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Stop looking for capitulation
Old 10-25-2008, 09:09 AM   #1
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Stop looking for capitulation

and start looking for "stupefaction".

The most interesting thing about [the 1974 market bottom] was its dullness," veteran fund manager Ralph Wanger recalled to me. "It wasn't a crash, it was a mudslide. You came in, watched the market go down a few points and went home. The next day you went through the same thing all over again." And then, without a moment's warning, the bull woke up and took off. By Jan. 6, 1975, the market had shot up 10%, and a year after that the Dow had risen 54% from its 1974 low.

The Intelligent Investor -

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.

Winston Churchill
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Old 10-25-2008, 09:15 AM   #2
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the 2000-2002 bear market ended this way, July was a spectacular low on high volume and high VIX. October's lower low wasn't as spectacular.

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Old 10-25-2008, 09:16 AM   #3
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What! You mean my trusty Vanguard computers rebalancing my portfolio on full auto - are not going to send me an E mail, post card, or ok it's safe to party notice?

Who would have thunk it.

heh heh heh - As often as I look these days - I will be calling at least 10? bottoms before the one that takes. Meanwhile I plan to hurry up and just stand there.
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Old 10-25-2008, 09:29 AM   #4
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nice post - thanks

Right now this is about who can take the most pain - like one of those survivor shows challenges.

I still haven't updated my portfolio.
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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Old 10-25-2008, 09:38 AM   #5
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Yeah - we won't get a bottom until the folks still owning stocks finally decide "it's really too late to sell".

I'd say it's been feeling like a mudslide lately!

I figure there won't be a (final) bottom this year, because there is so much forced selling and I figure it's going to take the rest of the year to get most of it done.

Maybe next year the numbness will set in, the VIX will drop, and we'll all just go "groan, another typical day in the markets!".

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Old 10-25-2008, 10:46 AM   #6
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I have updated everything today so I can look at my allocations. It's pretty ugly in terms of total losses. My allocations are OK after a little movement from bonds to stocks last week to rebalance.

Maybe we shouldn't be looking for the capitulation. I have thought it was here several times now, and we just keep selling off. It does seem like a dull ache now as opposed to a climactic sell-off. 3-4% moves down don't phase me anymore. This reminds me of the 2000-2002 bear. Just when you think it can't go lower, it does. Eventually no one wants to watch anymore. I am almost to the point where I don't care to watch anymore.
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Old 10-25-2008, 11:07 AM   #7
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Almost by definition capitulation precludes there being a lot of people waiting to throw money at the market at the first sign of capitulation.
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Old 10-25-2008, 11:08 AM   #8
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Originally Posted by dex View Post
Right now this is about who can take the most pain - like one of those survivor shows challenges.
Yup, a winnowing of the weak hands is in train.
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Old 10-25-2008, 12:40 PM   #9
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Recently (e.g., Friday), the media has been putting forth the idea that "people on Wall Street" have been disappointed that the markets haven't dropped further in a sign of greater "capitulation." I agree that this is self-defeating. Overt market drops as a sign of capitulation can't take place when people are waiting to rush in.

Of course, "this time it's different" (just like all the other times). People the world over are shell shocked. Perhaps capitulation by the common man has been occurring and is continuing as we speak, and we might be seeing it now if it weren't being drowned out by world events. Most likely no bell will ring, in any form.

I'm expecting a tough slog for a while, but I'd be thrilled and tremendously relieved if the S&P would pop back up to the levels of a month or so ago. Maybe the election results will provide some psychological relief.

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