Warning Signals

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cswift01
Posts: 819
Joined: Thu Dec 08, 2016 10:46 am

Warning Signals

Post by cswift01 »

Dear all,

So, recently I've become a bit engrossed in my reading of Shiller's work. It's been quite interesting to say the least. Nonetheless, I have begun developing my own personal "red line" for investing and I have been wondering how others have been setting theirs. Where I'm lacking is any short-term prognostication, I just have a long-term one. I noted that some of you left the market at the end of January, locking in your January gains for the year. I didn't and so I'm losing a bit now. Either way, this is my ongoing view:

Short-term:

Only for viewing purposes and not a reliable of short-term problems (only for this year)

GDP — Economists surveyed by Bloomberg have an average forecast of 2.6% for 2018. However, a handful of the 89 participants see GDP finishing the year at or above 3%, most notably ING Group (3.1%) and Pierpont Securities (3%).
Wage inflation — This is the measure that's closest to 3%, with a reading of wage growth from the Atlanta Fed at 2.9% as of year-end 2017. In fact, it was above the threshold for every month of last year until December.
10-year Treasury yield — It's currently at 2.64%, putting it less than 40 basis points from the 3% threshold. And it's heading upward, having climbed 61 basis points since reaching a low in early September.
S&P 500 — The benchmark equity index closed at 2,810.30 on Friday, putting it just 7% from the 3,000 threshold. It's already climbed more than 5% since the start of 2018.

https://www.aol.com/article/finance/201 ... /23339124/

Long-term:

Treasury Yield Curve inversion causes me to leave at the end of the year's cycle and go to either Treasury funds, AGG or stick it in a money market fund. With the present issue with bonds and the rising rates, I will probably go the money market fund route.

What do you use as a red line for short and long-term?

Thanks,

Me

law87
Posts: 33
Joined: Tue Jan 21, 2014 12:39 am

Re: Warning Signals

Post by law87 »

Most here using the seasonal pattern, not much technical analysis going into it. Let's be honest TA works 30-40% of the time. People been call doom and gloom since 2 years ago and here we are still gaining and trucking along. I figure I'll follow the herd, the smart here. I'll jump ship when they jump, I'll stay when they stay. As long as you are financially aware you don't take too much of a loss. I think the people that goes bankrupt back into 2009 are the type that set it and forget it. The market doesn't drop 3000 points in a day, it happened over a period of time, as long as you stay cognizant and know your risk limits you should be making money.

mindofmush
Posts: 353
Joined: Mon Jul 02, 2012 1:38 pm

Re: Warning Signals

Post by mindofmush »

I haven't seen a Treasury Yield Curve inversion yet, not even a "flat" signal.

Are you looking forward to a curve inversion this year? The curve flattening or inverting is a long time (6 months to a year) forward indicator and only one of many economic indicators of a bear market.
mo meng, mo ching (which loosely means: no money, no life)

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cswift01
Posts: 819
Joined: Thu Dec 08, 2016 10:46 am

Re: Warning Signals

Post by cswift01 »

mindofmush wrote:I haven't seen a Treasury Yield Curve inversion yet, not even a "flat" signal.

Are you looking forward to a curve inversion this year? The curve flattening or inverting is a long time (6 months to a year) forward indicator and only one of many economic indicators of a bear market.
I'm not talking about now, sorry. I'm asking what people generally use as metrics to "run away."

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evilanne
Posts: 2067
Joined: Thu May 14, 2015 6:52 pm

Re: Warning Signals

Post by evilanne »

law87 wrote:Most here using the seasonal pattern, not much technical analysis going into it. Let's be honest TA works 30-40% of the time. People been call doom and gloom since 2 years ago and here we are still gaining and trucking along. I figure I'll follow the herd, the smart here. I'll jump ship when they jump, I'll stay when they stay. As long as you are financially aware you don't take too much of a loss. I think the people that goes bankrupt back into 2009 are the type that set it and forget it. The market doesn't drop 3000 points in a day, it happened over a period of time, as long as you stay cognizant and know your risk limits you should be making money.
I would disagree about those going bankrupt back during the recession. It was more likely they borrowed more than they could afford for their home; had a non-traditional mortgage type (e.g. interest only) or used borrowed/leveraged funds in the market at the wrong time. Those that buy & hold or DCA lost value but if they didn't sell most recouped their value and more in the recovery/bull market.

TCenter201
Posts: 16
Joined: Sat Nov 11, 2017 9:33 am

Re: Warning Signals

Post by TCenter201 »


XAMOTOMAX
Posts: 542
Joined: Sun Aug 02, 2015 1:00 am

Re: Warning Signals

Post by XAMOTOMAX »

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