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Re: I tnink I need help
Old 11-03-2004, 12:13 PM   #21
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Re: I tnink I need help

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Aside from your overall sarcastic tone there is a flaw in your reasoning. The Dow Jones Average is not the country.
First, sarcasm is sometimes appropriate and called for, and second the Dow (s&p500, wilshire 5000, whatever) the day after the election can be interpreted to be very much a pulse of how the country is feeling about it, as a whole. * I can go into why they are feeling that way, but it'd be drifting. *In a nutshell, a bush vote is a vote of confidence that we're moving in the right direction (cause the people didnt demand a change) and that is positive.

Apparently, i dont agree with the masses since i voted for Kerry, but if the majority thinks we're heading in the right direction already, then the market is going to pick that up, anticipating the improvements on the horizon.

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Reading what some voters said about why they voted as they did I can only conclude that there has been a pretty thorough logic disconnect in many of our citizens. Maybe the happy DOW is equally meaningless, just one more happy-talk noise.
Nope, its as i said. *The market is very much susceptible to how everyone feels about the near future, and clearly knee-jerks when there are events that cause change within our country.
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Re: I tnink I need help
Old 11-03-2004, 12:19 PM   #22
 
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Re: I tnink I need help

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I recommend against Value at this time, with the exception of energy. *Value stocks have a remarkable runup over the past 5 years or so, but if you consult value vs growth comparisons over several decades, it is clear that they ocilllate back and forth. *Growth is long overdue.
Herd mentality in the market is very dangerous, and buying value now is showing up to the party when everyone else is walking back out to their cars.
I certainly am no expert in Stocks or investing, but I've got to ask a question.

It is my understanding that if a Value Stock's price gets run-up because everyone is buying it, it is no longer a value stock. In fact if enough people 'come to the party' - Doesn't the value stock turn into a growth stock? - Doesn't this kind of go against your premise of the 'herd mentality'

In my mind buying value stocks directly goes against the herd mentality. Their prices are cheap because the 'herd' does not want them.

Correct me if I'm wrong.
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Re: I tnink I need help
Old 11-03-2004, 12:28 PM   #23
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Re: I tnink I need help

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I certainly am no expert in Stocks or investing, but I've got to ask a question. *

It is my understanding that if a Value Stock's price gets run-up because everyone is buying it, it is no longer a value stock. In fact if enough people 'come to the party' - Doesn't the value stock turn into a growth stock? - Doesn't this kind of go against your premise of the 'herd mentality'
That's an excellent question (really, no sarcasm, hehe) and addresses a misunderstanding of what constitutes a value or growth stock. *

A value stock isnt one that others dont necessarily want. *It can also mean it is a very well established company, that has been around for decades, and that tends to pass its profits on to its investors in the form of dividends as opposed to reinvesting everything back into the company. *There are small, value stocks too, but again that they are value will mostly be defined by the behavior of the company, and the market in which they are competing.

A growth stock, conversely, will more often be medium or smaller sized (but can be large) and will tend to be a company that is taking more risks to push into newer markets, pouring all its disposable income into further growth (little/no dividends), and often leveraging to push even further. *They are doing everything they can to maximize growth and outcompete others, but often take big risks in that process.

There are value stocks (companies) that are sometimes overpriced (say if GE gets expensive relative to its history or to its sector), and there are also growth stocks that can often go on sale (like at the end of 2002). *But when that happens, that doesnt all of a sudden mean the company behaves like its counterpart. *Those darlings on the nasdaq that got hammered 75% are still growth stocks after all the damage was done. *

Azanon

(edit) but i admit, "growth" and "value" are arbitrary terms, if that is your point, and i understand that. But still, most companies would still be best characterized by one or the other before the 1999 crash, and would still be the same characterization afterwards.
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Re: I tnink I need help
Old 11-03-2004, 12:28 PM   #24
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Re: I tnink I need help

Nope - that's one definiton of value in my mind. Another label - ala David Dreman is contrarion - when an otherwise 'good' stock falls into disfavor. Given the variations on the theme - 'value' can be an elusive definition. I usually go with low P/B and P/E. Of course - in the words of Warren Buffett - "sometimes a wet cigar (butt) is really a wet cigar".
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Re: I tnink I need help
Old 11-03-2004, 12:36 PM   #25
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Re: I tnink I need help

Yeah, this can get into semantics. For example, I like nVidia Corp (nvda) and i'm watching it for a great buy point. I would say nVidia is inherently a growth stock/company from day one, but conversely you could say when they dropped from 70 dollars a share to under 10, they represent a good "value" and maybe that makes them a value stock in some folks minds. I wouldnt agree with that, but then its just getting into opinions.

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Re: I tnink I need help
Old 11-03-2004, 12:38 PM   #26
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Re: I tnink I need help

To clarify my recommendation: Any fund that identifies itself as a growth fund (esp large/mid cap) is what i'm recommending. Morningstar has the little boxes that help in this identification.
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Re: I tnink I need help
Old 11-03-2004, 12:48 PM   #27
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Re: I tnink I need help

Most of the definitions I've seen call value stocks "Good companies that are (perhaps temporarily) out of favor, that usually are paying a good dividend, and are priced favorably to their assets and business prospects".

Some companies seem to be almost perpetual value stocks...kmart and sears come to mine although i havent looked at either in quite a while. Others come and go.

Sometimes growth beats value, as in the end of the 90's...over most long hauls, value beats growth. Probably the steady dividend. Good chapter in "the four pillars" describes why owning "bad" stocks can be good and why owning "good" stocks can be bad. On the flip side, "good" growth stocks dont usually stay "good" for long periods of time and can become "value".

I've got a boatload of large value in wellington and wellesley, and in my IRA my two largest holdings are REIT and small cap value. I have all the dividends and capital gains from the reit fund buying more small cap value in the IRA. Let the cash generator DCA the best long term returning asset class there is...

I've considered selling the wellesley and wellington and splitting the proceeds 40% to the large cap value index and 60% to the CA intermediate term muni bond fund. It'd give me roughly the same yield, tax free, and would cut my investment costs by a few basis points. Might be a good idea for long term investors with a muni bond fund for their state. Another option is to look at the "wellesley index" or "wellington index" in their respective prospecti...they cobble up a mix of indexes they try to benchmark against...you could simply mimic that with indexes for less money if you really, really hate the idea of a managed fund.

As far as the election and all the associated tomfoolery...dont get me started. Suffice it to say that I believe everyones entitled to their own opinions, but not their own facts. A lot of people made up their own facts in this election and decided on the basis of those individually owned facts. I am deeply fearful of the long term results, but it is what it is, and we're going to have to live with it now.

As a marketing guy though, I have to express admiration for GW's handlers in passing off a rich white Yalie from Maine as a blue collar Texas cowboy. My hats off to those folks.

The bounce in the market is no surprise...its the mass psychological reaction to the removal of a major uncertainty. In nearly every case where an election is decided, theres a bounce up following. Although you'll see that later in the days trading the "bloom went off the rose" a little bit as traders started looking at upcoming data. Which hasnt been good lately and I suspect will get steadily worse.

One more thing, I'm going to recommend contrary to Azanon. I think the market is way overpriced and growth is no exception. Granted these things go in cycles but the last growth 'run up' was largely the tech/internet boom that shouldnt ever have happened. That those stocks are beaten down and remain down doesnt mean they're going to spring back up.

When its "look out below" time, cheap value stocks paying dividends will make you feel better than expensive growth stocks that might have an upside cycle coming due.
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Re: I tnink I need help
Old 11-03-2004, 01:01 PM   #28
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Re: I tnink I need help

Over a very long time, sure, its hard to beat a good-ole value stock or mutual fund that pays both dividends and has capital gains.

I was just talking about what style of stocks I think will do well over the next two years only. I think the growth sector will. We'll see.
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Re: I tnink I need help
Old 11-03-2004, 01:19 PM   #29
 
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Re: I tnink I need help

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Over a very long time, sure, its hard to beat a good-ole value stock or mutual fund that pays both dividends and has capital gains.

I was just talking about what style of stocks I think will do well over the next two years only. *I think the growth sector will. * We'll see.
I feel better already. I've got both asset classes covered
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Re: I tnink I need help
Old 11-03-2004, 01:23 PM   #30
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Re: I tnink I need help

Well we just WILL see then, wont we, mister!

One of the things I watch is this:

http://www.businesscycle.com/

scroll down to the pretty graph.

According to these leading economic indicators, we've got a slow gentle slide coming until the end of Q1, then a drop to a recessionary posture.

As this leading indicator package has been EXTREMELY good at detecting turning points in the economy, and they've pretty much nailed all of the major inflection points over the past 25-30 years, I almost believe it.

Should we re-enter a recessionary phase, we dont have the big interest rate cutting room we had the last time.

Crap monetary policy. Bad jobs situation. Currency in the crapper. Recessionary posture. Lots of people over their heads in debt.

I only have three words to describe that scenario.

Ugly. Ugly. Ugly.

Not a good place to own a lot of stocks, especially growth.

But I'll be every bit as interested in how it REALLY goes as you are.

In the meanwhile, cross everything you have at least two of and hope for the best...
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Re: I tnink I need help
Old 11-03-2004, 01:41 PM   #31
 
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Re: I tnink I need help

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Should we re-enter a recessionary phase, we dont have the big interest rate cutting room we had the last time.

Crap monetary policy. Bad jobs situation. Currency in the crapper. Recessionary posture. Lots of people over their heads in debt.
You've got to admit TH, Investing in Growth Stocks might be the true Contrarian Play.

But then there is Investing in Iraq Real Estate.
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Re: I tnink I need help
Old 11-03-2004, 02:03 PM   #32
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Re: I tnink I need help

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According to these leading economic indicators, we've got a slow gentle slide coming until the end of Q1, then a drop to a recessionary posture.

As this leading indicator package has been EXTREMELY good at detecting turning points in the economy, and they've pretty much nailed all of the major inflection points over the past 25-30 years, I almost believe it.

Should we re-enter a recessionary phase, we dont have the big interest rate cutting room we had the last time.

Crap monetary policy. Bad jobs situation. Currency in the crapper. Recessionary posture. Lots of people over their heads in debt.

I only have three words to describe that scenario.

Ugly. Ugly. Ugly.

Not a good place to own a lot of stocks, especially growth.

But I'll be every bit as interested in how it REALLY goes as you are.

In the meanwhile, cross everything you have at least two of and hope for the best...
Are you saying it is not the time to put my IRA into stock? May as well wack it into a 5 year CD at 4.75%

SWR
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Re: I tnink I need help
Old 11-03-2004, 02:15 PM   #33
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Re: I tnink I need help

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Are you saying it is not the time to put my IRA into stock? May as well wack it into a 5 year CD at 4.75%
And for his next trick Th will pick the winning ticket number in the state lottery so stay tuned for it.
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Re: I tnink I need help
Old 11-03-2004, 02:16 PM   #34
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Re: I tnink I need help

Ah Blow Me !

( Been a long time since we've had one of those )
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Re: I tnink I need help
Old 11-03-2004, 02:46 PM   #35
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Re: I tnink I need help

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Ah Blow Me ! *
Contrapositive back at you. *


You've got to be careful with your imaginings on the stock market or you'll have all the 'fraidy cats following your "predictions", putting their money into Savings Bonds, and ending up like Dominguez in a group home and cutting their own hair with a Flowbee.
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Re: I tnink I need help
Old 11-03-2004, 03:11 PM   #36
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Re: I tnink I need help

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WCOON !!!

Wine Coming Out Of Nose!
Now we're cooking! Time for an interesting post from Cuthroat. (Happy Hour)
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Re: I tnink I need help
Old 11-03-2004, 03:19 PM   #37
 
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Re: I tnink I need help

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Now we're cooking! *Time for an interesting post from Cuthroat. *(Happy Hour)
Not too happy today Jarhead! - I'm drowning my sorrows
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Re: I tnink I need help
Old 11-03-2004, 03:23 PM   #38
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Re: I tnink I need help

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But then there is Investing in Iraq Real Estate.
After all, you can't spell IRAq without the IRA. The market must be trying to tell us something.
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Re: I tnink I need help
Old 11-03-2004, 03:48 PM   #39
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Re: I tnink I need help

Owie...wine out of nose cant be good, and I know it cant be internally generated like milk is...or heck...my SWR would be a lot lower.

So whats got ya down CT? Just discovered you have an inferior oil filter? I noted that not one of the ones analyzed contained dryer sheets. Might be something there for an enterprising soul that still wants to work.

Hyper - Five bonus green stamps for a correct implementation of the term "contrapositive"! Ding Ding Ding (duck comes down on a rope)...that should be enough nostalgia for the old timers If you'd been following with me along my investment career, I've never, ever been a bear. I enthusiastically invested like a normal person in the 80's and early to mid 90's, rocked on tech stocks just like the rest of you idiots, and have been a conservative balanced investor since then.

But I'm worried right now. Everything from politics to economics to some reasonably well historied indicators to the tea leaves are smelling a little off to me. The last time I had the heebie jeebies like this was right at the end of 1999.

This is not to say I'm getting out of stocks. In fact the last few months I increased my large cap value holdings, bought some energy and increased my reit holdings...some of it in expectation of the post election pop. Heck, I'm up 1.5% today and roughly 4.5% in the past quarter. So its working for me so far.

But after the first of the year I may start shifting SOME of my stock into intermediate munis and watch for this downturn ECRI is predicting...I am very cautiously optimistic but I'm pulling out a size 12 frying pan and placing it over my posterior... :-/
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Re: I tnink I need help
Old 11-03-2004, 03:57 PM   #40
 
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Re: I tnink I need help

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So whats got ya down CT? Just discovered you have an inferior oil filter?
Yesterday was election day.

As far as the investment climate giving you the heebie jeebies. I've had the Heebie Jeebies ever since 1999. I did not have the heebie jeebies in 1978 because I didn't have any money

They also say that Wall Street climbs a wall of worry.... More money is lost waiting for the correction than the actual correction...... etc. etc. etc.

Again, I have no idea of what is going to happen and am glad that I don't have to decide where to invest.
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