You heard it here first… My long term view is that the market is still scary and it sucks beyond all means and that I am still mostly in cash right now. Short term prediction is that it drops to around 10,800 and then trades back up to 11,800-12,000 before it makes a turn south again…
Don’t get caught up in the rally and dump all your money in like the last wave of losers!
But if you’re mostly in cash, don’t you risk losing out on what could be some of the cheapest stocks of our lifetime? For the average investor on a long-term horizon (that is key here), shouldn’t he be diversely invested (perhaps no individual stocks and a couple of big index funds) and continue his automatic investment plan that is based on dollar cost averaging? These are the years that will drag that average down, which is a good thing. Now, if you’re nearing the time when you need that money for retirement, then forget about it - you may very well need to think about cashing out. But a good plan would have had you tamping down that risk and moving out of equities gradually over the years.
Get busy livin’ or get busy dyin’
The old risk versus reward curve… Yes, you could miss an uptrend, but missing a profit hurts a lot less than losing everything you have. I went through the 2000-2003 tech bubble with a front row seat and watched everything disappear. If the tech bubble didn’t happen, I would have retired a couple years ago. If I knew then what I knew today, I would be sitting pretty. Unfortunately, I learned the hard way. I’m not making the same mistake again. You can bet on that.
I think that we can all agree, that America faces the worst financial crises that we have seen in a VERY long time. That being said, with the average recession wiping out 28% of the market, we can probably safely expect more losses to come. People were counting on interest rates to bail us out? Now that the feds don’t really have any tricks left up their sleeves, why on Earth would I expect that the stock market takes a rebound in the next 6 months?
Also, I want you to think about this… Foreclosures aren’t about all of this stupid ARM rhetoric… Think about the people who can barely afford their house and strapped into their budget to begin with. Their fuel bill has nearly doubled. They can’t just stop driving because they have to get to work. Smart ones will consider other means of transit such as bus, etc, but most will not do it. Most will keep driving which means at the end of the month, they will be several hundred dollars short of paying the bills. Eventually, the mortgage payments will start to get later and later and foreclosure is coming. We haven’t even begin to feel the pain yet.
So yes, stocks may be cheap (if you really know what a bargain looks like), but even if they are, the opportunity to buy them at this price should be here for a long time!!! I say that we flatline for a few years at BEST case scenario. Worse case, biggest stock market loss in decades…
I hate to use the “D” word, but if this doesn’t smell like “depression”, then nothing will ever smell like depression again.
Don’t catch
Never catch a falling knife unless you are floating on a balloon.
Fractional reserve, derivatives, oil… it all adds up and I think you are right but probably for different reasons. Much of the capital that props up many of the markets is just sheer speculation, and when you have investors running for the hills and buying gold, that just opens a window for the little guys like me and you to get in on deals. Granted, the deals won’t pan out until energy is settled and the dollar comes back, but when it does, a $20 stock will be $120 split 3 times. As already said, long term investors win here. The short term commodity guys are going to have egg on their face, like the real estate and financial guys did when they bought into all this stuff 4 years ago.
Hold the tomato, fool!
quote:Very sensible, but I don't think we are even close to settling the energy thing! So, even if there are "deals" out there, they won't disappear any time soon. Also know that the oil stuff isn't just speculation. We buy it from other countries and the value of our dollar is falling. That means as our dollar get's weaker, oil will be relatively more expensive for us (consider that our USD get's converted into another currency).
Originally posted by Turkey and SwissGranted, the deals won’t pan out until energy is settled and the dollar comes back, but when it does, a $20 stock will be $120 split 3 times. As already said, long term investors win here. The short term commodity guys are going to have egg on their face, like the real estate and financial guys did when they bought into all this stuff 4 years ago.
Hold the tomato, fool!
There has been some oil news lately with the ban being lifted on offshore drilling and the 4.4% drop today. In my mind, this set’s up a nice bear market rally! “Hey folks, the doom is over, rush back in and place your bets!” It’s a sucker’s game. As soon as you get all your money in, Wall Street will decide to beat down the market again as earnings come in short. “Oh yeah, and we forgot to tell you before you put all your money back in, that it’s going to take a few years before we find more oil and build some refineries!”
All I am saying is look around outside… Do NOT look at your TV… I just bought a brand new Tahoe for 0% over 72 months! Hell, GMC is just trying to get rid of them. Why would a huge corporation being tigtening their belt in such a way if daylight were just a few months away? PS… I said in anotehr post that this “super deal” would also preceed layoffs. They announced either today or yesterday that they are doing mass layoffs! They
From what I can gather, you lost your ass in the bubble burst of the early 00’s. But, you say you learned your lesson from this. BS. You obviously don’t know what it means to be diversified. If you got burned as bad as you say, it’s b/c you were heavy in techs. No big deal - that’s just a bet that didn’t pay off. A diverse portfolio is not nearly the gamble you made on techs, however. I’m a little concerned you don’t understand basic risk management, yet you’re dispensing investment advice like it’s your job…
Get busy livin’ or get busy dyin’
quote:Settle down Donny. It's just a game to see if I am right when the dust settles... In just about every post, I put a disclaimer saying that I am not an invesement professional and to do your own research. What makes you think I am not diversified now? It's not that I was "heavy into techs"... It's the fact that I was only 23 years old and working for a tech company and sittin on a lot of stock options that got washed away. Also, held onto a lot of company stock. So yes, I learned a lot more than you give me credit for.
Originally posted by DonnyFrom what I can gather, you lost your ass in the bubble burst of the early 00’s. But, you say you learned your lesson from this. BS. You obviously don’t know what it means to be diversified. If you got burned as bad as you say, it’s b/c you were heavy in techs. No big deal - that’s just a bet that didn’t pay off. A diverse portfolio is not nearly the gamble you made on techs, however. I’m a little concerned you don’t understand basic risk management, yet you’re dispensing investment advice like it’s your job…
Get busy livin’ or get busy dyin’
And there is no need to get your panties in a wad unless you are an investment broker that get’s paid on a transaction basis. I’ve been telling people since December to “be careful”… My 401K is still in the positive for the year. What abour yours?
And what makes you think a diversified portfolio won’t lose your ass? The AVERAGE stock market loss is 28% for a typical recession. We are down 20% now and this aint’ your average one. That’s all I am saying… I don’t think taht telling people to “be careful” is wreckless advice…
You go ahead and move all your chips into the “cheap” stocks if you want to. Not this guy…
quote:
Originally posted by skinneejquote:Settle down Donny. It's just a game to see if I am right when the dust settles... In just about every post, I put a disclaimer saying that I am not an invesement professional and to do your own research. What makes you think I am not diversified now? It's not that I was "heavy into techs"... It's the fact that I was only 23 years old and working for a tech company and sittin on a lot of stock options that got washed away. Also, held onto a lot of company stock. So yes, I learned a lot more than you give me credit for.
Originally posted by DonnyFrom what I can gather, you lost your ass in the bubble burst of the early 00’s. But, you say you learned your lesson from this. BS. You obviously don’t know what it means to be diversified. If you got burned as bad as you say, it’s b/c you were heavy in techs. No big deal - that’s just a bet that didn’t pay off. A diverse portfolio is not nearly the gamble you made on techs, however. I’m a little concerned you don’t understand basic risk management, yet you’re dispensing investment advice like it’s your job…
Get busy livin’ or get busy dyin’
And there is no need to get your panties in a wad unless you are an investment broker that get’s paid on a transaction basis. I’ve been telling people since December to “be careful”… My 401K is still in the positive for the year. What abour yours?
And what makes you think a diversified portfolio won’t lose your ass? The AVERAGE stock market loss is 28% for a typical recession. We are down 20% now and this aint’ your average one. That’s all I am saying… I don’t think taht telling people to “be careful” is wreckless advice…
Y
quote:You are right. It is a form of market timing, but it's a little more calculated than that. It's more about capital preservation. And it's worked out pretty well for me so far.
Originally posted by DonnyWell, at least I understand where you’re coming from now; though, your stance on stocks still makes no sense, long term. Your position is the classic example of trying to “time the market” - good luck, let me know how that works out for you. As for a typical recession, it may very well be a 28% loss. But, that’s not what the long-term average gain on stocks is…Oh, one more point to ponder. How cheap are cash positions right now?
Get busy livin’ or get busy dyin’
I think you are missing the point on my 28% loss comment. That’s for a typical recession. My own personal feeling is that this recession will be much worse than a “typical” one. I think people could see 40% or more of their retirement wiped out before this thing hit’s the bottom.
Anyway, I don’t expect anyone to follow what I am doing. You have your strategy and I have mine. To each his own, but unless you were all in gold and oil mutuals, my calculations are that I am beating your pants off right now. And just know that if you lost 20% more than me already, then you will need to see a 25% gain just to catch back up!!!
And just to clarify. I’m not trying to give out investment advice here. This is just a discussion board called, “Business” where people come to discuss their ideas about “Business”. It’s a damned internet forum. It’s not a new concept to talk about the stock market on the internet. It’s really just a pissing contest between a few people looking to say, “I told you so” at the end of the year…
Hey Donny,
I just wanted to point out how close I was here on my interweb-prediction…
My guess on the last turning point: " around 10,800"
Actual low on 7/15 was: 10,827.71
That’s pretty ■■■■ close…
Then I said, that it would rally up into the 11,800-12,000 range before making a turn south again…
Actual highpoint on 7/23 was 11,698.71 was basically 11,700. So I was just over 100 points out of my range…
Where are we today???
11,131 and dropping… Which is definitely a turn south from 11,700…
I hate to say that “I told you so” and can’t claim total victory on this one since I missed my original predition by 100+ points on the high point, but you have to admit I was pretty ■■■■ close…
I think that even the mighty Edisto-Fisher would have been proud of this pick…
Thoughts??? Do you still think that I am a complete jack ass?
Jackass - yes…SMARTJACKASS THOUGH!
Epic Failure=When everyday,run of the mill failure just won’t do
quote:Fair enough.
Originally posted by TRITON225CCJackass - yes…SMARTJACKASS THOUGH!
Epic Failure=When everyday,run of the mill failure just won’t do
yea, I wish you’d just leave well enough alone 
since you are right so often would you please predict that my September 410:dizzy_face: call options in CME will be in the money by the middle of August?
PALMETTO C ~ 16’ Sea Fox
The Morris Island Lighthouse web page
www.savethelight.org
If you were certain enough that you actually put all your money on the turns, then smart. Otherwise…
I’ll withhold judgment on whether you’re a jackass until I hear how you’re dealing with the tax ramifications of your (apparently) frequent buying and selling. If you can time the market, great, go for it. I’ll stick with a strategy proven over…and over…and over…to work in the long run.
Get busy livin’ or get busy dyin’
quote:Who told you that I was frequently buying and selling? I just made a market prediction for fun. You got all bent out of shape about it.
Originally posted by DonnyI’ll withhold judgment on whether you’re a jackass until I hear how you’re dealing with the tax ramifications of your (apparently) frequent buying and selling. If you can time the market, great, go for it. I’ll stick with a strategy proven over…and over…and over…to work in the long run.
Get busy livin’ or get busy dyin’
But if you are asking for tax advice, you can trade inside of an IRA as much as you like without a tax penalty from my understanding.
Let’s see how your strategy works after the next 12 months.
My neighbor just confessed to me he made the classic nervous investor mistake of selling all of his stocks and putting the money into a moneymarket fund. He confessed he was late in his timing and lost “a little”. Well, I’m in stocks, have been in stocks, and am buying stocks regularly. I don’t care if my portfolio is down right now because I am getting some bargain deals on stocks by dollar-cost-averaging. Let’s compare ten year returns and see if trying to time the market out-performs dollar-cost-averaging. I’m 43 so I have 22 years left to invest before I retire if I retire at 65, but the plan is in the 50’s. If you are trying to time the market you are foolish. Most mutual fund managers can’t time it right and underperform. Just invest it and “forget-a-bout it”.
Dollar cost averaging in stocks is certainly an acceptable means to invest, especially if one doesn’t have the time or desire to do their research. In addition, many tend to sell at the bottom, and buy at the top, rather than the opposite. Dollar cost averaging by its nature corrects that error.
Dollar cost averaging does have it limitations, though. One of the problems with dca is that you can ride a stock or sector to the bottom. Enron, World Comm, and many other stocks went down with investors continuing to invest while waiting for a turnaround. Instead they lost it all. Housing stocks and Countrywide are more recent examples, though the investors are going to get out with something, though it may be only a shadow of their original investment. Housing stocks may eventually be back but how long do you want to tie your money up, and how low will they go in the meantime?
Timing, without a basis in the fundamentals of a particular stock, also is not a good idea. But many mistake trading based on fundamentals as timing. Last August the fundamentals started to look bad for financial and housing stocks. Those who took profits, or got out all together have saved a ton of money. They can now get back in for a great discount. That’s not market timing.
Dollar cost averaging in a good mutual fund is more practical, since you will have a manager that will trade based on fundamentals. While it may limit your profits, it also limits your losses.
I do agree because I was one of those “World-Comer’s”. But now I invest pretty much solely in index funds. Large, Medium, Small, Foreign and Emerging Markets. Very few managed mutual funds outperform the market and the fees are outrageous on most. The reason index funds and etf’s are low fee is because the manager just has to mirror the index and sit back and relax. Not try to beat the index like managed funds. I feel I am very diversified since I am invested in most index’es. Dollar cost averaging while being diversified is safer than betting all of your eggs on one stock like World-com. There is no guarantee that a stock is going to come back and no-one knew Worldcom was cooking the books. That is why they folded by the way. They stole my money and millions of others while Wall-Street was hawking “Buy, Buy, Buy”. I personally don’t spend hours at the computer every day watching this stock or that one. I am dollar cost averaging in my pension, my 401k, and my discretionary portfolio and I know over a 10 year period I am going to make money because historically the indexes have and my stuff mirrors the indexes.