written by reader Q

By cks99, August 23, 2016

things are happening in the world that, even five years ago would have moved markets SUBSTANTIALLY..and the markets seem to…what?? are they SO manipulated as to be completely irrelevant??…the only way to affect profit seems to be individual equities …on some kind of ”pop” either direction…otherwise the markets appear to be …what?…I’ve heard the story of them being ”rigged” and over the years I could see it to some degree, but NOW…its seems almost to the point of ridiculous??

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Travis Johnson, Stock Gumshoe
August 23, 2016 3:08 pm

Not sure what events you’re thinking of, or what markets — I’d personally say that the market is pretty expensive, and that many segments of the market are being propped up by low (and falling, and sometimes negative) interest rates. “Manipulated” implies that there is someone doing the manipulating, and I don’t think there’s an intentional manipulation — I think it’s central bankers trying desperately to keep us from the consequences of debt, and trying to keep some global balance so that the US dollar doesn’t get too high (and thus make paying the debt even harder).

It may have reached fairly ridiculous levels, at least in some parts of the market, but anyone who has a clear idea of how or when low/zero interest rates will end probably has a single-minded opinion about what SHOULD happen that’s driving their assessment. We’ve been in uncharted territory for five years or so, I think it’s probably more valuable to spend time thinking about what might happen, and what your reaction to that will be in different scenarios, than it is to “bet” on something specific happening beyond the “things will keep going sort of like they have been.”

For me, the adjustment I’ve made over the past couple years is primarily to keep more cash in my portfolio and to allocate a little more to gold equities, I think that gives my portfolio some ballast and also some flexibility to buy things if they get cheap in any possible panic. That’s been my position, gradually increased, for a couple years, since the bull market has gotten quite old and I’ve gotten more worried, so every bit of pulling back I’ve been and every increase in my cash position so far have been drags on my personal portfolio performance during the continuing strong market.

Whether I’ll actually have the intestinal fortitude to buy during a panic or not, we’ll have to wait and see — I did some buying in 2009 and patted myself on the back for that, but buying into a nasty market, when everyone’s telling you the world is about to end, can be really hard.

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