Will the stock market crash (June 24 2016 Update)?

[Tugg Speedman]

TARP saved every investor's arse.

And I don't care whether I can invest like him.  I was just pointing out that you were wrong in saying that he is no longer successful.  Your fallen hero, on the other hand....

... And TARP is tearing our politics apart.  "Our" means the developed world, Trump, Sanders, BRexit, Nationalist parties in Europe.  Huge price to pay so Warren does not fail.

[Tortuga94]

Berkshire never took bail out funds in 2008. Warren Buffett was actually buying stocks in 2008. Made a huge investment in Goldman Sachs - 5 Billion dollars. Doesn't sound like somebody about to go into the poor house.

[Tortuga94]

That GS investment was not the only one he made at the time either.

http://www.wsj.com/articles/SB122220798359168765

[MU82]

That GS investment was not the only one he made at the time either.

http://www.wsj.com/articles/SB122220798359168765

Careful, Tortuga. Facts often don't play well here.

[tower912]

Doesn't foment enough uncertainty. 

[GooooMarquette]

... And TARP is tearing our politics apart.  "Our" means the developed world, Trump, Sanders, BRexit, Nationalist parties in Europe.  Huge price to pay so Warren does not fail.

So you lose the argument about TARP's impact as some unique Buffett-saving device, and turn it into a political debate?  We were talking about Buffett's still successful trading style vs Livermore's...which was successful until it wasn't.

[Herman Cain]

I have enjoyed reading this thread.

I made my living for many years on Wall Street participating in all aspects of it.  Investment Banking, Private Equity, Sales and Trading, Venture Capital, High Yield Bonds etc  . About ten years ago I turned to the company CEO side. Life is a lot more fun where I am at now.

The one lesson I learned from working on the street is you have to pick a style of investing and stay loyal to it through thick and thin.  The Battle for Investment Survival is won by those who control their emotions. It is far easy to control your motions when you have a degree of confidence in what you do. The market is so dynamic it can accommodate everyone provided your patient and focused.

My fundamental principal is Bulls Get a little , Bears get a little and Hogs get slaughtered.

[Tugg Speedman]

Berkshire never took bail out funds in 2008. Warren Buffett was actually buying stocks in 2008. Made a huge investment in Goldman Sachs - 5 Billion dollars. Doesn't sound like somebody about to go into the poor house.

All his investments took TARP ... Without it he was toast.

Buffett does not buy stocks anymore.  That has not been his primary business for decades.  He buys specially designed preferred stocks that offer him huge sweetheart deals that no one else can get.  Yes, I would love to invest like Warren but no one can get these preferreds.

Regarding his "buying" in 2008 ...

October 16, 2008
http://www.nytimes.com/2008/10/17/opinion/17buffett.html?smprod=nytcore-ipad&smid=nytcore-ipad-share
On October 16, 2008 Buffett penned an op-ed in the New York Times titled “Buy American, I am."  This advice was offered just as the biggest stock market collapse of the last 80 years was getting underway.

On January 19, 2009 Buffett found a little surprise in his depends ..
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3lI4cKxPngg&refer=home
Us in Midst of an ‘Economic Pearl Harbor’
The U.S. is facing an “economic Pearl Harbor” that has spread fear throughout the country, billionaire investor Warren Buffett told Tom Brokaw in an interview broadcast yesterday on Dateline NBC. “We have a negative feedback cycle going on right now,” Buffett said, according to a transcript of the interview on CNBC’s Web site. “We have fear which leads to people not wanting to spend, and not wanting to make investments. And that leads to more fear.”

March 9, 2009
The day after the 2009 low, and after his "Buy American" op-Ed above was down almost 40%, that surprise in his depends was now running down his leg and he sold at a massive loss.

http://money.cnn.com/2009/03/09/news/newsmakers/buffett_economy.reut/index.htm

Warren Buffett said Monday the U.S. economy had “fallen off a cliff” but would eventually recover, although a rebound could kindle inflation worse than that experienced in the late 1970s. Speaking on CNBC television, the 78-year-old billionaire said the country is experiencing a “close to the worst-case” scenario of falling business activity and rising unemployment, causing consumer confidence and spending to tumble.

May 1, 2009
After the market rebounded 30%, and Buffett got a new set of depends, he announced it was all good again.  But Warren, everyone took massive losses from your October buy on March 9, the day after the low.
http://www.cnbc.com/id/30516766

Warren Buffett tells CNBC’s Becky Quick that the U.S. economy has made it past the “Pearl Harbor” conditions of last September, but he says “we’re still at war.” … “Well, no.  We’re at a war now to some degree, but Pearl Harbor was September.  Pearl Harbor was September.  At that point, you could have lost the war.  And there was a strike at the heart of the American system, the financial system.  And we got past that.  Some of the right decisions were made then, so I give people great credit for doing that.  The war isn’t over, though.”



To recap ...


* Buffett is a huge buyer of financials.  Always has been.  But he does not buy the common stock.  He buys specially designed preferred stocks that offer him sweetheart deals.  Something no one but him can get.

* In late 2008 he was so far over his skies with financial (preferred stock) exposure that Berkshire was facing ruin.  Berkshire stock was down almost 50% in late 2008.

* Around the same time Buffett was found of saying that Derivatives were "weapons of financial mass destruction."  It turned out that Buffett was an active player in these instruments and they were exploding in his face (he sold long term puts on stock indices that gave him billions in unrealized losses).

* October 14, 2008 all the heads of Buffetts collapsing financial investments were called to Wasington to be told to take TARP money to save the system (and Buffets empire).  Records show treasury Secretary Hank Paulson was in frequent contact with Buffett in the days leading up to this decision.

* October 16, 2008, two days after the Government saved his empire, he penned "buy American, I Am" (above). Literally that day the stock market began its worst collaspe in 80 years.

* he panicked at the stock market low on March 9, 2009 calling it "close to worse case."  Why?  Because now those derivatives ("weapons of financial mass destruction") were threatening to bury the Berkshire empire,

* nine days later, March 18, 2009, the Fed starts printing money (QE), this naked manipulation of the stock market saves Buffett from his derivative exposure that was burying Berkshire.  Records show that in the days leading up to the Fed's decision, Buffett was in frequent contact with Fed chief Ben Bernanke.

* May 1, 2009, With the stock market rebounding, Buffett announces the economic Pearl harbor had passed.

* November 2010, pens a "thank you letter" to the government for saving his empire.

-------------

When Bernie Sanders gets huge applause about "Wall Street billionaires" rigging the system for themselves and screwing the middle class, he is talking about Warren Buffett.

The actions taken to save Buffett (TARP and QE) are the same actions that are being blamed for millions of unemployed and poor economic performance.

Buffett is worse than Goldman Sachs bankers, that because Buffett is Goldman Sachs' largest investor.

[MU82]

The one thing I lesson I learned from working on the street is you have to pick a style of investing and stay loyal to it through thick and thin.  The Battle for Investment survival is won by those who control their emotions. It is far easy to control your motions when you have a degree of confidence in what you do. The market is so dynamic it can accommodate everyone provided your patient and focused.

Interesting comment, and I believe it's true.

There are a lot of ways to make money. If there weren't, only one kind of investing would succeed, and we know that's not true. I agree wholeheartedly with finding something that works for one's "investing personality," having confidence in it, and sticking with it.

One of the most important aspects of controlling one's emotions when it comes to investing is the ability to tune out the "noise." Most successful investors are great at doing that.

We've got a coupla noisy ones here on Scoop. Not that I'm naming names.

[Tugg Speedman]

Interesting comment, and I believe it's true.

There are a lot of ways to make money. If there weren't, only one kind of investing would succeed, and we know that's not true. I agree wholeheartedly with finding something that works for one's "investing personality," having confidence in it, and sticking with it.

One of the most important aspects of controlling one's emotions when it comes to investing is the ability to tune out the "noise." Most successful investors are great at doing that.

We've got a coupla noisy ones here on Scoop. Not that I'm naming names.

Completely agree ... there are as many way to make money as there are people that made money.

* Buffett had a style that works (I picked "had" purposely)
* James Simons (Renaissance Technology) while investing purely on computer models is considered one of the greatest hedge fund managers ever.  (to be clear, Simons has never made a trade or investment, he programs computers to do it for him.)
* Steve Cohen (Point 72) is a pure discretionary trader (the opposite of Simons) and he too is extraordinarily successful.  He also channels his emotions into his trading, not remove them from his decisions.
* Sam Zell has a far different approach and was once described as the greatest capitalist of the 20th century (as well as the grave dancer for picking up cheap assets).
* Paul Tudor Jones has amassed billions as a short term futures trader.  Ditto John Henry, the former owner of the Red Soxs.
* John Bogle of Vanguard thinks none of the above works so he pioneered index funds and now runs the largest mutual fund complex in the world.
* Dan Fuss (MU grad!) of Loomis Sayles has a reputation as an aggressive punter in the bond market, going where few would dare and think is prudent and he has been among the more successful bond traders ever.

* Heisenberg/Livermore has never been wrong .. ever.  Despite this some here want him to admit to something that has never happened.  His quantitative/systematic built around discretionary assumptions approach has done well for him (he's still doing it after 30 years and has not had to resort to getting a real job ... yet).

[Coleman]

And today we have record highs

Just dialed back my 401k from 95% stocks to 85% stocks. Will up it back to 95% after we take a little dip.

[MU82]

And today we have record highs

Just dialed back my 401k from 95% stocks to 85% stocks. Will up it back to 95% after we take a little dip.

You must be seeing things ... because sources say (OK, just one source said) Brexit immediately was going to cause a major market crash.

[brandx]

And today we have record highs

Doesn't matter. I'm still reeling from the devastation that was wrought upon us.

[tower912]

Record highs.    Time to panic.    (Hey, this IS fun)

[MU82]

Siemens backs away from Brexit warnings

Siemens (OTCPK:SIEGY) is backing away from its earlier warnings that leaving the European Union could make the U.K. a worse place to conduct business and affect the company’s future U.K. investment plans, Financial Times reports.

While eager to see some sort of framework plan showing how the U.K. would approach its departure from the E.U., CEO Joe Kaeser says the U.K. remains a re-industrialization “showcase,” and regardless of the Brexit vote, Siemens would build a “huge manufacturing place” for local transport systems “in a heartbeat” if there were enough domestic orders.

After the vote to leave the E.U., Siemens warned long-term plans to export wind turbine blades from its £160M manufacturing plant in Hull likely would be put on hold, but Kaeser brought his top managers to the U.K. this week to help send staff and customers the message that “we’re here for the long term.”

[Coleman]

Boeing also planning to add 2,000 more jobs in the UK.

I still think Brexit was dumb. For a lot of reasons. But it looks like the economic impact was overstated. I am happy about that. Everyone should be.

[Tugg Speedman]

Boeing also planning to add 2,000 more jobs in the UK.

I still think Brexit was dumb. For a lot of reasons. But it looks like the economic impact was overstated. I am happy about that. Everyone should be.

Boeing won a contract to build the Boeing P-8 Poseidon maritime patrol aircraft for the UK Military.  The 2,000 staff are to build this one airplane so it is not a statement about BRexit.

[GooooMarquette]

Raise your hand if you're happy you didn't panic-sell over the Brexit hysteria.

[Raises hand]

[Coleman]

Raise your hand if you're happy you didn't panic-sell over the Brexit hysteria.

[Raises hand]

Raise your hand if you bought that day!

[MU82]

Shoulda called it Brezzzzzzzit!

Hell, the new PM was a "remainer" and not a "leaver," which is pretty funny.

[Frenns Liquor Depot]

Boeing also planning to add 2,000 more jobs in the UK.

I still think Brexit was dumb. For a lot of reasons. But it looks like the economic impact was overstated. I am happy about that. Everyone should be.

I think drawing conclusions from a jobs headline two weeks removed from a non-binding vote (versus actual withdrawal) is the equivalent to drawing conclusions from a one/two day stock sell-off.

[GooooMarquette]

I think drawing conclusions from a jobs headline two weeks removed from a non-binding vote (versus actual withdrawal) is the equivalent to drawing conclusions from a one/two day stock sell-off.

True about the non-binding vote, but the new PM (who opposed the Brexit) stated yesterday that the Brexit will happen...and yet stocks are rising today.

IMHO the markets have now priced the assumption that the Brexit will happen, so the actual effects when it (gradually) occurs will be muted.  Kind of like the Greek default - everyone (including notably Heisenberg/Livermore) thought the bottom would drop out.  It ended up being a couple-day blip, then a bounce, then business as usual.  The Brexit might not be quite that smooth, but I don't think there will be huge longer-term effects in the US market. 

[Frenns Liquor Depot]

True about the non-binding vote, but the new PM (who opposed the Brexit) stated yesterday that the Brexit will happen...and yet stocks are rising today.

IMHO the markets have now priced the assumption that the Brexit will happen, so the actual effects when it (gradually) occurs will be muted.  Kind of like the Greek default - everyone (including notably Heisenberg/Livermore) thought the bottom would drop out.  It ended up being a couple-day blip, then a bounce, then business as usual.  The Brexit might not be quite that smooth, but I don't think there will be huge longer-term effects in the US market. 

Maybe - what you lay out has happened or maybe what you say is being assumed or maybe it is being ignored. 

The US equity market is definitely dependent on what happens in Europe since most US MNCs have about 20%+ of their revenues coming from Europe.

I just meant that until there is clarity about what Brexit means it is all speculation.

[Coleman]

True about the non-binding vote, but the new PM (who opposed the Brexit) stated yesterday that the Brexit will happen...and yet stocks are rising today.

IMHO the markets have now priced the assumption that the Brexit will happen, so the actual effects when it (gradually) occurs will be muted.  Kind of like the Greek default - everyone (including notably Heisenberg/Livermore) thought the bottom would drop out.  It ended up being a couple-day blip, then a bounce, then business as usual.  The Brexit might not be quite that smooth, but I don't think there will be huge longer-term effects in the US market.

This

[Coleman]

Maybe - what you lay out has happened or maybe what you say is being assumed or maybe it is being ignored. 

The US equity market is definitely dependent on what happens in Europe since most US MNCs have about 20%+ of their revenues coming from Europe.

I just meant that until there is clarity about what Brexit means it is all speculation.

Perhaps, but there is much more clarity now than there was 2 weeks ago.