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Guest cindona

Are You Still In?

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I see some/many analysts already asking today, is this the bottom...is this a buying opportunity? Hmmm, as one writer with a different point of view said this morning, "The term “buying opportunity” is posted in so many circles, and what is interesting is that you never ever hear the term “selling opportunity” on Wall Street." :) He also pointed out that, "The Investor’s Intelligence survey right now is at 46.3% bulls and 24.7% bears; again, at last summer’s market bottom, the number of bears outnumbered the bulls by eight percentage points. At last count, the bulls outrank the bears by 22 percentage points. Where is the panic button? When you see that, then it may be time to get back in." Or in other words, with the market up today, it may be another good day to get out!

 

Cheers John

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It is August, a lot of traders have sold off so they can go on vacation, # of issues traded are often smaller in August, which magnifies any move. Good time to stay the course.

 

Barb

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It is August, a lot of traders have sold off so they can go on vacation, # of issues traded are often smaller in August, which magnifies any move. Good time to stay the course.

 

Barb

 

But this is not your Grandfather's August. "Volatility pumps up the volume in August." If you are 25 years old, then "stay the course" is an OK idea, otherwise...NOT. Any "up day" is a "selling opportunity."

 

Cheers John

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Selling should have been done when the Dow hit about 12500.

 

Now is the time to look for bargains and judge when to put a little back in, or just sit on the sidelines.

 

Barb

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Guest cindona

Five of the past six days have had 400+ point moves in the DOW. Up, down, up, down. Way too much volatility. I'll be sitting on the sidelines, as I believe the can they keep kicking down the road is about to hit a wall.

 

----------

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Now is the time to look for bargains and judge when to put a little back in, or just sit on the sidelines.

 

I basically agree. I also used the lower market values to shift some of my taxable investments from Europe to Latin America and Asia. If the market fully prices the expected future into current prices, the shift shouldn't matter, but it shouldn't hurt either. And I'm more comfortable under weighting Europe at this point.

 

If anyone is considering converting IRA, 401K or their ilk to a Roth, doing it when the market is lower results in lower conversion taxes.

 

Rightly, or wrongly, I'm 90% invested in a broadly diversified portfolio consisting primarily of EFTs. I do have a limit order in for some DEM for my Roth account, hoping I can catch a little more higher yield, at "reasonable" risk during the volatility.

 

Dan

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Investing in the stock market has always depended on your time frame. If you put your yearly living expense money in the market, shame on you. You deserve all your losses and heartaches.

I have no current needs for any money invested in the stock market. My personal investing horizon is 10 to 20 years out. A well balanced portfolio is a good place for me to be.

 

Here is a mutual fund that I've had very good luck with over the years. Nice conservative asset allocation fund. Good for times just like this.

 

PRPFX

 

http://www.google.com/finance?q=MUTF:PRPFX

 

In spite of all the recent gyrations, it's still up 6.79% YTD.

 

Nope. Not in the investment racket. Just a personal choice based on my research.

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One thing to think of when dealing with mutual funds, especially in this volatile time. If lots of folks want to redeem, a mutual fund may have to sell the good stock holdings as well as their bad stock holdings to make sure they have enough cash to meet all redemption orders. In this regard an ETF may be a better idea but it all depends on your timeline.

 

We are holding tight and like Barbara said, it is time to look for bargains that give dividends. A loss is only on paper unless you sell, so with a longer timeline it is worth it to hold on.

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Guest cindona

With the sharp gains AND sharp losses, the DOW ultimately ended -175 points for the week.

 

Link here

 

Wonder what Monday will bring.

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I hope it brings a sharp drop in Tesla. I missed it for just under 23 last Thursday and it is back up to $26.31. Granted that makes all my previous buys of it at 22.55 and at 17.50 or so worth more but I really wanted to buy one more block. I know, it is strange to hear someone wanting their stock to go down. Well they should show a really bad two quarters as the last roadsters are sold and there is no product selling until the Model S comes out. I was banking on that for my last buy later later this year, or in early 2012 or later if they post a delay in the Model S, I just missed the unexpected drop to the price point I wanted last week . . . caught unawares because I am not glued to the ticker, I am long on Tesla.

 

Once again I am no knowledgeable person at this. I just know what they are gonna do. Knew it back when everyone thought I was being too optimistic. I just got an email that they will be giving rides in the ModelS only to reservation holders at the new FRemont Ca. Factory and giving factory tours. For those that ignore anything connected with the words "Electric Car" and automatically become blind, and many do, take a look at their website and see what the future is bringing for their second successful car in production. http://www.teslamotors.com/

Edited by RV

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A loss is only on paper unless you sell, so with a longer timeline it is worth it to hold on.

True. But also true is " a gain is only on paper unless you sell!" And just how long should a timeline be before one sells?

 

TheDOWhas been at the low 11,000 value too many times over the past 10+ years to get me real excited about gains on paper. And when considering inflation it is much worse. Total inflation from 2000 to now is about 30%. So a DOW of 11,000 in year 2000 would compare to an inflation adjusted DOW of more than 14,000 today. That means, a DOW of 14,000 today has shown no real growth compared to a DOW of 11,000 in year 2000.

 

We all understand inflation, but we don't often think about it when talking about stock values. The new saying is becoming more and more relevant, "buy and hold" has become "buy and hope." And there hasn't been a whole lot of hope in the past decade. Does the next decade look brighter? Not to me.

Edited by mcbockalds

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I essentially agree. But I'm not convinced that individual stock selection or market timing will do any better (I have a lot of experience with both and I switched to only doing strategic tweaks).

 

You've disparaged "buy and hold" but haven't disclosed the specifics of anything better.

 

What's your secret?

 

Dan

 

On Edit: I looked backward and discovered your Aug 8th post. I see that you appear to have held your money in cash and assets. In retrospect, that was a very reasonable strategy for the last decade or so. But it would have been a lousy one for most earlier time periods. To me the real question for investors is about the future. IMO, hard assets are near to, if not at, their peak. Although cash is likely to be safe from significant inflation erosion for at least several years, interest rates will remain very low. Bottom line: things don't look great for our investments regardless of preferences on where to put your money.

Edited by Dan Zemke

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I essentially agree. But I'm not convinced that individual stock selection or market timing will do any better (I have a lot of experience with both and I switched to only doing strategic tweaks).

 

You've disparaged "buy and hold" but haven't disclosed the specifics of anything better.

 

What's your secret?

 

Dan

 

On Edit: I looked backward and discovered your Aug 8th post. I see that you appear to have held your money in cash and assets. In retrospect, that was a very reasonable strategy for the last decade or so. But it would have been a lousy one for most earlier time periods. To me the real question for investors is about the future. IMO, hard assets are near to, if not at, their peak. Although cash is likely to be safe from significant inflation erosion for at least several years, interest rates will remain very low. Bottom line: things don't look great for our investments regardless of preferences on where to put your money.

I have no secret! I sometimes wonder why I even post anything about investing. As a retired academic (small college) economist I probably know less about investing than your average diesel mechanic, who really understands something important. That said, I guess I just like to see my writing in print, so here I am saying what I THINK, not KNOW about financial markets.

I agree with you that, "things don't look great for our investments regardless of preferences on where to put your money." (Although gold MAY continue to do well, but I don't have access to gold or commodities in our retirement funds.) And given that belief, I guess the only way I can hope to do fairly well with our IRA funds and 403b funds is to try to time the market...not to make a killing but to preserve assets and get a bit of growth. So far about all I have done is to preserve assets (except for some good growth in the past with precious metals and energy funds), but inflation too has not been kind to me since then since I have been on the sidelines. I do hope to get in soon, but don't believe our economy is going to support even these lowered stock market evaluations. "You pays your money and you makes your choice."

 

Cheers John

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We all do what we are comfortable with. In 2000 I lost all faith in stocks and mutual funds. I converted everything into single payment fixed annuities. I am a very happy camper. I've never looked back and I know exactly how much money will hit my bank account each month.

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Why Buy Stocks Now

 

This article and its analysis is almost a repeat of articles I remember reading back in Feb., July, and Nov. of 2007 when the DOW took some 600 to 1,000 point nosedives. All were touted as buying opportunities, none were selling opportunities, even though, as now, the news was full the housing and sub-prime crisis and other possible impending problems. Oh my, here we go again.

 

To read about the simplicity and incorrectness of simply using forward operating earnings and current low interests rates to predict buying opportunities read John Hussman's articles like, Rich Valuations and Poor Market Returns, where Hussman says,

While we can certainly find analysts who believe stocks are cheap, we can easily test the long-term accuracy of their methods (which often amount to nothing more than applying an arbitrary multiple to forward operating earnings, or dividing the forward earnings yield by the 10-year Treasury yield). Frankly, many of those alternative methods stink. Regardless of whether an analyst claims that stocks are cheap or expensive, they should be expected to provide some sort of evidence that their methods have a strong relationship with subsequent market returns.

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It was the last good buying opportunity last week for Tesla. I told you I was looking to buy my last block but it was too high and I missed a slight drop the week before last. Well I put in my buy order in for 22.55 again and thought it would never happen but I was ready. My goodness it went all the way down to 22.00 for a couple of days and I could have bought much lower. Back up to 24.71 today and will go as before I think so I did get to buy my last block just in time this time. It hasn't been that low since last March. So I achieved my goal of the last two weeks. I now have twice the shares and am way up already again. I expect one more buying opportunity just before the Model S starts delivery since the roadsters are not being built anymore and there will be a gap in income for a month or three there when I expect consumer confidence to flag again. I know it is only one stock I am playing with and the rest of my funds etc. I don't manage as the experts at USAA are doing just fine managing those, certainly better than I would be. But I am having fun.

 

I hope everybody else is doing as well.

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I reckon today was another good "selling opportunity" about an hour or so before the market closed. I also reckon a few people are waiting for Ben to reopen the money spigots next week and that is suppose to finally support the market. Or will that actually produce another great "selling opportunity?" Unless, of course, he doesn't.

 

Just like in 2008 the market seems to find courage/hope at the "big round numbers" like 11,000 and probably again at 10,000 (although 12,000 flew by). It seems to take a major piece of bad news to break through these "courage/hope producers." It isn't hard to imagine future financial events that will do the job.

 

On the other hand a bit of good news, no matter how thin, can sure take the market up. Take, for example, today's announcement by German Chancellor Angela Merkel and French President Nicolas Sarkozy, who issued a joint statement following a phone call with Greek Prime Minister George Papandreou, that reminded us (i.e., old news) that "enacting a set of proposals the European Council, announced in July, to support Greece and prevent a broader crisis are now more important than ever to ensure the stability of the eurozone." Those proposals included an agreement by European leaders to provide another 109 billion euros in emergency funding for Greece.

 

Ahh...well...no wonder the market shot up today, now that that problem is resolved. I am reminded of the great film, One Flew Over the Cuckoo's Nest. Where, of course, the mental institution represents the market. But I'm not sure who Nurse Ratched represents - maybe the legion of market analysts who always tell us it is a good time to buy? Or perhaps the really-big-money investors who are already out of the market (indeed their getting out is what caused it to go down). Or maybe "Wall Street" who seem to get their bonuses no matter how crazy the game becomes and the inmates suffer? This is too depressing...I think I will go watch a horror film.

 

Cheers John

 

 

 

 

 

 

 

 

 

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Guest cindona

After today, I feel compelled to ask again: Are you still in? Perhaps a better question would be 'Are you staying in?'

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Still in? Maybe a better choice is 'are you getting in?'. The answer is a qualified yes. After getting out in April, I am slowly buying back in with good dividend stocks. And there are good ones out there. There are ones paying 3 to 5 percent at today's prices. I did this but on a larger basis in 2009. Right now, I am just putzing like, 100 shares here and 100 shares there. With dividends on bond funds plus growth at 5 percent, I think I can slowly speculate.

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Amen Duke!

The rule is buy low sell high. We have our USAA Mutual funds that we bought when the prices were bottomed out from 2007 to 2009 and I bought maximum anuual contributions for the IRAs and a large for us amount monthly as my pay was free and clear as everything we own including our land and house are and were paid for. The market is down and my TSLA buy two weeks ago that I posted above is up. From the $2.55 I paid back to today's close of 26.35 after hours. It will still go up past last year's high and beyond I believe. It will take well into 2012 for that to happen. Tellingt you why that will happen would take several pages but it is all out there.

Edited by RV

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Here is a chart that is so true it is funny but is a serious article on the psychology of investors and how they really do the opposite of what Buffet keeps telling people is the secret. Buy low sell high. Look at the chart and see what I mean:

http://www.tflguide.com/2011/04/how-investors-react-in-different-market-situations.html

 

It goes on to explain all the varying copmments we get and the personalities thaty say them and why. Pretty interesting article.

 

Edited for wrong link, right one now.

Edited by RV

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