How far will you ride the market down ?

[REWahoo]

Quote:

Originally Posted by daloanboy I am DCAing dividends and interest only and will do so until the markets return to 2007 levels...

I'm sure you realize the odds are you'll be dead before this happens.

[haha]

Quote:

Originally Posted by Moemg I also remember the tech boom and some of my friends hung in there until their investments were almost worthless . I did fine because I got out when I got spooked by the craziness . Maybe this time I should have gotten spooked and sat on the sidelines for awhile . I am going to ride it down just a little farther and then I'm getting out until there is some sense of sanity .

I know that you may feel very threatened by this nasty break in the markets.

I have proven to myself and others that I don't know what will happen, I don't even fully understand what has happened already. So I won't be making any suggestions!

But I can point out that the dot com era was different. First, thanks to some very high fliers the S&P was much more overvalued than is is now, and even much more overvalued that it was in Oct 2007.

Second, there were many high flying stocks that never really had a prayer, that were just hope and manipulation.

So although today's economy may appear worse (or not-to anyone living in a high-tech area in th early 21st centruy the economy looked pretty bad), today's valuations based on long term earning power are much lower than the early 2000s.

Ha

[MichaelB]

We have just gone through a decade and a half when it was easier to make money with financial tricks than it was making and selling real stuff. Not just for the banks, either. For lots of companies and people as well.

Most of that’s gone away. It’s not now so easy to just make money out of nothing, and a lot of the wealth generated is either gone or going away.

Right now this is bad – but later it will be good. Kind of like when you say to you kids “you’ll understand this when you are older”

It’s bad right now because income and wealth is being lost and there is economic confusion. That is causing financial hardship. It’s also bad because of the uncertainty and fear that results for the absence of a clear vision of a positive future. More people are affected by uncertainty and fear than financial hardship.

It’s good because businesses and people will now turn away from this artificial financial stuff and get back to making and selling real stuff. The work force will be larger as more people work longer to fund their lifestyle and retirement. This keeps a lid on labor costs and helps keep inflation under control. It also stimulates demand because working people consume more than non-working people.

It’s good for the US because we import much of the real stuff we consume, so the weakening in demand affect others more now and later the strengthening in demand will create more opportunity for US businesses to satisfy.

Businesses that aren’t competitive will fail and be absorbed by their competitors. This will help boost productivity – and also profits. It becomes a whole lot easier to distinguish effective business leadership and management from the mediocrity and rest of the herd.

The relationship between risk and reward becomes clearer and strengthens. That is a very positive thing for equity investors.

This isn’t happening yet, and it may be too soon to be fully exposed to equities, but the writing is on the walls. If the past decade (and a half) is the lost decade, this upcoming decade will be the revitalization of capitalism. And it will be great for investors.

[DallasGuy]

I'll probably ride it as low as it goes. But since I only had 30-35% in the market when all this started (that's down to about 20% now), I can still retire on the remaining portion of my investments (CD's, I-bonds and MM)...as long as the banking system doesn't collapse. I will probably not be putting any new money into the market in the future. If the market ever recovers, I'll be pulling more out.

[Lsbcal]

Quote:

Originally Posted by daloanboy ... I'm in the UK. We avoided most of the great depression compared to USA, but our nemesis was the '70s - our UK stock index dropped 90% - NOMINAL!. Think about it that's an 80% drop and then a further decline of 50%. We had three day working weeks enforced, and power cuts several times a week.

I wasn't aware that the 1970's were that bad in the UK for stocks. Do you know if small caps did better then large caps then? Are there any free data bases to access for general UK stock info for the 1970's?

In the US my inflation adjusted data shows a partial recovery of the Total Stock Market during 1975-76 and small value stocks made a full recovery back up to the 1973 peak. Large value and TSM lagged in the late 1970's but small value and midcaps did well.

[Bikerdude]

Quote:

Originally Posted by MichaelB We have just gone through a decade and a half when it was easier to make money with financial tricks than it was making and selling real stuff. Not just for the banks, either. For lots of companies and people as well. Most of that’s gone away. It’s not now so easy to just make money out of nothing, and a lot of the wealth generated is either gone or going away. Right now this is bad – but later it will be good. Kind of like when you say to you kids “you’ll understand this when you are older” It’s bad right now because income and wealth is being lost and there is economic confusion. That is causing financial hardship. It’s also bad because of the uncertainty and fear that results for the absence of a clear vision of a positive future. More people are affected by uncertainty and fear than financial hardship. It’s good because businesses and people will now turn away from this artificial financial stuff and get back to making and selling real stuff. The work force will be larger as more people work longer to fund their lifestyle and retirement. This keeps a lid on labor costs and helps keep inflation under control. It also stimulates demand because working people consume more than non-working people. It’s good for the US because we import much of the real stuff we consume, so the weakening in demand affect others more now and later the strengthening in demand will create more opportunity for US businesses to satisfy. Businesses that aren’t competitive will fail and be absorbed by their competitors. This will help boost productivity – and also profits. It becomes a whole lot easier to distinguish effective business leadership and management from the mediocrity and rest of the herd. The relationship between risk and reward becomes clearer and strengthens. That is a very positive thing for equity investors. This isn’t happening yet, and it may be too soon to be fully exposed to equities, but the writing is on the walls. If the past decade (and a half) is the lost decade, this upcoming decade will be the revitalization of capitalism. And it will be great for investors.

I feel much better now.

[Lusitan]

Quote:

Originally Posted by kumquat Better change your name to Lusitania!

Good one! But my wife has that one claimed already.



That's not fair! How come we don't get to have a band ... ?

[MichaelB]

Well, the man has spoken. The one thing Pres Obama had stayed away from 'till now. Hear yourself in his own words Bloomberg.com: Editors' Video Picks

Quote:

What I am looking for is not the day-to-day gyrations of the stock market... but the long-term

Quote:

On the other hand, what you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is potentially a good deal, if you have a long-term perspective on it,

Clear as always, he leaves no doubt. Which raises many in my mind. And I like the guy...

[ls99]

Quote:
What I am looking for is not the day-to-day gyrations of the stock market... but the long-term

So he want's is long term gyrations. Perhaps he should have described how big gyrations.

Though in and of itself that statement is meaningless, now if discusses rates and limits.......

[Koolau]

Quote:

Originally Posted by dex Also, I think there will come a time when the US$ will peak and that would be the time to buy foreign currencies - Australian $, Canadian $, possibly Euro.

Dex,

How do you actually buy foreign currencies? I've heard of buying foreign equities to take advantage of the gyrations of currencies, but are there funds for specific (or, say, non-US currencies)? I'm sure you can open non-US bank accounts, but I'd think the reporting and reconciling the interest/foreign/US taxes would be a pain.

Would seriously consider shorting the US$ at some point but too ignorant to know how.

[Gpond]

Quote:

Originally Posted by koolau would seriously consider shorting the us$ at some point but too ignorant to know how.

etf udn.

[Bimmerbill]

All the way I guess. I've lost too much to pull whats left out now...
14-18 years till retirement, so I HOPE I have time to recover.

ETA: I'm still putting in 5%, plus match of 4% biweekly.
I just looked, down about 80K from all time highs.

[Gone4Good]

Riding it all the way down.

Even put a little more in yesterday.

My question is this: If I sell out today, what will I do if the market rallies 20% from here? What then if it rallies another 10% on top of that? (we already had one ~25% bear market rally from November to January). Will I know the real thing from a hoax? Probably not. Will I get pulled back in to the market just in time to see my losses compounded as the bear market continues? Or I could sit on the sidelines locking in these losses while the market starts a real recovery?

Because I don't know, because no one can know, I'm sticking with the plan I started with. At least that has a historically proven track record.

[Culture]

I am riding it down, and using the low prices to fill in some sectors that have I have been unwilling to purchase in the past due to high prices (XOP - Oil E&P FTF and GDX - Market Vectors Gold Miners ETF). I now have 2.5% of my equities portfolio in each ETF (5% incease in equity allocation). Oil is not going to stay down.

However, I do not plan on putting any more into equities until the bad news ends, with the possible exception of increasing XOP to 5% of equities if it goes significantly lower than it is today.

YouTube - Europe - The Final Countdown

[dex]

Quote:

Originally Posted by koolau dex, how do you actually buy foreign currencies?

etf - fxa, fxe,

[Retire Soon]

In my equities allocation, where I hold mostly Vanguard Total Stock Market I plan to ride it out as low as it may go. It's simply too late to bail.

[Gone4Good]

Quote:

Originally Posted by slazenger I'm starting to wonder if maybe herd mentality with regard to investing is actually the right way to do it. What was the heard doing in 98-00' - buying like mad and in internet stock of course, and even in 1-2 years they doubled their money. If the herd then soon panicked into 2000 and they panicked within a month or two, they missed most of the drop that continued through the end of 02' and sold much sooner than I did (which was never).

I remember lots of herds of sheep and lemmings . . . never met any members of the flock who actually got out with any gains. Whether the herd was chasing tech stocks, oil, or real estate over the past 10 years I don't know any one who got out near the top.

[SarahW]

All the way to the bottom, baby!

YouTube - DIRE STRAITS "Money for nothing"

[ejman]

If the market drops another 50%, it would bring it to about Dow 3500 or so or roughly a 75 - 80 % drop from its peak in October of 2007. This would put the drop in the neighborhood of the Big D levels. Given my asset allocation, this would mean about a 50% drop in my liquid assets from the top of the market back in 07. Just for the fun of it, I re ran my numbers in Firecalc using the assumed drop and guess what - It still works! So, I hoping there isn't a major glitch in Firecalc somewhere... I'm riding this baby down... and hopefully UP some day

[Tadpole]

The only adjustments I may make will be in bond holdings and, maybe selecting the same asset class with lower fees. Otherwise, with respect to equities, I will ride the coaster to the bottom.

The way I see it is, although we are in the process of retiring, we won't need to tap much from the savings for a few years if inflation is not too bad and, knock-on-wood we have few emergencies. So I may be retiring but I am still semi-long term (5-8) years.