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Does the fiscal cliff make it a good time to buy stock right now?


By Patrick   Follow   Fri, 21 Dec 2012, 7:18am PST   4,520 views   47 comments
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I'm starting to think that the fiscal cliff fear is very overblown, and that stocks will surge once the public realizes that. So here's my poll question:

Does the fiscal cliff make it good time to buy stock right now?

Yes
No

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Raw   Fri, 21 Dec 2012, 9:13am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

It's a great time to buy stocks. The economy after a long slump is on the verge of recovery, making it an opportunity to invest in stocks.
My humble prediction...Dow will hit 15,000 in 2013, and 20,000 by 2016.
Go all in with a few ETF's. America always comes out ahead.

Patrick   Fri, 21 Dec 2012, 9:17am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 9

Raw says

Go all in with a few ETF's.

Maybe go all in, but fuck those ETF's.

They don't tell you exactly what they are doing, and then take commissions for being obscure. Sometimes they hand you your own money back and call it a "dividend" which is then taxable. Ugh.

Better to just own the underlying stocks.

Peter P   Fri, 21 Dec 2012, 9:19am PST   Share   Quote   Permalink   Like   Dislike     Comment 10

Raw says

It's a great time to buy stocks. The economy after a long slump is on the verge of recovery, making it an opportunity to invest in stocks.

My humble prediction...Dow will hit 15,000 in 2013, and 20,000 by 2016.

Go all in with a few ETF's. America always comes out ahead.

Whoa, predictions are cheap to make...

It is better to make decisions now, and then make new decisions later.

Peter P   Fri, 21 Dec 2012, 9:20am PST   Share   Quote   Permalink   Like   Dislike     Comment 11

Patrick says

Raw says

Go all in with a few ETF's.

Maybe go all in, but fuck those ETF's.

They don't tell you exactly what they are doing, and then take commissions for being obscure. Sometimes they hand you your own money back and call it a "dividend" which is then taxable. Ugh.

Better to just own the underlying stocks.

There are different kinds of ETFs. Index ETFs have low turnovers.

Leveraged ETFs are really short-term/swing-trading vehicles.

Raw   Fri, 21 Dec 2012, 9:25am PST   Share   Quote   Permalink   Like   Dislike     Comment 12

Peter P says

Raw says

It's a great time to buy stocks. The economy after a long slump is on the verge of recovery, making it an opportunity to invest in stocks.

My humble prediction...Dow will hit 15,000 in 2013, and 20,000 by 2016.

Go all in with a few ETF's. America always comes out ahead.

Whoa, predictions are cheap to make...

It is better to make decisions now, and then make new decisions later.

I even took my kids college funds and fully invested it. Now he follows the stocks daily, and complains every time stocks drop.
I also convinced my parents to go all in with their retirement funds for high dividend ETF - "SDY"
So far so good.

Peter P   Fri, 21 Dec 2012, 10:17am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 13

High dividend ETF makes more sense in a tax-deferred account.

But "following stocks daily" is a investment psychology thing. It is a complex subject. I personally think that crowd psychology is the ONLY explanation of stock price movements. (Behavioral view.)

Patrick   Fri, 21 Dec 2012, 10:19am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 14

I'm pretty sure that consistently rising profits and especially rising dividends always drive the stock price upward.

Peter P   Fri, 21 Dec 2012, 10:24am PST   Share   Quote   Permalink   Like   Dislike     Comment 15

Patrick says

I'm pretty sure that consistently rising profits and especially rising dividends always drives the stock price upward.

In the long-term, they are some of the inputs, but stock prices themselves will also feedback into the system.

For example, wealth effect and consumption.

But investor psychology on profit EXPECTATIONS will have direct effects on stock prices.

Prices will keep going up until people stop believing in it because of some new information.

Peter P   Fri, 21 Dec 2012, 10:32am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 16

So expectations drive asset prices. Reality only reinforces expectations.

Patrick   Fri, 21 Dec 2012, 10:33am PST   Share   Quote   Permalink   Like   Dislike     Comment 17

But the reality is definitely important.

There are no stocks with a consistent P/E of 5, for example. They get bid up.

Peter P   Fri, 21 Dec 2012, 10:54am PST   Share   Quote   Permalink   Like   Dislike     Comment 18

Patrick says

But the reality is definitely important.

There are no stocks with a consistent P/E of 5, for example. They get bid up.

True, however, by the time reality is here the prices will have long reacted to the change in expectations.

Mark D   Fri, 21 Dec 2012, 12:06pm PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 19

should have bought 3-4 days after Obama's re-election when NASDAQ was at 2900. now it's a bit late. i would wait for the last dip, probably in 2-3 more business days.

disclaimer: i could totally be wrong!!!

bmwman91   Fri, 21 Dec 2012, 2:13pm PST   Share   Quote   Permalink   Like   Dislike     Comment 20

Well, it is nice to know that we are all thinking mostly the same thing lol. I guess the real issue becomes sacking-up and putting money on your bets. The market is clearly in mass-reaction mode right now, and once the government declares that it has solved the fiscal cliff issue (which it will) it will probably surge. I expect to see sizable drops over the next 2-3 business days as hysteria spreads, and then a big bump once our leadership announces that it found a way to raise taxes and cut spending (which are, funnily enough, the exact things that "going over the cliff" would do lol).

JohnLaw   Fri, 21 Dec 2012, 2:26pm PST   Share   Quote   Permalink   Like (3)   Dislike (1)     Comment 21

I think the only thing holding the economy up is government borrowing. No government can continue to borrow at this rate indefinitely. Its a very shaky foundation to be basing investments decisions on.

zzyzzx   Sat, 22 Dec 2012, 2:10am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 22

Mark D says

should have bought 3-4 days after Obama's re-election when NASDAQ was at 2900.

I agree. At today's prices it's a crapshoot, but in the days right after the election prices were much more attractive to me.

zzyzzx   Sat, 22 Dec 2012, 2:11am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 23

Patrick says

Does the fiscal cliff make it good time to buy stock right now?

Question could probably be broken down into two categories, one for short term trades and another for long term prospects. I.E. - if you are only think about buying stock now to sell in January, your answer might be different.

zzyzzx   Sat, 22 Dec 2012, 2:13am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 24

bmwman91 says

Well, it is nice to know that we are all thinking mostly the same thing lol. I guess the real issue becomes sacking-up and putting money on your bets. The market is clearly in mass-reaction mode right now, and once the government declares that it has solved the fiscal cliff issue (which it will) it will probably surge. I expect to see sizable drops over the next 2-3 business days as hysteria spreads, and then a big bump once our leadership announces that it found a way to raise taxes and cut spending (which are, funnily enough, the exact things that "going over the cliff" would do lol).

This close to Christmas I am expecting low volume and little movement.

Patrick   Mon, 31 Dec 2012, 4:16am PST   Share   Quote   Permalink   Like   Dislike     Comment 25

Looks like yes, the fiscal cliff made it a good time to buy stock, going by the surge today as they get closer to a deal.

EBGuy   Mon, 31 Dec 2012, 5:06am PST   Share   Quote   Permalink   Like   Dislike     Comment 26

I sat on my hands too long (even a couple of hours ago the indexes were only up slightly). Will be interesting to see if Boehner can find enough adults in the GOP.

Kevin   Mon, 31 Dec 2012, 6:04am PST   Share   Quote   Permalink   Like   Dislike     Comment 27

Patrick says

Looks like yes, the fiscal cliff made it a good time to buy stock, going by the surge today as they get closer to a deal.

Too early to call. 1% is nice, but it could go down dramatically wednesday if no deal is reached.

Patrick   Mon, 31 Dec 2012, 10:07am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 28

Bet you two things:

1. A deal will be reached.
2. The stock market will surge much more.

pdh   Tue, 1 Jan 2013, 7:02pm PST   Share   Quote   Permalink   Like   Dislike     Comment 29

I bet the real surge will be today. I voted "no" because I thought they'd squabble about it a bit more and then backdate whatever they inevitably agreed to but apparently everyone realized what a big hole they'd dug themselves by hyping this nonsense as some sort of armageddon.

RentingForHalfTheCost   Tue, 1 Jan 2013, 8:28pm PST   Share   Quote   Permalink   Like   Dislike     Comment 30

DLTR will be a big winner. Combination of unfairly getting beaten down at the same time as the fiscal cliff being overblown. It is already on the move. What better way to play the current economy than with dollar stores. It will only get better in a recession and when people can't access newly printed money as easy as today.

skinnyninja   Tue, 1 Jan 2013, 11:10pm PST   Share   Quote   Permalink   Like   Dislike     Comment 31

Wow, I have never seen my investment account jump this much in one day (1/2/13). Incredible.

Of course, it's still early in the day yet.....

FortWayne   Wed, 2 Jan 2013, 12:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 32

I did, when they announced AIG bailout and it went from being under $1 to almost $100 in a day. Of course I didn't earn anything, I just recovered what I lost. This was a long time ago investment, still kicking myself for not buying more of it when these were considered a junk stock.

HeadSet   Wed, 2 Jan 2013, 1:17am PST   Share   Quote   Permalink   Like   Dislike     Comment 33

Patrick says

Bet you two things:

1. A deal will be reached.

2. The stock market will surge much more.

Incredible accuracy, Patrick.

I hope you acted on your prescience and made some green.

zzyzzx   Wed, 2 Jan 2013, 1:19am PST   Share   Quote   Permalink   Like   Dislike     Comment 34

pdh says

I thought they'd squabble about it a bit more and then backdate whatever they inevitably agreed

I was also expecting something to be agreed upon late this week. It's unlike them to actually meet a deadline.

lostand confused   Wed, 2 Jan 2013, 1:26am PST   Share   Quote   Permalink   Like   Dislike     Comment 35

zzyzzx says

pdh says



I thought they'd squabble about it a bit more and then backdate whatever they inevitably agreed


I was also expecting something to be agreed upon late this week. It's unlike them to actually meet a deadline.

Well they did push out all spending cuts by two months and the debt ceiling too! :)

fil   Wed, 2 Jan 2013, 1:31am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 36

Now that a deal has been reached, it may be a good time to sell. A correction is still coming. IMHO

errc   Wed, 2 Jan 2013, 1:36am PST   Share   Quote   Permalink   Like   Dislike     Comment 37

Markets up 2%
Oil up 2%

Less transaction fees and taxes,,,from any realized profits

Weeeeeeeeee!

Call it Crazy   Wed, 2 Jan 2013, 1:39am PST   Share   Quote   Permalink   Like (5)   Dislike (2)     Comment 38

lostand confused says

Well they did push out all spending cuts by two months and the debt ceiling too! :)

*

EBGuy   Wed, 2 Jan 2013, 4:41am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 39

I'm giving Troy some credit too. I thought they'd get a real deal done -- it should have been a tipoff when the negotiations went to Biden and the Senate. Showdown in March -- and it will get ugly. GOP actually had the juice to get a Grand Bargain type deal done in December, but of course they botched it again. I am amazed at how many times they can shoot off their foot (oops -- there goes the other one).

zzyzzx   Thu, 3 Jan 2013, 11:35am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 40

Seems like the stock market bump caused by the deal is over.

Patrick   Thu, 3 Jan 2013, 1:27pm PST   Share   Quote   Permalink   Like   Dislike     Comment 41

Yes, that was probably it.

Now can we predict the next market bump up?

zzyzzx   Thu, 3 Jan 2013, 10:20pm PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 42

Patrick says

Now can we predict the next market bump up?

Can we predict the next market bump down as well? I'm guessing that it's going to be close to that end of that 2 month extension.

Dan8267   Thu, 3 Jan 2013, 11:39pm PST   Share   Quote   Permalink   Like   Dislike     Comment 43

Patrick says

I think the whole market is down today because of the silly fiscal cliff thing. They are all moving together.

I agree with that, but I also think the whole U.S. stock market is overvalued right now.

FortWayne   Fri, 4 Jan 2013, 12:47am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 44

I'm probably going to buy more GE. After last fiscal Washington compromise they made out big time. They won't be paying much taxes if any. That can't be bad for the stock price.

Raw   Fri, 4 Jan 2013, 1:20am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 45

Patrick says

Yes, that was probably it.

Now can we predict the next market bump up?

It will happen in spurts over the next 12 years.
The last 6 years, which was the worst for our economy since the great depression has created an unprecedented opportunity for asset appreciation in the next few years. There is an ocean of liquidity looking for higher returns, and they can only find it in stocks and real estate.
The golden rays of the sun will shine bright on wall street.

Raw   Fri, 4 Jan 2013, 1:23am PST   Share   Quote   Permalink   Like   Dislike     Comment 46

Raw says

It will happen in spurts over the next 12 years

LOL. I meant months. 12 years would be awesome.

uomo_senza_nome   Tue, 8 Jan 2013, 5:09am PST   Share   Quote   Permalink   Like   Dislike     Comment 47

I think the next down leg will come in March (when Washington is squabbling over the sequester deadline).

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