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


By Patrick   Follow   Fri, 21 Dec 2012, 3:18pm   4,190 views   47 comments
In Menlo Park CA 94025   Watch (0)   Share   Quote   Permalink   Like   Dislike  

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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  1. Raw


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    8   5:13pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  2. Patrick


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    9   5:17pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (3)   Dislike  

    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.

  3. Peter P


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    10   5:19pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  4. Peter P


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    11   5:20pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  5. Raw


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    12   5:25pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  6. Peter P


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    13   6:17pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (3)   Dislike  

    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.)

  7. Patrick


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    14   6:19pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (3)   Dislike  

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

  8. Peter P


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    15   6:24pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  9. Peter P


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    16   6:32pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (2)   Dislike  

    So expectations drive asset prices. Reality only reinforces expectations.

  10. Patrick


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    17   6:33pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    But the reality is definitely important.

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

  11. Peter P


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    18   6:54pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  12. Mark D


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    19   8:06pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (2)   Dislike  

    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!!!

  13. bmwman91


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    20   10:13pm Fri 21 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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).

  14. JohnLaw


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    21   10:26pm Fri 21 Dec 2012   Share   Quote   Permalink   Like (3)   Dislike (1)  

    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.

  15. zzyzzx


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    22   10:10am Sat 22 Dec 2012   Share   Quote   Permalink   Like   Dislike (1)  

    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.

  16. zzyzzx


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    23   10:11am Sat 22 Dec 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    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.

  17. zzyzzx


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    24   10:13am Sat 22 Dec 2012   Share   Quote   Permalink   Like   Dislike (1)  

    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.

  18. Patrick


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    25   12:16pm Mon 31 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  19. EBGuy


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    26   1:06pm Mon 31 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  20. Kevin


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    27   2:04pm Mon 31 Dec 2012   Share   Quote   Permalink   Like   Dislike  

    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.

  21. Patrick


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    28   6:07pm Mon 31 Dec 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Bet you two things:

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

  22. pdh


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    29   3:02am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  23. RentingForHalfTheCost


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    30   4:28am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  24. skinnyninja


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    31   7:10am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.....

  25. FortWayne


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    32   8:52am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  26. HeadSet


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    33   9:17am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  27. zzyzzx


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    34   9:19am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  28. lostand confused


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    35   9:26am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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! :)

  29. fil


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    36   9:31am Wed 2 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike  

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

  30. errc


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    37   9:36am Wed 2 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Markets up 2%
    Oil up 2%

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

    Weeeeeeeeee!

  31. Call it Crazy


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    38   9:39am Wed 2 Jan 2013   Share   Quote   Permalink   Like (5)   Dislike (2)  

    lostand confused says

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

    *

  32. EBGuy


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    39   12:41pm Wed 2 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    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).

  33. zzyzzx


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    40   7:35pm Thu 3 Jan 2013   Share   Quote   Permalink   Like   Dislike (1)  

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

  34. Patrick


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    41   9:27pm Thu 3 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Yes, that was probably it.

    Now can we predict the next market bump up?

  35. zzyzzx


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    42   6:20am Fri 4 Jan 2013   Share   Quote   Permalink   Like   Dislike (1)  

    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.

  36. Dan8267


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    43   7:39am Fri 4 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    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.

  37. FortWayne


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    44   8:47am Fri 4 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    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.

  38. Raw


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    45   9:20am Fri 4 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    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.

  39. Raw


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    46   9:23am Fri 4 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Raw says

    It will happen in spurts over the next 12 years

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

  40. uomo_senza_nome


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    47   1:09pm Tue 8 Jan 2013   Share   Quote   Permalink   Like   Dislike  

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

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