Chad wrote:jennypenny wrote:If we get a big correction in the stock market, what do you think will happen to bond funds? (not just TLT, but corp and muni bond funds)
As Tylerrr points out you will probably get a bigger move in gold, but bond funds would probably go up. Money would flee somewhere out of stocks other than cash. Gold and bonds are the standard refuge in a crash.
I don't think we are quite ready for the big pull back, yet. I like this graph outlining the different psychological states from a bottom to a top and back to a bottom:
http://www.bloombergview.com/articles/2 ... oltz-chart
I agree with his conclusion. We are somewhere around "enthusiasm" with a lean towards "Public." There is a lot of noise with "all time highs" being hit every week or so, but we really haven't seen a big run up recently (less than 3%in the S&P over the last 3 months), which means these highs aren't at nose bleed levels.
that is a great chart and really shows how I like to personally trade regarding the overall present psychology of markets. I always feel markets follow macro moods. Saying that, my guess is that we are at "greed" or "delusion" on the chart because equity inflows are at record highs from every day people, which historically says the party is almost over....
In addition, housing is incredibly expensive in many of our major cities, which says there is probably another housing bubble in many areas. My buddy in LA makes about 150k per year and he said he can't believe he cannot find a decent condo to purchase in the LA area because they are just too damn expensive. He grew up in LA too.....
My gold stocks have been hammered this week. I've lost a lot of gains, but i'm holding on because I think gold stocks will head higher to wrap up 2014 eventually in unison with an equity downward correction over the rest of 2014.
Of course, we can't time it perfectly, but if i had to guess, I would guess gold/metal stocks will do better than DOW and SPY over the whole 2014.