Re: ER check-up by intercst
Who said stock market investing (or at least the analysis of it) is as easy as quantum mechanics?
Something between heisenbergs uncertainty and schrodingers cat.
There are only two solutions I suppose: do not play, or play with everything at the same time, then wait 2-3 decades and see if that was correct...
Had a sort of chunk of this conversation on a long walk with gabe and the wife yesterday. She mentioned that everyone at work was really excited about oil stocks and precious metals and were jumping in. I explained the inverse emotional reaction people have to investing, where they want to buy stuff thats been run up and run screaming from things that have gone on sale. We dumped our energy and precious metals stocks, as they had done what I wanted them to: make us lots of money. As diversifiers? I dont think they're any more useful than internet stocks, the nifty 50 or tulip bulbs. They might keep making money, but we made ours and sold too soon. Which is way better than too late.
As far as slice and dice? I think its had its day. People who were going to do it did it, either through mechanical means of individual asset buying and rebalancing, purchase and rebalancing of mutual funds or purchase of a canned multiple asset balanced fund. If they didnt already do it, they soon will. Then it'll be "so much for any historic correlation/uncorrelation" and any sector that outperforms will most likely be accidental or through happenstance, not predictive.
Bearing in mind that "not playing" isnt an option for me, or most, and that I really dont care much about volatility given a 40+ year horizon and ability to live off the dividends alone, I'll just "put everything into play", go with broad equity holdings and @#%$@ bonds and excessive cash.
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.