and selling the higher range angles those ranges continue to narrow. It's as if this is determined to form a complete point right up to Nov. 8th. A move below 18100 would be significant to watch as would a move above 18450.

Bottom line - Condition yellow (caution with 401k's sitting it out at appropriate levels) still in effect.

---

What do you recommend on 401ks. Obviously continue to contribute but would you move all of your investments to a fixed income or maybe just half? I have fixed income options of a bond backed option and a government securities option (Government National Mortgage Association obligations...ginnie mae). The government seems more risky. Would you make the move sooner rather than later?

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I've tried to lay out positions as best I could. If you are over 55 then I'd be 75%+ in cash and if you could focus that remaining 25% exposure into dividend heavy holdings then great. If 35-55 I'd be 50-75% cash and under 35 25-50% cash. All depending on income, accumulated account valuations, etc.

That is a condition yellow suggested model. A condition red would result in a 100% move out even though you're likely to get hit with a 2-4% portfolio "hit". Green would signal a suggested 75%-90% market entry, dependent on all the age and current financial status.

Hope that helps further clarify that we entered condition yellow back when posting the pre-400 point drop that verified that status.

Lastly, you absolutely should continue to max out your 401k. Accumulate the powder, even as you keep it dry.

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The options I have for being as close to cash as possible are a Preservation Fund which is mostly fixed income (GICs). This seems to be what they consider the least risky. They also have a Government Securities Fund and a Total Return Bond fund. Am I correct assuming the Preservation fund would be the safest option should I deem it necessary to move a portion of my assets? Do 401ks charge fees for such moves?

edit: currently in Retirement Fund and 2 large US equity funds.

oldarmy1 said:

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pfo is holding up this whole show! Darn you pfo!!!!

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Damn me is right! 75% long and 25% investable cash is actually my bearest portfolio (yes, I still do it like old grandad did) so really it can tank anytime. I am itching to buy some BMY cheaper and all those other great companies I wasn't smart enough to buy long ago at cheaper prices.

And I don't think it will be too long before the market goes on sale. All the ingredients are in the pot for a major league correction.

planoaggie123 said:

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oldarmy1 said:

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planoaggie123 said:

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oldarmy1 said:

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All you need to know for now on a Macro basis. While traders are frolicking buying the lower and selling the higher range angles those ranges continue to narrow. It's as if this is determined to form a complete point right up to Nov. 8th. A move below 18100 would be significant to watch as would a move above 18450.

Bottom line - Condition yellow (caution with 401k's sitting it out at appropriate levels) still in effect.

---

What do you recommend on 401ks. Obviously continue to contribute but would you move all of your investments to a fixed income or maybe just half? I have fixed income options of a bond backed option and a government securities option (Government National Mortgage Association obligations...ginnie mae). The government seems more risky. Would you make the move sooner rather than later?

---

I've tried to lay out positions as best I could. If you are over 55 then I'd be 75%+ in cash and if you could focus that remaining 25% exposure into dividend heavy holdings then great. If 35-55 I'd be 50-75% cash and under 35 25-50% cash. All depending on income, accumulated account valuations, etc.

That is a condition yellow suggested model. A condition red would result in a 100% move out even though you're likely to get hit with a 2-4% portfolio "hit". Green would signal a suggested 75%-90% market entry, dependent on all the age and current financial status.

Hope that helps further clarify that we entered condition yellow back when posting the pre-400 point drop that verified that status.

Lastly, you absolutely should continue to max out your 401k. Accumulate the powder, even as you keep it dry.

---

The options I have for being as close to cash as possible are a Preservation Fund which is mostly fixed income (GICs). This seems to be what they consider the least risky. They also have a Government Securities Fund and a Total Return Bond fund. Am I correct assuming the Preservation fund would be the safest option should I deem it necessary to move a portion of my assets? Do 401ks charge fees for such moves?

edit: currently in Retirement Fund and 2 large US equity funds.

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You'd have to research or call about any fees. Generally you should be clear of any additional fees as long as you aren't making frequent moves - which you shouldn't. Preservation Fund sounds safe.

The trend line off Feb lows was saved today, barely. We'll see what happens AH. Tommorrow a lot of data and Janet and next week is OPEX, which is usually ramped. So, you likely have time to get out before this sick market sells off.

Anyone use Value Averaging ?

rcannaday said:

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Anyone use Value Averaging ?

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It's essentially the approach I use.

Headed out of the country until late Wednesday. That will help ease the anticipation for the huge Bama/Ags showdown. Work hard and make the week go quickly!

Everyone has the key numbers to watch. Just remember that its where the markets CLOSE that makes any breach of the support/resistance lines important.

And as always, these crazy moves tend to occur when I'm incommunicado so expect fireworks. j/k...sorta

China's GDP tonight 8pm

The mid-channel mark has become a resistance mark. Markets keep selling off as we hit around those areas with no ability to push through for an upper channel test.

If there were a condition between yellow and red I would turn that signal on today. Maybe we need to go on a DEFCON system. Ha!