Quote:
|
Originally Posted by chinaco
Under what conditions would you exit the market to cash? Do you have a firm strategy/approach (e.g., trigger, threshold, etc)? Or would you just play it by ear? Or do you intend to always sit tight?
|
Pretty much the same as last time-- we wouldn't even blink for the first 30% drop. When everything starts getting down to our cost basis (some at -35%, most at >-45%), we'd think about putting 20-30% cash aside for a buying spree. And again we'd probably wait for a year or longer before things got bad enough to merit that move.
I'd be extremely tempted to spend most of my time shorting entertainment stocks, retailers, and mortgage financing companies. I'd also be paying attention to international investments-- might be some real bargains there if they get swept up in the U.S. selling hysteria.
It helps one's attitude to have a govt pension, rental property, and a budget with plenty of slack in it.
Quote:
|
Originally Posted by chinaco
Same question about returning to the market (or another market). Do you have some sort of rules? or Just play it by ear?
|
I'd wait for the usual signs:
- Single-digit P/Es
- Warren Buffett coming back from the dead for the unbelievable bargains
- Bill Gross' Dow 5000 prediction
- Massive institutional selling at capitulation
- Enough articles like Business Week's "The Death of Stocks"
- Gold over $1500/ounce (inflation-adjusted from its 1981 runup)
- Companies buying back their stock
- The U.S. starting a war to distract the voters defend democracy
- Tweedy, Browne Global Value re-opening (closed for two years so far)
- Execs disdaining options in favor of dividend-paying restricted stock
- Abby Joseph Cohen calling a suicide hotline
- Jeremy Grantham going 100% equities
and, of course, the ultimate sign that it's time to get back in:
"This time it's really different and we're permanently screwed!"