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Old 10-18-2008, 12:28 PM   #21
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"... the crisis now weighting on the market - an epic deleveraging wave, a broken financial system, and an historic housing bust - is far more complex and fast-moving than either the dotcom collapse or the oil shock recession of the early 1970s. So previous bear markets may not be of much guidance this time around."

Ugh. Regarding my earlier post about buying low, perhaps I should be prepared to buy low and see them staying low for a while.
Always be prepared.

The "real economy" (the one where people actually work and buy things) is going to get a whole lot worse. There is no avoiding that. But remember, the stock market is a discounting mechanism and a darn good one. It discounts in today's prices everything we know about the future and everything we hope and fear too. There is an awful lot of fear in the market right now. And in addition to fear, there is an awful lot of forced selling. Conditions are ripe for "irrational pessimism".
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Old 10-18-2008, 01:18 PM   #22
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Always be prepared.
Conditions are ripe for "irrational pessimism".
But are we yet in utmost despair?

Your screen name suggests that you are still accumulating. I belong in the group with no or little new income coming in. So, we will let the accumulators lead the charge. When we hear a lot of "Uncle!" cries, that's when we lazy bums get off our butt...

We are only trying to "rebalance" here... Don't want to stick our neck out too far...
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Old 10-18-2008, 01:37 PM   #23
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I have really calmed down concerning the current losses and I'm looking at the market more level headed. I actually hope the market stays down for a year or more - the payouts and dividends are being re-invested and buying in at nice levels. If I was still working, I would be very happy with this situation.....why not now? I have cash for several years --
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Old 10-18-2008, 01:38 PM   #24
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Plus - I just hit 500 posts and am employed here!
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Old 10-18-2008, 01:44 PM   #25
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Seriously, in the last crash of 2001-2003, I felt calmer when the market stabilized near the bottom. Though I lost 50% then, I was sure that if I survived up to that point, I would be OK looking forward.

Similarly, I feel more at peace now compared to 2 months ago (though I've lost mucho). Still, I am getting older than 5 years ago, and my part-time freelance work may dry up. Hence I need to remind myself often of that. Hey, looks like I am catching up with you, being employed here.
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Old 10-18-2008, 09:45 PM   #26
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I enjoy reading The Economist for commentary and analysis above the fray. The following article points out that the Dow first crossed 9000 in 1997. Ten years of lousy dividends and zero capital gains for a buy-and-hold investor. Are we perhaps only in the middle of a structural bear market, albeit perhaps at the end of a cyclical (October 2007 to the present) bear run? Did last week usher in a bit of a dead cat bounce? I'm trying really hard not to be unduly pessimistic, but these historical cycles of 18 or 20 year durations feel a bit intimidating right now.

How long can a bear market last? | The big bear | The Economist

Tom
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Old 10-19-2008, 12:02 AM   #27
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Always be prepared.

The "real economy" (the one where people actually work and buy things) is going to get a whole lot worse. There is no avoiding that. But remember, the stock market is a discounting mechanism and a darn good one. It discounts in today's prices everything we know about the future and everything we hope and fear too. There is an awful lot of fear in the market right now. And in addition to fear, there is an awful lot of forced selling. Conditions are ripe for "irrational pessimism".
That's been my perspective too. But I've been swinging between feeling that the pessimism is at the irrational level (panic selling by retail investors lately) and thus we must be close to a bottom, and then wondering if the market has truly priced in all the damage from the credit crisis as well as the fall out of the deleveraging of the large percentage of American households that have lived on debt in recent times.

When the market dumped last week on the news of a 1.2% drop in consumer spending in Sept I wondered, "what the heck, duh!" I'm mean really, should that have been a surprise? With all the negative news that wasn't really a shocker for me.

And so I'm worried about another significant drop from these levels; like 20% or so, taking us down to a 50%+ drop from the high.

On the other hand maybe it's not pricing in future economic bad news well but the panic selling and unwinding of hedge fund positions may be doing it just as effectively.

No perfect answers, just more questions as I read the wide range of opinions out there. It sure makes your head spin sometimes!
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Old 10-19-2008, 09:17 AM   #28
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I enjoy reading The Economist for commentary and analysis above the fray. The following article points out that the Dow first crossed 9000 in 1997. Ten years of lousy dividends and zero capital gains for a buy-and-hold investor. Are we perhaps only in the middle of a structural bear market, albeit perhaps at the end of a cyclical (October 2007 to the present) bear run?
I take some comfort from the fact that we've already had 10 yrs of lousy returns. Periods of low returns are followed by periods of high returns, and vice-versa. Is it possible we still have another 10 yrs of bad returns to get through before the sun shines again? Absolutely. It's certainly possible we still need a long period of bad stock returns to get the rest of us dead-enders to finally capitulate. But in either event I'd rather be sitting here today at Dow 8,000 than in Jan 2000 with the Dow at 12,000.
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Old 10-19-2008, 10:50 AM   #29
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I enjoy reading The Economist for commentary and analysis above the fray. The following article points out that the Dow first crossed 9000 in 1997. Ten years of lousy dividends and zero capital gains for a buy-and-hold investor. Are we perhaps only in the middle of a structural bear market, albeit perhaps at the end of a cyclical (October 2007 to the present) bear run? Did last week usher in a bit of a dead cat bounce? I'm trying really hard not to be unduly pessimistic, but these historical cycles of 18 or 20 year durations feel a bit intimidating right now.

How long can a bear market last? | The big bear | The Economist

Tom
anyone who says they know is lying or dreaming. you can make a fundamental and chart argument that 2002 was the lows for this secular bear and you can say that the lows won't be here till next year or even for a few years.

but the price action looks very similar to 1966-1979 so far with the 1973 bear being the 2000-2002 bear. and the last few weeks looks very much like 1987 even down to the percentage movements being almost identical
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Old 10-19-2008, 12:52 PM   #30
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one of the things i don't understand is how do we go in such a short time from the heralding of tin-hat-wear-appropriate "world wide economic collapse" which sounds worse than a depression to me, from the government assuring that guaranteed loans will be available for payrolls and "to keep shelves stocked" all the way to disaster avoided, this won't get as bad as the great depression, stocks are safe again, have no fear? tell me, how do i trust that?
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Old 10-19-2008, 01:04 PM   #31
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We have cash right now and the falling knives are not attracting me. I know there will be a recovery but there were too many "up" days recently that seemed to be the day to get back into it, only to be followed by another low, and we were glad to have stayed out. I know it's anti-buy-and-hold-and-rebalance, but everyone has to listen to their own little voices in their heads to sleep at night right now. My little voice is saying spring 2010....
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Old 10-19-2008, 03:51 PM   #32
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one of the things i don't understand is how do we go in such a short time from the heralding of tin-hat-wear-appropriate "world wide economic collapse" which sounds worse than a depression to me, from the government assuring that guaranteed loans will be available for payrolls and "to keep shelves stocked" all the way to disaster avoided, this won't get as bad as the great depression, stocks are safe again, have no fear? tell me, how do i trust that?
the banking system was saved with the bailout. if most of the big banks had collapsed than who would make the loans to grow the economy?
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Old 10-19-2008, 03:59 PM   #33
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We have cash right now and the falling knives are not attracting me. I know there will be a recovery but there were too many "up" days recently that seemed to be the day to get back into it, only to be followed by another low, and we were glad to have stayed out. I know it's anti-buy-and-hold-and-rebalance, but everyone has to listen to their own little voices in their heads to sleep at night right now. My little voice is saying spring 2010....
I am teetering on the fence. So many of us have rebalancing to do after the past couple of miserable weeks on Wall Street. I guess I will go ahead and buy what I have to, to rebalance. Kind of scary, though!
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