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Old 05-04-2009, 08:26 PM   #21
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I'm so confused, I don't know where to begin.
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Old 05-05-2009, 10:46 AM   #22
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Even if it is a bear market rally, any investment now will simply be an opportunity to DCA into investments that will take years to recover. If it isn't then you can congratulate yourself on your perspicacity.
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Old 05-05-2009, 10:51 AM   #23
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It's a rally until Bernanke speaks...
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Old 05-05-2009, 11:29 AM   #24
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Continue to DCA in and grow the income stream.
I don't care if this is a bear market rally or not, just as I don't care if the market goes up to 10000 or down to 6000 over the next 6-18 months.
The only thing I would be concerned over is if most/all of my dividend payers stopped paying dividends (or cut them drastically).
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Old 05-05-2009, 11:47 AM   #25
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Its different this time.
I'm indifferent this time (same as I have been through the up/down movement of the market over the last 30 years).

Same script; just a different "flex" to the rubberband that is the market.

I was a buy/hold person for many years (BTW, lead to my ER before the age of 60). Today (working on my 3rd year of retirement), I'm just a "hold".

This too, shall pass...
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Old 05-05-2009, 12:20 PM   #26
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It's a rally until Bernanke speaks...
Oh oh. He spoke today: http://www.nytimes.com/2009/05/06/bu...d.html?_r=1&hp

“We continue to expect economic activity to bottom out, then to turn up later this year,” Mr. Bernanke told the congressional Joint Economic Committee, according to his prepared remarks.
“Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while,” he predicted. “We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly.”

DD
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Old 05-05-2009, 12:41 PM   #27
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I'm indifferent this time (same as I have been through the up/down movement of the market over the last 30 years).

Same script; just a different "flex" to the rubberband that is the market.

I was a buy/hold person for many years (BTW, lead to my ER before the age of 60). Today (working on my 3rd year of retirement), I'm just a "hold".

This too, shall pass...

So, is it safe to say you don't need to be rescued?
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Old 05-05-2009, 02:19 PM   #28
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So, is it safe to say you don't need to be rescued?
In a financial sense - no.

Thanks for asking...
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Old 05-05-2009, 03:19 PM   #29
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It's a rally until Bernanke speaks...
Wasn't so bad today. He spoke and the market stayed flat - certainly an improvement over 4Q 08

From GMO quarterly update, their current strategy reflects an intention to continue increasing allocation to equities and expand into the riskier classes (guessing EM and ISC)
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Having increased our exposure to equities last quarter, we kept to our game plan and gingerly shifted our stance toward favoring riskier asset classes. For the most part this was reflected by reducing the exposure to our Alpha Only Strategy and shifting the freed-up capital back toward equities. Our concern about the broader economic picture, however, prevented us from deploying toward more speculative areas of the market, and we did not stray far from U.S. high quality stocks. We believe that this latest move will probably represent the apex of our high quality exposure. While we do not expect to be reducing our current weight in the near future, it is probable that our next moves into equities will target different opportunities This last move combined with the subsequent market rally shifted our overall equity exposure to just shy of being neutral. Our next moves will likely begin to shift our portfolios to an overweight in the coming quarters. We continue to favor the Flexible Equities Strategy, which has been targeting Japanese companies that get a substantial majority of their earnings within Japan. Essentially, domestic companies (and the higher quality half of domestics in particular) are both cheap compared to junky exporters and are at an all-time low in terms of relative profitability. In other words, as the exporters get hammered in the global slow-down and their profitability relative to domestics reverts to the long-term mean, we can expect domestics to outperform. In fixed income markets, sovereign yields are likely to be pressured by rapidly increasing supply and do not offer any longerterm value. Where we have more latitude, we still prefer to own broadly diversified absolute return portfolios, but even here we are beginning to dip our toes back into equities.
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Old 05-05-2009, 08:15 PM   #30
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I was glad to see Hussman quoted on this thread and so will add this section from his column of May 4 which I think is quite important.

"What we can observe is that valuations are now in the high-normal range on the basis of normalized earnings. Stocks are no longer undervalued except on measures that assume that profit margins will permanently recover to the highest levels in history (in which case, stocks would still only be moderately undervalued). For instance, the price-to-peak earnings multiple on the S&P 500 is only about 11, but those prior peak earnings from 2007 were based on record profit margins about 50% above historical norms, largely driven by the excessive leverage that has since sent the economy reeling.

"On normalized profit margins, valuations are above the historical average, and prospective long-term returns are below the historical average. Overall, I expect the probable total return on the S&P 500 over the coming decade to be about 8% annually, provided we don't observe much additional deleveraging in the economy. At the 1974 and 1982 lows, based on our standard methodology, the S&P 500 was priced to deliver 10-year total returns of about 15% annually. While it has become quite popular to talk about 1974 and 1982, the stock market is presently not even close to those levels of valuation."

Hussman Funds - Weekly Market Comment: Comfortable with Uncertainty - May 4, 2009
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Old 05-05-2009, 09:13 PM   #31
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Hussman is only 1 of 3 men that I trust in investments, so I'll give you my two cents on where he is at. If you look at his most recent comments you will actually see that he has actually been becoming a little bit more open to the idea that the bull market will sustain(while he doesn't think it should). The dilema is the same as after the dot com crash. Market prices based on earnings(hussmans metric) and market prices based on gnp(buffets metric--both a lot alike) were at extreme levels, and these men assumed that the market would retreat back to historical norms based on these metrics. It didn't happen, a policy of soft money caused the market to bottom at prices that appeared to be still overvalued. That is why buffet largely didn't participate in the last bull market. This time the crash was bigger, and now buffet and hussman(who both largely practice a similar philosophy) are at slight disagreement over the valuation of the stock market. Buffet is using his metric to say that stocks are slightly undervalued relative to historical averages, and largely undervalued relative to the last decade. Hussman is using his metric to say that the market is neutral to slightly overvalued.

The strange thing is that according to both their metrics the market should have fell farther, but the same was true in 2001. A policy of easy money reinflated the market to overvalued on both their metrics back then, and hussman doesn't know if he should believe it will happen again, so he remains defensive. I on the other hand am a little more aggressive, and believe that all the easy money that we are throwing at the problem will cause a rebound into an overvalued market for a second time, I'll just be a lot more squeamish after the recovery(few years) because we all should know that a contraction of the money supply(and a subsequent crash) is inevitable.

Edit: I guess we have decided to restack the house of cards. How many levels do you think they will make it(giving you profit) before it comes crashing back down again?
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Old 05-06-2009, 09:06 AM   #32
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Do I hear a bunch of market timers here?
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Old 05-06-2009, 09:20 AM   #33
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I will not believe anybody that did not predict the market fall in 2000 to 2001 range... the increase afterward... and the huge fall this last 18 or so months... so far, nobody has been presented to me that was right for all of these past major moves... I am not saying they need to predict minor moves, but these were some big moves...

So, anybody out there that got all of them right? If not, then they are market timers... maybe good at it... but that is some luck also...
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Old 05-06-2009, 10:20 AM   #34
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So, anybody out there that got all of them right? If not, then they are market timers... maybe good at it... but that is some luck also...
Yep - those dang computers rebalancing my balanced index funds at Vanguard. Luckily they are not bragging or even I would be tempted to kick em right in their smarty pants electrons.

The Norwegian widow missed every down turn and was forced to muddle on thru with her dividends.

heh heh heh - .
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Old 05-06-2009, 10:32 AM   #35
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Do I hear a bunch of market timers here?
I'll confess to grabbing a minimum account open stake in VHDYX just about at its low point since fund inception (Nov 2006). And almost doubling up on my usual DCA into munis at the tail end of 2008 when they were getting clobbered. Heeheehee
Other than that, not meeeeeeeeee.
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Old 05-06-2009, 11:12 AM   #36
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Do I hear a bunch of market timers here?

It is just one of the basic rules of shopping check out what's on sale and if it's cashmere at 80% off go for it as long as it's quality cashmere.
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Old 05-06-2009, 11:39 AM   #37
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I will not believe anybody that did not predict the market fall in 2000 to 2001 range... the increase afterward... and the huge fall this last 18 or so months... so far, nobody has been presented to me that was right for all of these past major moves... I am not saying they need to predict minor moves, but these were some big moves...

So, anybody out there that got all of them right? If not, then they are market timers... maybe good at it... but that is some luck also...
GMO did a pretty good job on equity valuations, and they don't purport to time. However, if you invested using their forecasts in 1/2000, 1/2004 and 1/2008 you would have done quite well.
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Old 05-06-2009, 06:05 PM   #38
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"Do I hear a bunch of market timers here?"
Not really in my case. I have a philosophy of get in early and get out early don't try to call top or bottom. Hence, I was buying on the descent, I thought anything under dow 8000 was a good buy, and anything under 7000 as a great buy. I didn't care what the market did from there, I knew that I would make a good return on my money in the coming years. I only believe that selling off a small portion of your portfolio and purchasing some puts is a good idea because A) the market has rallied extremely fast, personally way to fast for the reality on the ground, and B) it provides a good cheap insurance policy(hedge) on my existing gains.

"I will not believe anybody that did not predict the market fall in 2000 to 2001 range... the increase afterward... and the huge fall this last 18 or so months... so far, nobody has been presented to me that was right for all of these past major moves... I am not saying they need to predict minor moves, but these were some big moves...

So, anybody out there that got all of them right? If not, then they are market timers... maybe good at it... but that is some luck also..."
I am a person that started correctly hedging and profit taking from my positions in late 06 early 07(so you'll see what I mean by early), I can tell you that it is a lot easier to tell that a bull market wont go into perpetuity and that it will crash sometime in the near future, than to actually predict what part of the market will lead a crash. I can tell you that Hussman was fully hedged in 00-01 and 08, and I can also tell you that Buffets personal portfolio was completely absent of equities in both 00-01 and 08. It is somewhat unreasonable for you to expect these types of people to know the cause of a crash before it happens. Correctly positioning for a crash should be sufficient.
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Old 05-06-2009, 06:50 PM   #39
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I am still learning how to invest so with that caveat I have to say that I don't understand the virulence against market timing. If you look at the market and do your research and see that, for example, munis (or high yield corporate bonds) look like a good deal for your portfolio at this particular time then why would that be a bad thing?

I think tbere must be a distinction that is confusing me. If someone does their research and decides that the market is too high and that they need to sell some equities and get into a more conservative allocation, why is that called "market timing" in such a derogative manner?

Frankly, sometimes an outsider who is just learning can be more objective than those who have already been drinking the cool-aide for serveral decades.
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Old 05-06-2009, 07:28 PM   #40
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It depends on what you mean by market timing. By having a brain and realizing that there are better deals out there or that the risk vs. reward ratio has now made hedging a smart move is "market timing", than "market timing" is a good thing and anybody that says otherwise isn't the brightest bulb. Traditionally market timing is associated with people that are trying to nail almost the exact bottom or top of a market, that is just a futile effort and hence why I say that I'm not a market timer.

"for example, munis (or high yield corporate bonds) look like a good deal for your portfolio at this particular time then why would that be a bad thing?"
Personally I don't think munis or corporate bonds are a good deal right now. Future rising interest rate environment = devalued bonds. I wouldn't buy a bond today that had a maturity more than 2 years. While I still wont buy them, 15%+ yielding bonds might not be a bad idea. The huge overpricing of default risk might actually exceed future inflation.

"Frankly, sometimes an outsider who is just learning can be more objective than those who have already been drinking the cool-aide for serveral decades."
That is a lot of times very true. It sometimes astonishes me as to the stupidity of certain "professionals" such as edward jones agents(to be fair an EJ agent is a lot of times better than the stupidity that many ignorant individuals pursue). But you also have to understand that new "outsiders" that are just learning tend to have a niavete towards investing too. I can't tell you how many newbies I've talked to that think they that they can day trade between the highs and lows and make tons of money, or that it shouldn't be that hard to call a top, or that if they get one of those technical analysis systems they will make all this money, etc.
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