Hi Junkster,
Nice to see you posting again. About catching falling knifes ... I don't look at my current special strategy in that light. But, one that uses market money to make new purchases at discount prices. Below is my thinking, my strategy, what I am doing and my anticipated outcome.
I am hoping the 2100 comes to be for a year end close for the S&P 500 Index as forecasted by Birinyi. This would equate to just short of a 12% gain from current levels of 1878. Which is indeed possible should forward earnings estimates materialize as anticipated.
Anyway, I now have my marker on the bet line that it will as I bought again today. With this I have recently bought at the 1970's, the 1920's and the 1870's. My next buy step is the 1820's and then beyond that at the 1770's should we reach these levels on the Index.
Keep in mind that year end mutual fund capital gain distributions are expected to be on the heavy side this year. Since, I take all my distributions in cash I have decided to put these anticipated distributions to work early and use the forth coming distributions to restore the cash position within my portfolio used to make these purchases.
With my average cost on amount invested currently at about 1920 and should the Index reach the forecasted 2100 year end closing mark then this will equal about a 8.5% gain. Should I buy again at the 1820's then this will lower my cost on amount invested to about 1895 and increase the gain to 10.8% should the 2100 mark be reached. With another buy at the 1770's and if the 2100 year end closing mark be reached then this would equate to about a 12.3% gain.
For me it is risk on for the traditional fall stock market rally. After all, the way I look at this is that I am using market money derived from investment distributions to make more market investments which from my thinking is kind of clever by using market products that generated the cash that will, in the end, fund these special purchases.
Should my strategy not play out by year end; I believe it will over time and besides the funds I invested in have a history of paying out good distributions.
Since this is being played in a tax deferred account there are no taxes to pay until withdrawals are made and I am investing in funds that are nav purchases for me.
Old_Skeet

FYI: The S&P 500 Energy sector makes up about 10% of the entire S&P 500. The sector rallied 23% from late February through June 23rd, and it was one of the top performing sectors in 2014 at that point. But things have turned ugly for Energy lately. Real ugly !
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2014/10/14/energy-sector-crashes.html?printerFriendly=true

yields continue to sink globally. In the US the whole curve had a bid – 2yr yields are at multi-month lows down at 0.37% (keep in mind this was 0.58% only back on 9/24). 10yr yields are now ~2.2% (down ~8bp Tues). The 2-10 spread is at risk of hitting fresh lows (it narrowed ~3bp Tues to 182bp). 30yr yields broke under 3% and are at new 52w lows (2.94%, down 7bp). A lot of moving pieces are at play. To start, some of this is just catch-up (recall FI was closed Mon while the SPX sank >30 points). Meanwhile, European yields continue to sink – German 10yr yields are at risk of falling to 0.8% and regardless of what is happening in the US Treasury yields won’t be able to rise so long as European borrowing costs sink. Nominal growth expectations continue to move lower – globally the collapse of crude prices is feeding through to inflation forecasts and market-based break-even indications are still sinking (US 10yr TIPS spreads are down to new lows today) while growth assumptions are nudging lower too.

I am hoping the 2100 comes to be for a year end close for the S&P 500 Index as forecast by Birinyi. This would equate to just short of a 12% gain from current levels of 1878. Which is indeed possible should forward earnings estimates materialize as anticipated.
Anyway, I now have my marker on the bet line that it will as I bought again today. With this I have recently bought at the 1970's, the 1920's and the 1870's. My next buy step is the 1820's and then beyond that at 1770.
Keep in mind that year end capital gain distributions are expected to be on the heavy side this year. Since, I take all my distributions in cash I have decided to put these anticipated distributions to work early and use the forth coming distributions to restore the cash position within my portfolio used to make these purchases.
With my average cost on amount invested currently at about 1920 and should the Index reach the forecasted 2100 year end closing mark then this will equal about a 8.5% gain. Should I buy again at the 1820's then this will lower my cost on amount invested to about 1895 and increase the gain to 10.8% should the 2100 mark be reached. With another buy at the 1770's and if the 2100 year end closing mark be reached then this would equate to about a 12.3% gain.
For me it is risk on for the traditional fall stock market rally.
Old_Skeet

FYI,
Dex: the low on rates on the 10 year are not in yet.
Dex
"He also forecast the dollar would continue to rise, even as he described the strong-dollar trade as crowded."
If the $ gets stronger, I would think the 10 year would also get stronger.

FYI: If you’re confused as to what’s going on with the stock market, you’re in pretty good company.
In a recent note, Birinyi Associates, headed by Salomon Brothers veteran Laszlo Birinyi, said the S&P 500 SPX has a 60% probability of hitting the firm’s year-end target of 2,100, compared with the 80% probability of a month ago.
Regards,
Ted
http://blogs.marketwatch.com/thetell/2014/10/14/birinyi-not-even-sure-whats-going-on-with-stocks/tab/print/

Hi rjb112,
I rarely, if ever, post on Bond and fixed income issues because I consider myself rather naïve on these matters. I plead an embarrassing level of ignorance. Many MFO members are far better informed on this subject than I am, so I suggest you address your income questions to these fine folks.
Since you asked, and since I have been investing in various forms of the fixed income universe for decades, I will submit a few incomplete thoughts on bond/fixed income investing. As usual, I will document my thoughts with a couple of references.
Using a ship as an analogy, equities are the power-plant that drive the ship towards a target safe harbor. Fixed income and bond components serve as a rudder to more closely align the ship on the desired compass heading. The rudder does slow the ship a little.
Volatility is very acceptable when you are young and accumulating wealth, but losses its attractiveness when approaching retirement. Hence, I morphed from a heavily weighted equity portfolio a few years ago to a more neutral portfolio (50/50 mix) today.
When wisely assembled, a balanced portfolio can almost maintain the annual returns of an all equity portfolio while reducing volatility (standard deviation) by half. Volatility always functions to attenuate compound returns below annual return levels.
Bond diversification helps to reduce overall portfolio volatility just like equity category diversification does. The bond market offers about as many subcategories as does the equity marketplace. Just like equities, these bond subcategories deliver a random checkerboard of annual returns; so the bond segment of my portfolio has many components to smooth the journey. Here is a Link to a Vanguard Bond Table of Periodic Returns:
http://www.vanguard.com/jumppage/international/web/pdfs/INTLCCRD.pdf
Just like the famous Callan Periodic Table of Investment Returns, the annual fixed income rewards bounce all over the space. Predicting future winners is an impossible task, so diversification is a reasonable strategy.
Likewise, forecasting future inflation rates and interest rates is also hazardous business. History suggests that the best guess for interest rates 10 years from now is what the current value is.
I do believe that just like market professionals have improved their skill sets, so has the Federal Reserve. I don’t expect wild inflation rate changes like those recorded in the late 1970s. The Fed actions can not guarantee a “soft” landing, but I do believe that they have sufficient control and data to pilot the economy to a “softer” landing.
However, I do not fully trust my projection of a more stable interest rate environment. Therefore, the bond portion of my portfolio emphasizes short duration elements as well as TIP components. Once again, uncertainty pushes me in diversification’s direction.
Costs always matter. That’s especially the case when investing in bonds. Very, very few actively managed bond funds outdistance their passive rivals. Given today’s low interest rate environment, costs are extraordinarily critical. I control costs by doing most of my bond business with passive Vanguard products (exceptions included later). They have served me well.
Even given the present low interest rate levels, bonds are still an important segment of an individual’s portfolio. Vanguard has a nice recent report that illustrates this point. Here is its Link:
https://personal.vanguard.com/pdf/s704.pdf
When my portfolio was rather thin, I decided to diversify into the bond market by using Balanced mutual funds. I was lucky and selected some winners. After decades, I still own these funds. They are the exceptions I noted earlier. These are Dodge and Cox, Wellington, and Wellesley mutual funds. I report these merely for the record, and do not necessarily recommend them for anyone.
I hope this is a little helpful. Sorry for this unorganized post; it is a series of random, real-time thoughts on your question. I’m lazy and commit little time to the bond marketplace. Please consult with better informed MFOers on this topic.
Best Wishes.

FYI:
Regards,
Ted
http://www.cnbc.com/id/102086498

Quoting: "But you can’t plan on a stock market crash every single time stocks fall. Sometimes stocks go down without an enormous crash. Were it not for the occasional correction or bear market, stocks wouldn’t offer a risk premium over bonds and cash.
Plan on seeing stocks fall plenty of times over your lifetime, including the occasional crash."
It's been difficult lately, to take the long-term view. But that's my frame of reference. I've got the world covered, leaving out Latin America, deliberately..... I hate to see the numbers, the last several days. Maybe I should just go fishing and start to think again in terms of YEARS. "I love it when a plan comes together." ---George Peppard.
Fishing results: https://scontent-a-ord.xx.fbcdn.net/hphotos-xap1/v/t1.0-9/s720x720/10628570_10202606813880871_8137407407218187508_n.jpg?oh=8eaad4dbfee36c6483e3f21ffb6c55be&oe=54AE224A

:) Hello, Ted! I'm here, just doing my best to be the 1st style of investor that uncle Barry Ritholtz described in his article.... ;)

@Derf.
Through last Friday. So, last one now actually a couple % lower.

FYI: Many investors have been hoping for a “healthy” correction to put money to work at lower prices, but corrections never feel healthy when they finally hit.
It always feels like this is the big one when losses start to pile up. We start hearing comparisons to the prior peaks in 2000 and 2007 along with some scary stories about the 1987 crash.
Regards,
Ted
http://awealthofcommonsense.com/heading-another-crash/

Ritholtz is no different than any of the other financial advisors looking to market their name and business to increase assets under management (AUM). AUM is the name of the game.

I'm hoping he is different, but you may be right.
I tend to read him as a higher priority, thinking he is more honest and trustworthy. I think Josh Brown works with him, and I'm thinking Josh Brown is also one of the more honest and trustworthy guys out there.

Same here.

I am not sure how this would work.
1. Automated, or does a human have to do the moving of posts?
2. Would posts toggle back and forth as they became threads, then threads without further responses for 24 hours? (What would happen to long-running threads with occasional bursts of silence, such as the "What are you buying/selling/contemplating" threads?)
3. Pretty easy to game the system by adding a follow-up post rather than editing an original post, e.g.
But let's try *something.*

@MJG.
Great paper.
Thank you!

Paging Charles: Would you have the average draw down for those 12 times SP500 went -5.1 % or more ?
Thank you.
Derf

Amazing interest rates on 10 year Gov't bonds around the world!
USA 2.21%
Germany .8%
The FED was surprised when it went below 2.6%
It signals an economic slowdown to me.
I'll say it again. I think we all will be surprised how low and long this interest rate environment will last.

@Tampabay I think investing is slightly different: sooner or later, at any single point in time, there is a humbled ass for every available seat. And, in a long-leg-down market, it is a very willing ass, grateful to even have a seat to take; on the floor around will be the litter of those who attempt to catch the falling knives, to which Junkster alludes.
Keep your cool, Fundsters; ya can't trade the market ya wish for, ya has to trade the market ya has. Being all pensive will mess with our A game. The week is young... and the bell has just rung. Away we go! (or, "away" we go?)
10/14/2014
00:56:22
10-yr T: 2.24% ;)

Actually, since the last market "trough" on 3/6/2009, which is the start of the current bull market, the SP500 has drawn down at least -5.1% twelve times. Or about twice a year. The worst being -18.6% on 10/3/2011.

Also try this Google chart. Enter your fund, choose "1 month". Under chart set "Technicals" to 30 day SMA.