Looks Like A Stock Market Correction:
 

A correction would be a decline of 10%, or less, in a relatively short period of time. I say bring it on; let's get it over and done. Corrections are normal and needed from time to time.

:)

We prefer to call it a "consolidation".

Just tell me the day before it happens.

Some have been calling correction for the last year. Nobody knows!

Read an article yesterday that had some analyst predicting a 15% correction on the horizon. He also pointed out that the last two changes to the Fed chair brought corrections to the market soon after the change. Bernanke leaves office in January 2014.
Being very cautious with investments right now.

I see some good valuation metrics out there. We're real close to stepping off the curb for some good buys.

I hope you're right. It seems to me however, that the stock market gains of the past few years are largely correlated with the increase in the Fed's balance sheet ...ie printing money (metaphorically speaking) by the various QE programs.

Corrections, when they come, seem to be largely a matter of panic at the prospect of the Fed stopping with the free money from what I can see.

Who cares if there is a correction. Unless you need the money in the next six months (and if you do, it probably shouldn't be in the market), then the market will correct and recover and at the end of the year you will probably be up about 8%.

Timing the market
 

It is a fools game.

You mean like how up to last year, 2012...buying/selling the DOW...if you'd bought at the peak in 1999 (11722), you could have been forced to sell below what you paid? That's 13 years to recover. Yes it was up higher during that time, but it's also been down...a lot...do you remember 6547 in 2009? It LOST half in 10 years. Are you willing to guarantee that it'll be up in a year?

And sadly...that recovery period includes changing the index to get rid of losers. Using the original companies, would it be up? I don't know if it would.

The banks make money...and the lucky. If the Fed stops spending $90 billion a month to keep things going...to keep interest rates down...it's gonna get ugly. The fed is the guy giving a dying patient CPR...we can't pay the bills. The bills have gotten too large.

A fools game is the interest rates anyplace other than the market. I will take the ups and downs and collect my 8-10% each year.

btk

It's true that in 2009 I lived through the worst financial crisis I am probably going to see in my lifetime. I left my money in the market and recovered it all and more in a relatively short time. Also, during that time none of the companies that I invest in for dividends cut their dividends, so my income didn't change, and in fact it went up.

The Fed pumped around $3 trillion into the economy since 2009. THAT is why things are as they are. The market is up because of Fed money. It's another bubble being blown. Like the housing bubble, education costs bubble, previous "bull markets", all went up from Fed money. You're gambling with people who cheat. I'm NOT saying you can't make money. The premise was "don't worry about any correction, it'll be back up in a year". And I disagreed.

Opportunity
 

:agree:

Well said. I see a correction in the market as an opportunity to buy lower than I had been previously buying at. Then ultimately when the market goes up, I made even more than I would have before the "correction".

Correction
 

Since the great depression the stock market has averaged 1.5 corrections a year. (down 10%). It has always recovered and the average over those roughly 90 years is over 8%. You just have to roll with the punches.:bigbow:

Looks like AAPL is "correcting" nicely!

Have to agree ... it's great when market goes up but without the Fed ... DJIA would be 8-9000 or thereabouts IMHO. It's actually quite amazing to watch Ben Bernanke levitate ... gotta give him credit. He's the modern day Wizard of OZ and so far, it's working.

the real reason the market is up is because any other place one putes their money is paying 2% or less. As long as interest rates remain where they are the market is the best return. If you need the money in the short term you probably should look else where.

btk

I did; I told you yesterday! And today, at the end of traiding, the market is down 225.47. :)

1.5 %.....mathematically it is almost just noise on the curve.

btk

That's what I'm saying actually... at least in part. The Fed has flooded the system with new money and, among other things, forced interest rates lower. By manipulating the rates lower, and goosing the stock market higher, the de facto policy is to create a "wealth effect" such that investors will have no other choice except to put their money in the market to generate returns.

I think this policy is particularly pernicious when it comes to the elderly and retirees who, for the most part, don't fully understand what's happening. All they know is they can't make any interest income in bonds or CDs anymore so they go into the market. It's actually immoral in some ways but that's another topic.

You may fully understand and appreciate why you're in the market but I think there are a lot of people out there who don't and thus likely to get hurt at some point.

Excellent synopsis, TexaninVA. It's sad how undereducated people are as to the financial crisis boiling under the surface of the American economy. The Emperor has no clothes.

Rats, I didn't listen. I only lost 1% so it wasn't too bad but the next time I will listen better.

I agree about the Fed pumping up the market and that a lot of people will eventually get hurt. Although, inexperienced investors usually get hurt because they typically get out at the bottom and get back it at the top.

Having said that, the Fed action is not all bad. Cheep money has allowed many corporations to restructure their debt, thereby reducing their operating costs. Many are operating leaner and smarter in many respects. Many have continued to expand, albeit more slowly during the recession, so their stock prices are catching up with the growth and changes they have made in recent years. Yes, the Fed is helping to pump things up, but it's not all hot air in my opinion.

:)

The correction continues:
 

Down 170.33 today.

The Fed is a de facto central planner and it is hurting the economy. Wall Street as become addicted to the Feds buying. Banks are getting richer because they are dealing with low interest and so make money but then just sit on it. Why wouldn't they.

Retirees lose out because they are forced into the market when perhaps all they want re CD's etc.

The dam is going to burst and when it does the bond market is going to react the same way as the real estate market.

The kicker is by that time Bernanke will be sailing his boat along the Caribbean and probably denying paternity the this monstrosity called QE

the ONLY time you lose is if you sold your holdings. What a portfolio is worth at any given moment on a given day is just that....what it is worth IF YOU SOLD THEN (maybe).

Paper losses up and down are just personal score keeping. Pick one day each month to look at your holdings. Then just watch the trends.

It's kinda like weighing ones self every day...the human body can vary up or down depending on a lot of things...pick one day per week to get a better picture.....ditto the stock market.

If one is diversified properly the daily ebb and flow of the market is for the tums takers.

btk

Market will correct if Fed stops buying. The other wild card is Syria. Both could cause major down slides in the short term.

At some point the Fed will buy LESS bonds; they won't completely stop buying bonds all at once. That means interest rates will likely go up gradually. This gradual increase in interest rates, as the economy improves, won't hurt the market long term. All the fear about interest rates and Syria is being factored in now and that makes this correction a buying oportunity, IMHO.
I've been using this correction as an oportunity to reinvest money that has accumulated from dividends. I would have reinvested it anyway but this is an oportunity to take advantage of somewhat lower pricing.

Exactly! My net worth has taken a hit this last month, but my income has actually increased as two of the companies I invest in have announced an increase in their dividend. In 4 months, my net worth will have recovered (or not). As long as I keep enough cash on hand for 4-6 months of emergency spending, I don't have to sell any holdings "at the bottom". At this point in my life it's all about income, not the daily fluctuations of the market and the resultant "on paper only" fluctuations of my net worth. When the market goes up and my net worth increases, I don't have any more money in my pocket. When the market goes down and my net worth decreases, I don't have any less money in my pocket.

Perfect timing for me as it is Dividend Reinvestment Season.....

Get ready for a reduction in the bond market The Fed's QE is coming home to roost. Gold is said to it a new bull market givn the bond market problem and currency problems ????????????????