Market Fall or Buying Opporunity

[Lucavia123]

Which is this downwar slide today? Beginning of the correction or a great chance for some cheap shares?

[mrmarket]

Which is this downwar slide today? Beginning of the correction or a great chance for some cheap shares?

weak sellers getting out based on the recent runup. There is no negative macro news to dent this market.

[Louetta]

weak sellers getting out based on the recent runup. There is no negative macro news to dent this market.

Hmm. Weak guidance from the housing sector, troubles in European banks might be cause for concern but US equities, methinks, are the place to be.

[mrmarket]

Hmm. Weak guidance from the housing sector, troubles in European banks might be cause for concern but US equities, methinks, are the place to be.

European banks? Didn't that song top the charts a couple of years ago? Yawn

[mrmarket]

Hmm. Weak guidance from the housing sector, troubles in European banks might be cause for concern but US equities, methinks, are the place to be.

We're buying a condo in Somerville...if there is weakness in the housing market then I sure as heck didn't see it. Had to pay over asking several times to finally land one.

[Louetta]

European banks? Didn't that song top the charts a couple of years ago? Yawn

The largest bank in Portugal, to be specific. They're supposed to be in trouble. Supposedly that was the cause of the weak open today.

[Louetta]

We're buying a condo in Somerville...if there is weakness in the housing market then I sure as heck didn't see it. Had to pay over asking several times to finally land one.

Not housing per se but a couple of suppliers lowered guidance. Hate to be vague but I can't find it now. The idea is the weakness in demand for housing related items that was seen in March and blamed on weather has continued. You're buying into one of the strongest real estate areas around. Everything is expensive here and you're near the city. Bet it will prove a god investment.

[mrmarket]

Not housing per se but a couple of suppliers lowered guidance. Hate to be vague but I can't find it now. The idea is the weakness in demand for housing related items that was seen in March and blamed on weather has continued. You're buying into one of the strongest real estate areas around. Everything is expensive here and you're near the city. Bet it will prove a god investment.

As long as my first tenant doesn't trash it

[Louetta]

As long as my first tenant doesn't trash it

To bad you aren't going to live there, we'd practically be neighbors. For a time I rented a place on Cordis Street in Charlestown, just below the monument.

Separately, I just subscribed to a magazine called BoxLife. Sounds like a mag for female sex workers but it's a magazine on cross fit training, the box being what the gym is called. Hope to learn mucho stuff.

[Lucavia123]

Here we go again? This is the start to the end?

No... nothing fundamentally has changed and volume is weak. We'll be back up soon.

[Louetta]

Here we go again? This is the start to the end?

No... nothing fundamentally has changed and volume is weak. We'll be back up soon.

Well, after 5-6 years of quantitative easing Yellen announced it's going to end in October.

[mimo_100]

Between Bernanke and Yellen, I think most people are aware of the direction towards "normalization." My private banking letter says the 10 year note will range between 2.5 and 3.5% in 2014 - today it closed around 2.44% due to the Malay Air plane being shot down. IMO, money managers have discounted the QE ending, and are now focused on what will happen if the economy expands into 2015. The Fed must then consider raising the Fed Funds rate - which means they will begin SELLING bonds from their $4 trillion QE bond portfolio. We are a long way from an inverted yield curve which typically foreshadows a recession.

[tiedyed1]

While all my accounts saw red today I still see plenty of opportunity.

Added to my Airlines today.
Added to my Biotechs today.
Even added to my BAC today.

All fundamentally sound, longer term holdings, and nothing I will be forced or looking to sell anytime soon.

-Adam
Old Hippy & Mortgage Pro

[Louetta]

Between Bernanke and Yellen, I think most people are aware of the direction towards "normalization." My private banking letter says the 10 year note will range between 2.5 and 3.5% in 2014 - today it closed around 2.44% due to the Malay Air plane being shot down. IMO, money managers have discounted the QE ending, and are now focused on what will happen if the economy expands into 2015. The Fed must then consider raising the Fed Funds rate - which means they will begin SELLING bonds from their $4 trillion QE bond portfolio. We are a long way from an inverted yield curve which typically foreshadows a recession.

Well spoken. And if the Fed is to sell bonds, someone must buy them and that takes money. Where will they get the money? They could sell stocks. Where else can the $4 trillion come from? I'm not selling my horse.

[mimo_100]

Well spoken. And if the Fed is to sell bonds, someone must buy them and that takes money. Where will they get the money? They could sell stocks. Where else can the $4 trillion come from? I'm not selling my horse.

Excellent questions. The short answer to your 2nd question is that there will not be a lot of buyers. The Fed will lower prices (thus rates will increase) until demand increases- just like the last day of your garage sale - you cut prices in half to get rid of the stuff.


Below are links to some excellent articles on interest rates. I know we both follow rates closely.


In the State Street article, look at Figure 6 on page 4. the fed has gone from buying mortgage-backed securities to US treasuries and then back to more mortgage-backed securites.


Who Will Buy All Those Treasury Bonds When The Fed Stops?

http://www.forbes.com/sites/greatspeculations/2013/01/09/who-will-buy-all-those-treasury-bonds-when-the-fed-stops/

What Does US Interest Rate Normalization Mean? An Introduction to the Natural
Rate of Interest and Its Implication for Investors

http://www.ssga.com/library/exchng/601750_What_Does_US_Interest_Rate_Normalization_MeanCCRI1378368005.pdf

Will Federal Reserve Rate Hikes Crush the Bond Market?

http://bonds.about.com/od/Issues-in-the-News/fl/Will-Federal-Reserve-Rate-Hikes-Crush-the-Bond-Market.htm