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Old 05-07-2010, 10:32 AM   #21
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Maybe it is just recency bias, but I feel like yesterday's incident did more to undermine my confidence in the stock market than the 2008 crisis ever did. At least I understood why the market dropped the way it did in 2008. Yesterday's glitch highlighted just how much upper hand Wallstreet has in this game. I am at their mercy. My future is at their mercy. Everything I "own" is at their mercy.

But, at the same time, what alternatives do I have?
If you believe that the deck is stacked towards Wall St. - which is not my personal belief - wouldn't the easiest and most logical alternative be for you to purchase equity in the Wall St firms such as Goldman, JPM, et al as they are all publicly traded equities? In fact, you can purchase their bonds or their preferred equities if you wish to have higher claims on any of these Wall St firms' capital structures.

In many ways this rant is similar to a Vegas gambler cursing the casino after a tough night at the tables and screaming that the literal deck is stacked. The simple solution for the gambler, if the assertion were true, would be to likewise purchase the debt or the stock of the Vegas casino, which are probably publicly traded companies as well, instead of trying their luck at the cards and dice but...

Anyway, good luck. The market is nervous these days for obvious reasons and remember that panicked mkts are always more volatile than bullish or bearish ones...bulls and bears make $, pigs get eaten...
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Old 05-07-2010, 10:41 AM   #22
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If you believe that the deck is stacked towards Wall St. - which is not my personal belief - wouldn't the easiest and most logical alternative be for you to purchase equity in the Wall St firms such as Goldman, JPM, et al as they are all publicly traded equities? In fact, you can purchase their bonds or their preferred equities if you wish to have higher claims on any of these Wall St firms' capital structures.

In many ways this rant is similar to a Vegas gambler cursing the casino after a tough night at the tables and screaming that the literal deck is stacked. The simple solution for the gambler, if the assertion were true, would be to likewise purchase the debt or the stock of the Vegas casino, which are probably publicly traded companies as well, instead of trying their luck at the cards and dice but...

Anyway, good luck. The market is nervous these days for obvious reasons and remember that panicked mkts are always more volatile than bullish or bearish ones...bulls and bears make $, pigs get eaten...
I happen to be overweight financials (if you can't fight them, join them) but, as demonstrated in 2008, banks will not hesitate to cannibalize each other. So you better bet on the right horse if you don't want to end up looking like a Lehman Brother's investor.
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Old 05-07-2010, 10:49 AM   #23
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I'm fairly comfortable with my holdings and at the moment I'm thinking long term picture. If Bernanke, Geitner and Obama have a Rose Garden Moment with shaky voices I would reconsider.
Probably too late at that point.

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Know too well from experience that it's hard to time ins and outs

Still if you get enough uncertainity thrown at you you start to wonder.

I'm thinking of riding this out. Go to France on Tues for 2 weeks and not think about finance.
What's the thinking on the forum?
I think you have to go to your guiding principles for your investments or else you will be whipsawed by the news.

My guiding principle at my place in life - retired - is preservation of capital. This is a bit easier to due during the current no/low inflation.. I will be 100% in cash in the summer.
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Old 05-07-2010, 11:22 AM   #24
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I'm fairly comfortable with my holdings and at the moment I'm thinking long term picture. If Bernanke, Geitner and Obama have a Rose Garden Moment with shaky voices I would reconsider.

Know too well from experience that it's hard to time ins and outs

Still if you get enough uncertainity thrown at you you start to wonder.

I'm thinking of riding this out. Go to France on Tues for 2 weeks and not think about finance.


What's the thinking on the forum?
I have an inee...but I digress.

You feel comfortable with your AA...you are going to France...life is good.

Have a wonderful time.
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Old 05-07-2010, 11:38 AM   #25
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In many ways this rant is similar to a Vegas gambler cursing the casino after a tough night at the tables and screaming that the literal deck is stacked. .
Are you comparing the stock market with a casino? Oh, surely not!

Peter
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Old 05-07-2010, 11:42 AM   #26
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I saw the market drop in real time, and of course nobody likes seeing something like that happen so rapidly.

Still, my portfolio is bigger than it was in February. Even if the market had not recovered yesterday afternoon my portfolio would be pretty close to its February values, despite the fact that I am also living off of withdrawals from it.

What I plan to do is to rebalance, if and when I need to do so. Right now, my planned AA is 45:55 and actually today it is less than 1% off (44.3:55.7). That is not enough to trigger a rebalance.

Other than rebalancing? I don't plan to do a thing, other than watch the show and hang on for the ride. In other words, exactly what I did in 2008-2009. Been there, done that, got the t-shirt.
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Old 05-07-2010, 11:45 AM   #27
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I saw the market drop in real time, and of course nobody likes seeing something like that happen so rapidly.

Still, my portfolio is bigger than it was in February. Even if the market had not recovered yesterday afternoon my portfolio would be pretty close to its February values, despite the fact that I am also living off of withdrawals from it.

What I plan to do is to rebalance, if and when I need to do so. Right now, my planned AA is 45:55 and actually today it is less than 1% off (44.3:55.7). That is not enough to trigger a rebalance.

Other than rebalancing? I don't plan to do a thing, other than watch the show and hang on for the ride. In other words, exactly what I did in 2008-2009. Been there, done that, got the t-shirt.

Do you really have the T-shirt If so, I want to see pics
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Old 05-07-2010, 11:49 AM   #28
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Are you comparing the stock market with a casino? Oh, surely not!

Peter
Actually I would trust a casino more than the market. When you walk into a casino, you know what your odds of winning are. Those odds can be mathematically determined in fact. The house rules are also clearly posted so you know what you are up against. On Wall Street, no one can tell you what your odds of winning are and the rules keep changing on you every 2 weeks... When I lose money at the casino, well I know that it was the most likely outcome. That's why I don't play at the casino.
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Old 05-07-2010, 11:51 AM   #29
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Basically, I have been just taking advatage of the chaos to switch around some holdings.
The economy seems to be rebounding nicely as evinced by the jobs report, so this looks like a temporary panic/correction that is an opportunity to reshift some stuff.
Yep. A bunch of our call options expire next month, too, so hopefully this volatility will persist until after we've sold some more. Nothing like a "flat" market with a high VIX.

At the same time we're beginning to struggle with balancing the concepts of "stewardship" vs "loss aversion". At some point the research, decision-making, tracking, and rebalancing all become just another job. If you don't need the profits, then why risk the capital?
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Old 05-07-2010, 11:53 AM   #30
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I've been on the sidelines since September. The Feds can only keep propping the market up for so long, then its gonna get ugly.
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Old 05-07-2010, 11:53 AM   #31
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Lived through 1987....2000...2007....yesterday.
Still here; not changing course. That doesn't mean that I like what's happening, but I know that what goes down, comes up...eventually.
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Old 05-07-2010, 11:57 AM   #32
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Am I in our out? I'm always in and out. That is, according to my targeted allocations.

When I added up my allocations last time (end of each quarter), it was within 5% of my target. I usually only allocate once a year, but if it gets too out of whack before then, maybe I'll reallocate sooner.

The $64,000 question is what caused the falling off the cliff yesterday? Was it a fat finger, or a tech glitch or what else?

Other than that, I see the jolt like a sudden storm or blizzard. My approach is to just hunker down, wait for it to pass, then go from there. Though I see during a storm or blizzard it is tempting to go exploring a bit to feel the elements.
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Old 05-07-2010, 12:01 PM   #33
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I think one thing stands out- the environment of investing that most of us grew up with is gone, at least temporarily. I mean the S&P has gone nowhere since 2000, and it's not like we have had high dividends in the interim. Likewise safe fixed assets pretty much stink, though at times over the past decade some of these have offered outstanding opportunities.

So about that "what goes down must come up", true I suppose given a reasonable height before the fall, and given plenty of time. But it is not going to be easy for a while, maybe a very long while. Most of us like the upward volatility, it's the down stuff that bothers us. The cure for this is buy only high beta stocks on the way up, that become low betastocks on the way down.

Out markets are behaving more like what was once mostly associated with Hong Kong.

Ha
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Old 05-07-2010, 12:04 PM   #34
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Do you really have the T-shirt If so, I want to see pics
What, you didn't get one? I'm sure it is coming in the mail.

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Lived through 1987....2000...2007....yesterday.
Still here; not changing course. That doesn't mean that I like what's happening, but I know that what goes down, comes up...eventually.
+1 Exactly! Though as Ha implies (I think?) the market of the 1990's is over and times have changed. I guess we have all known that for a while.
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Old 05-07-2010, 12:08 PM   #35
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...

So about that "what goes down must come up", true I suppose given a reasonable height before the fall, and given plenty of time. But it is not going to be easy for a while, maybe a very long while. Most of us like the upward volatility, it's the down stuff that bothers us. The cure for this is buy only high beta stocks on the way up, that become low betastocks on the way down.

...

Ha
Absolutely agree. But since my portfolio is invested for the long term, I'm still in. Now as for short term cash needs, sure wish there were better alternatives than MM funds or low interest rate CDs.
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Old 05-07-2010, 12:08 PM   #36
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"Is you in or is you out?"

Don't ask, don't tell.
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Old 05-07-2010, 12:23 PM   #37
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I think one thing stands out- the environment of investing that most of us grew up with is gone, at least temporarily. I mean the S&P has gone nowhere since 2000, and it's not like we have had high dividends in the interim. Likewise safe fixed assets pretty much stink, though at times over the past decade some of these have offered outstanding opportunities.

So about that "what goes down must come up", true I suppose given a reasonable height before the fall, and given plenty of time. But it is not going to be easy for a while, maybe a very long while. Most of us like the upward volatility, it's the down stuff that bothers us. The cure for this is buy only high beta stocks on the way up, that become low betastocks on the way down.

Out markets are behaving more like what was once mostly associated with Hong Kong.

Ha
I am reading a book called "a history of interest rates" right now, and it fascinates me that from antiquity to the later part of the 20th century, the 2 pillars of a personal investment portfolio were real estate and short term fixed income investments. I think our forefathers would look at our engouement for the stock market as madness.
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Old 05-07-2010, 12:28 PM   #38
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I am reading a book called "a history of interest rates" right now, and it fascinates me that from antiquity to the later part of the 20th century, the 2 pillars of a personal investment portfolio were real estate and short term fixed income. I think our forefathers would look at our engouement for the stock market as madness.
Not surprising, given that the concept of a healthy "retirement" as an expected middle class life stage is largely an invention of the same time frame, and given that retirement investing is one of the most common reasons for "ordinary" folks to be in stocks and stock fund at all. And there's no way pension funds provided retirement for so many decades without significant allocation to stocks, either.

Most of us can't fund 30+ years of retirement on a portfolio primarily invested in fixed income for decades. So stock investment for the masses is very much a rather recent thing tied to retirements.

Then again, I've been saying for years that retirement as a middle class expectation is starting to fade out. It will still be possible for those who sacrifice short-term gratification, but I think there are many economic and demographic factors which suggest the golden age of middle class retirement is quickly coming to a conclusion.
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Old 05-07-2010, 01:05 PM   #39
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I think one thing stands out- the environment of investing that most of us grew up with is gone, at least temporarily. I mean the S&P has gone nowhere since 2000, and it's not like we have had high dividends in the interim. Likewise safe fixed assets pretty much stink, though at times over the past decade some of these have offered outstanding opportunities.

So about that "what goes down must come up", true I suppose given a reasonable height before the fall, and given plenty of time. But it is not going to be easy for a while, maybe a very long while. Most of us like the upward volatility, it's the down stuff that bothers us. The cure for this is buy only high beta stocks on the way up, that become low betastocks on the way down.

Out markets are behaving more like what was once mostly associated with Hong Kong.

Ha
Speak for yourself, Ha. I started investing around 1998/1999, so this environment is all I have ever known, at least from personal experience. If you baby boomers quit pissing in the punchbowl it would be great to get some of that calm equity market that generally goes up and doesn't crash every 3 or 4 years.
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Old 05-07-2010, 01:15 PM   #40
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Speak for yourself, Ha. I started investing around 1998/1999, so this environment is all I have ever known, at least from personal experience. If you baby boomers quit pissing in the punchbowl it would be great to get some of that calm equity market that generally goes up and doesn't crash every 3 or 4 years.
1966.

So now that the Saints finally won a Superbowl am I supposed to get excited about something or what.

heh heh heh - 17th year of ER. Full auto Target Retirement 2015 - PLUS a few good stocks for the hormones. and football is in the fall. .

I do get excited when I watch though - but I missed this little dip.
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