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How Do Markets Perform After Hitting All-Time Highs?
New all-time highs in the DJIA are a rare occurrence generally greeted with strong market emotions. The last few weeks have seen asset-gatherers clambering over each other to appear on TV proclaiming 'victory' and suggesting now is the time to buy stocks or miss out!! However, when one looks at the actual data (as opposed to anecdotes), while the returns one year out are fairly similar (6.72% after setting a new high vs. 7.07% on average over the last 113 years) Barclays finds that it is in the one-quarter time frame that the difference is most stark (-0.40% after setting a new high vs. 1.63% overall). This suggests a bias to profit-taking (and choppy trading) at all-time record highs, as opposed to a moon-shot.
Via Barclays,
We identified nine new all-time highs in the DJIA using data since 1900 (a previous high must have held for at least two years before a new all-time high is to be declared). We then computed returns on an investment made at the close of the fresh all-time high and held for one quarter (91 days), one half (182 days), and finally one year out (365 days). Additionally, to set a baseline we also looked at the average return over the defined period over the course of the entire history of the DJIA. While the returns one year out are fairly similar (6.72% after setting a new high vs. 7.07% over all) it is in the one-quarter time frame that the difference is most stark (-0.40% after setting a new high vs. 1.63% overall).
This points to a predisposition toward modest profit taking into and after a new all-time high is made.
The statistics support our bias for a choppy corrective tone in Q2, potentially setting up for a range bound summer.
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Must be time to "get into equities" to "ensure my retirement" and stash those "orange" dollars (ING) with those trustworthy upright fund managers and bankers in Sodom and Gomorrah.
Have you stopped sniffing glue again? ;-)
Sell High!
Let's look at recent history of the S&P. 2000, all time highs, 2 yrs later -50%. 2007, all time highs, 2 yrs later -50%. -1.64% or whatever, yeah, right.
The real question should be ...How do markets perform when the fed stops printing $85 billion per month? Yeah I know silly question since from here on out they will only print moar.
the markets are performing
but it's a very sad, pathetic play
and once again, the cannons will bring down the theatre
stocks feel euforic on raw materials smack down (meaning lower production costs) but will it last ?
Dow is barely down today and was down yest much more than the other day (Monday). There is little net selling in the magic Dow yet.
Dow is only beginning it's retracement. Follow AAPL though because this will be a predictor of where all stocks will eventally go. Many simply will have to catch up with Apple's retracement.
Who needs fancy software?!!
No new DJIA high from the ENTIRE NINETIES shows up, since none of them held for more than two years before being exceeded.
In other words, excluding Bubbles, it doesn't pay to buy new highs.
Otherwise it does.
Thanks for the info!
This could be a very challenging and difficult question. There are so many variables to take into consideration, like inflows and outputs, as well as fluctuations in the volatility indexes that this could be verging on the sublime, this could be taxing to the point of confusion for our banking friends.
Me though? I'll go and ask the dog, and if he says nowt, I'll ask the wife.
I asked some local pot-heads how they would perform after an all-time-high. They said: "Very slowly!" ;-)
Just for you bearwagon. ;-)
This parachutist jumps out the plane at 20,000 feet, when he gets to rip cord hight he pulls the cord. Nowt.
He pulls the back up cord, nowt. He pulls the safety, one off never been used before cord, nowt.
Just then he passes a bloke going up-over, he shouts 'You know out about parachutes?'
The bloke on his way up shouts, 'Sorry mate nowt, you know out about gas cookers?'.
Thank you very much. :)
?? nowt? What kind of ‘word’ is that?
bah
I'd sit me doon yet 'ave but nowt for a chaer. laddie!
fucking oath.
Apple has lost more market cap then all gold stocks combined this week.
Off Topic....
I thought that they had somebody in custody for the Boston bombing. What the hell are they waiting for? If I were of a suspicious nature I would think they might be hiding something. Like deporting Saudi national....but that would never happen right?
They need time to make something up. Gosh, Dr., haven't you seen "Wag the Dog"? You must have. So you know what they are waiting for: Their Spindoctor, to come up with a plan how to follow up best ...
interesting speculation from anonymous source here:
http://i.imgur.com/paK3lGJh.png
"the raid is issued to occur on Friday."
if it plays out that way, consider it another rip in the fabric. no doubt you'll be seeing the trolls out in force over the weekend trying to stitch it up before it all unravels.
They shall NOT succeed!
Tip E. Canoe - there are multiple misspellings in his post, and other faulty wordisms, suggesting to me it's bullshit.
yeah, that was my first thought too. then again, that could be intentional. anything's possible at this point methinks.
tune in tomorrow for the next episode of Behind the Looking Glass: Raid or No Raid?...
imho, this is a much more fascinating question:
What Is This Guy Holding?
http://www.youtube.com/watch?feature=player_embedded&v=R_AYbNz-uS4
(warning: annoying music but seems to fit the piece)
Suggests to me he's at work and doesn't want to get caught and fired. Or jailed.
Thought for the Day:
Organic fertilizers don't explode
And they don't start wars in the Middle East
Additionally they do not contain traces of Uranium, which most mineral fertilizers do.
actually, uranium in very minute doses is actually not bad for the soil (or plants or animals). but considering that we've already been most likely overdosed with them over the past 50 years, probably not needed at this point.
now Manganese, Selenium, Molybedenum, Cobalt & Boron, all needed & much more important for plant growth and human DNA replication.
Correct, it sums up over time, otherwise we could savely ignore it.
and you can make em at home for cheap
Correction for the day: ammonium nitrate contains carbon therefore it’s organic and it certainly DOES explode hence the use by farmers to remove tree-stumps.
Chasing the dragon
AAPL trading below its 200-week MA. Why do I sense some action tomorrow, or soon, anyway? A run for physical gold, and the realization that the global economy is not recovering smells bad.
I'm getting queasy about all the retro-comparisons going back many years/decades, although I understand said attempts. But we are disconnected from all fundamentals and current inaccurate data are now so ubiquitous that comparisons just end up being useless or misleading.
Seriously, comparisons to the old Soviet Union economic central planning would be much more predictive in our current situation. Central bankers are probably asking themselves right now, What would Stalin do? What would Khrushchev do? The answer: Squeeze the clients states harder and steal more property.
The reality sinking in: Decreasing effectiveness of each successive iteration of FED QE means it is going to be no less disastrous to the economy, and equity markets, than if the FED announced they were going to outright pull the plug on QE.
-0.40% = "stark"?????