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Historically bad stock December


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16 hours ago, TexasTiger said:

This is a bit rambly, stream of consciousness, as there are so many things to think about:

We are currently down 11% from the year's high.  We are currently down 180 points lower than the previous low for the year, and over 1000 points lower than the year began.  Those aren't good trends.  

Nobody really knows where it's going, but sooner or later it'll be recession.  I still think we'll see it in 2019-2020, but I could be completely wrong. 

An issue for me is that the Fed needs to raise rates to deal with the coming slowdown, but raising those rates isn't something the markets like.  My sense of this is the Fed should keep going markets be damned.  Having room to drop rates will be a good thing if the bottom falls completely out, and the market isn't the economy, just speculation on the economy.

A dangerous combination, in my mind, would be an economic slowdown, already low interest rates and an unnecessarily high national debt.  That might lead to depression, hyperinflation, difficult austerity measures, etc.  Hopefully it's not that dire.

If we get anywhere near 19 to 20k on the DJIA I will take a chance on aggressively buying.  That's probably a given.

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The S&P 500 has been trading well above its long term average (based on trailing 12 months earnings) for at least 3 years.  The average is near 16 and currently around 19.5.  It was trading at a PE around 25 at start of this year.  I suspect many investors were looking to get some dividends and capital gains from the market in excess of what they might get from "safe" treasuries or other high rated fixed income investments.  

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