Citrus Growers Forum

TRI · Posted: Thu 03 Apr, 2014 12:09 am

The stock market has had a HUGE increase in the last 5 years and may continue to rally in the short term, but long term it is headed for some serious trouble. The valuation is now the highest since year 2001 during the dot com bubble era. Market cap/GDP is 118.3% and price/sales is near 1.7 and far far above the median of 0.9. I am afraid central bankers have created another very dangerous bubble. The dip buyers are really pushing their luck and will get burned very severely. It is now time to start to think about your investment objectives and get defensive.

What will burst the bubble this time? The next financial crises will likely be driven by corporate debt bubble bust which has the potential to be much more devastating than the housing bust before it. Corporations have been issuing debt like hot cakes over the past five years with 1.4 trillion in new debt issued in year 2013 alone. Covenant lite loans issuance, the riskiest debt, has soared in 2013. C paper is yielding less than 6 percent which is absurd! We are in one of the greatest financial bubbles in history and it will end very very badly. Few people are paying attention to the corporate credit bubble and it will blind side Wall Street and lead to massive crises. GET DEFENSIVE and sell your stocks!

Sylvain · Posted: Thu 03 Apr, 2014 3:48 am

TRI, did you really send this message or is it a Spam?
I don't want to make a troll. I just want to know if we delete this message or not.

Sylvain as moderator.

Tom · Posted: Thu 03 Apr, 2014 1:50 pm

I think it's real and something people should consider and at least tread very carefully. I just bought a penny stock and another wild possibility. Frankly not a lot of money because I've been worried a long time. My timing is always perfectly wrong ! Don't play if you can't afford to loose is a reasonable mantra. Anything can fall by 1/2 or more. Been there and done that. If you hold on it might come back or could be worth even less. I've seen people loose bunches and I'm almost 62 .......Tom

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Tom in central Alabama

mrtexas · Posted: Thu 03 Apr, 2014 4:38 pm

Penny stocks are swindles. And that is a fact. Consider any money spent on penny stocks as thrown away. That is better advice than what you have posted.

Tom · Posted: Thu 03 Apr, 2014 8:27 pm

I can't say you're wrong. Have you heard about the guy that kept buying as his penny stock went up ? After having a nice profit he told his broker to sell. Broker said 'sell to who' ?

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Tom in central Alabama

TRI · Posted: Sat 05 Apr, 2014 1:45 pm

Sylvain wrote:

TRI, did you really send this message or is it a Spam?
I don't want to make a troll. I just want to know if we delete this message or not.

Sylvain as moderator.

I did make this message because very concerned with stock market rise and valuation and do not want a repeat of 2008. I believe this is a very dangerous time to make investments but could be wrong on timing. I do not know the future and have been wrong before on timing economic events because human sentiment and psychology are so hard to predict and could be wrong again but respect history. The signs are there: economic stagnation in Europe and Asia, record high margin debt, record covenant lite debt issuance, high stock market valuations, global credit bubble over 100 trillion dollars, etc. There are more even concerns than listed in this message. Eventually this cycle will end badly but the timing is not certain. It could end this year or could continue longer.

mrtexas · Posted: Sun 06 Apr, 2014 8:29 pm

Good time for defensive stocks like XOM and KMR(yield 7.4%) my largest holdings. I also have AXP, KO, CAT that are not so defensive.

I consider not investing in the stock market to be a sure loser over time with the pathetic interest rates the politburo is forcing on those with money to invest. I consider bonds to be much riskier than stocks. With historic low interest rates the only way for bond prices to go is down, down, down easily DOWN 50% for 30 year bonds. IMHO the stock market is the only way to financial success in the long run as other strategies are even riskier.

Another of my strategies is the largest mortgage I could get at 3.25% and holding an equal amount of KMR at 7.44%.

Corporate profits are more than good as corporations are finding they can do more work with less people/automation. The working person is in not so good of shape however due to uncertainty and poor government in Washington.

Hard to believe but I have paid no income tax since retiring in 1/2014 due to income is dividends and capital gains and potentially regular taxable income is in IRAs which I haven't had to withdraw from. Standard deduction and child tax credit for two kids results in no income tax for joint income less than $110k. I haven't let any tax credits go to waste as I have had to intentionally take capital gains to use up the credits. I consider myself more than fortunate with my fiscal situation. However, I saved 25% or more of my income for many years while working and have a considerable amount of very low $7 basis XOM stock currently selling in the $90s.

I have been careful to make this post as generic as possible but interesting in that I am telling my strategies. I don't know anyone on this forum personally or I wouldn't disclose as much as I have already.

I also would like to encourage the younger posters here to save as much as possible, as young and as early as possible for your future financial success. Take advantage of IRAs as tax is not owed until money is taken out. It helps to have a career in a stable field such as Engineering as I did and such a stable and great company as I did at MOB and XOM. I give XOM another good 50 years as hydrocarbons aren't going away any time soon.

I apologize if this post comes across as anything other than encouraging to anyone.

What scares me most is Washington borrowing Chinese $$ to prop up the US economy.

mrtexas · Posted: Sun 06 Apr, 2014 8:38 pm

TRI wrote:

Sylvain wrote:

TRI, did you really send this message or is it a Spam?
I don't want to make a troll. I just want to know if we delete this message or not.

Sylvain as moderator.

I did make this message because very concerned with stock market rise and valuation and do not want a repeat of 2008. I believe this is a very dangerous time to make investments but could be wrong on timing. I do not know the future and have been wrong before on timing economic events because human sentiment and psychology are so hard to predict and could be wrong again but respect history. The signs are there: economic stagnation in Europe and Asia, record high margin debt, record covenant lite debt issuance, high stock market valuations, global credit bubble over 100 trillion dollars, etc. There are more even concerns than listed in this message. Eventually this cycle will end badly but the timing is not certain. It could end this year or could continue longer.

I appreciate your concern and agree with most of it but IMHO consider the alternatives more risky. 2008 meltdown was 100% the fault of government forcing lenders to loan to people who couldn't repay. Lenders were forced to lower lending standards by government edict with the utopian goal of "affordable housing", forcing(fascism) with a smiling face as usual. I leave it up to you what form of government I think we have). There are rumblings from those in government that didn't learn the last time(don't they all?) to have "affordable" housing again. Funny how so many believe the way to solve "unfairness" is to give more money and power to idiot politicians to mess things up even worse. Yes, our current system is "unfair" but no one has been able to devise a more fair system. The more the politicians attempt to make things "fair" the more dangerous and "unfair" our system gets. The more government regulates business, the more business regulates government. You can always legislate against human nature as our politicians can't seen to help trying but human nature ALWAYS leads to the law of un-intended consequences!

A very interesting book I recommend is "Liberal Fascism". Just finished it and have re-read it as well. Beware of fascism when you hear government/business partnership and government forcing the marketplace to do the un-economic (come to think of it that is what our government does everyday both parties.) The "fascism" of Hilter is always tied together with his anti-semitism but his form of government was actually called "national socialism." Fascism as practiced by Mussolini and Hitler minus the rabid anti-semitism of Hitler was actually a competing form of leftism to western european socialism and soviet communism with an un-biased reading of history. Read "Main Kampf" if you don't agree. Leftists today like to call anyone who disagrees with them fascists and right wing same as Stalin defined fascist as anyone opposed to him and to the right of him. Does anyone really think Trotsky was a right winger? Interesting that today's progressives call the "Right" fascist.

Tom · Posted: Sun 06 Apr, 2014 9:54 pm

Very interesting. What KMR are you writing about with that kind of yield ? Thanks. Tom

_________________
Tom in central Alabama

mrtexas · Posted: Mon 07 Apr, 2014 3:49 am

Tom wrote:

Very interesting. What KMR are you writing about with that kind of yield ? Thanks. Tom

Kinder Morgan Management, LLC (NYSE: KMR) is a limited partner in and manages and controls the business and affairs of Kinder Morgan Energy Partners (NYSE: KMP), one of the largest publicly traded pipeline limited partnerships in the United States. KMP is an energy transportation and storage company and owns an investment in or operates approximately 46,000 miles of pipelines and 180 terminals in North America. Our pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and our terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel.

KMRs success is dependent upon our operation and management of KMP and KMPs resulting performance. In 2012, KMP declared total cash distributions of $4.98 per limited partner unit, an 8 percent increase from the previous year. KMR, like KMP, declared $4.98 per unit for 2012. Since its formation in May of 2001, KMR has delivered an average annual return to shareholders of 15 percent.

The advantage to KMR is that it has the same payout as KMP but sells at a lower price per share and does not have the complicated tax form.