target2019
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Right or wrong, I could not resist buying Ford and Tesco yesterday.
Would that be the Tesco with large accounting error reported?
Right or wrong, I could not resist buying Ford and Tesco yesterday.
First, I would like to point out as the market has been falling, I am losing money not making money, just losing 1/2 as much as I would have. This is a conservative and defensive approach to portfolio management, not a lottery ticket shot at getting rich sure to result in poverty.Time will tell, but SPY has had dozens of dips like this in the past 5 years. Would getting out each time, and then getting back in at a higher price have been 'genius'? I doubt that. How can we know that this one will be different?
-ERD50
No need to explain. Someday people will look back on what they believed, and how arrogant some of them were about it, and wonder what could have been going on.First, I would like to point out as the market has been falling, I am losing money not making money, just losing 1/2 as much as I would have. This is a conservative and defensive approach to portfolio management, not a lottery ticket shot at getting rich sure to result in poverty.
I would like to quote from Benjamin Graham's excellent book, The Intelligent Investor on the defensive investor: "We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a converse inverse range between 75% and 25% in bonds. There is an implication here that the standard division should be 50/50 between the two investment mediums. According to tradition the sound reason for increasing the percentage in common stocks would be the appearance of the bargain price levels created in a protracted bear market. Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgement of the investor the market level has become dangerously high...... it is almost equally difficult to advise a reduction of the figure well below 50% unless the investor is disquieted in his own mind[note italics are Benjamin Grahams not mine] about the current market level and will be satisfied to limit his participation in any further rise to say 25% of his total funds."
With the bond buying by the FED coming to an end, the fact there have been sellers in abundance every time the S&P gets to 2000, along with price action after years of bull market in many different investments, was very disquieting to me, but Draghi is getting ready to start taking aggressive steps of his own and if this selling does not keep the S&P from breaking 2000 then I will jump in and see how the Draghi ride goes. But my moves are not usually frequent and try to buy value and sell at peaks.
My selling at 1400 in the S&P 500 in 2007 and buying at 700 in 2009 made the stock position in 2009 equal to 200% of the stock position had I just maintained a 50/50 allocation. I am certainly not a genius, I am very conservative in nature. If I was willing to take large positions I could have become Michael Burry, because I was as sure as he was that the market was going to collapse, it's just I realize the potential of being wrong and I wasn't willing to bet my retirement on it, just for the chance to be rich. I don't need to be rich, but I like a comfortable lifestyle and watch closely to protect it.
To the 2nd point that there have been all these dips on the chart, and how is this time different: We are 5 years into a bull market which is up 200%, how many bull markets have exceeded this length in time and return? The reason for my selling is extremely similar to my move in late 2009 after the Dow nearly got to 10,000 (S&P was nearly 1100) I reduced again to my lower target and as the Fed showed their hand in 2010 that they had no intention of slowing their easing, and in fact were willing to take historic unequaled steps, I returned to a 50% holding. The key is how disquieted I am, not anyone else, I must think independently, the fact that no one understands this move shows how opposite to thinking I have to an approach I see as crystal clear.
I have been posting here to show what Benjamin Graham actually suggests is possible as a conservative approach to stocks if one is willing to take time to study stocks, their value and what that means to the relative value of the market.
We are in an unusual time, the Federal reserve did not even exist for much of the stock history and did little through most of the years used in FIRECALC. Now in just a few short years they have become the single biggest purchaser of financial assets in the United States. From 700 billion in 2007 to 4.4 trillion dollars today, while GDP has gone from 14 Trillion to 15 Trillion means the Fed now has an amazing amount of assets relative to the output of the country. This is unprecedented in FIRECALC history and the outcome of this is going to have some disruptions, and at some point it will get outside the control of the FED. Now Europe and Japan are doing the same thing, financial impact is going to be interesting, certainly the last 5 years have been very interesting. Will it be the start of a bear market or a big move up? I think most likely the answer to that is yes.
No need to explain. Someday people will look back on what they believed, and how arrogant some of them were about it, and wonder what could have been going on.
It hurt to trim that post. Well put, and some do understand.To the 2nd point that there have been all these dips on the chart, and how is this time different: We are 5 years into a bull market which is up 200%, how many bull markets have exceeded this length in time and return? The reason for my selling is extremely similar to my move in late 2009 after the Dow nearly got to 10,000 (S&P was nearly 1100) I reduced again to my lower target and as the Fed showed their hand in 2010 that they had no intention of slowing their easing, and in fact were willing to take historic unequaled steps, I returned to a 50% holding. The key is how disquieted I am, not anyone else, I must think independently, the fact that no one understands this move shows how opposite to thinking I have to an approach I see as crystal clear.
Indeed, it is!Would that be the Tesco with large accounting error reported?
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I would like to quote from Benjamin Graham's excellent book, ...
If I was willing to take large positions I could have become Michael Burry, because I was as sure as he was that the market was going to collapse, it's just I realize the potential of being wrong and I wasn't willing to bet my retirement on it, just for the chance to be rich. ...
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I do not trust my ability to time the market that well, so I am staying the course.
While I understand the difficulties of marketing time for most people is you have to be right twice, getting out and getting in. In my case I'm quite confident of my ability to get within hand grenade distance of the market bottom. In 30 years of investing, I have never been tempted to sell near the bottom. Instead of being fearful during a bear market, I am greedy. The only time I've ever sold at the bottom was the Oct 19, 1987 crash. The weekend before smart guys like Bob Brinker said the market was going to correct. I put in sell order that weekend, once I saw the carnage in the morning, I tried to contact Fidelity and cancel the sell order but their phone lines were jammed so I sold at the bottom. But I got immediately back into the market that week.
However, I have no talent for spotting the market top. Even during the crazy internet bubble back in 1999/2000, my gut didn't tell me sell only my brain. I'm finding it hard to have a large cash position right now, and watch the market drift modestly lower and not buy something.
But just because I have no talent spotting a top doesn't mean others don't.. I've made money listening to Brewer on fixed income investments, and HaHa on individual stocks. Will see if Running_Man will do the same for market timing, don't mean to put too much pressure on you.
(I am still at 60% equities, so I'll be perfectly happy if Running Man is wrong and S&P 2000 is nothing.
I consider adjusting my AA every year or so to be the only form of market timing that I'm comfortable with.
....though the probability of 2020 before 1600 seems less likely as the month passed.
S&P 2000 means something to people right now. In about a year, after we've crossed it back and forth a few times, it won't.
Anyway, you've commented on several occasions that you're willing to follow the advice of two posters on an internet message board to compensate for your own admitted shortcomings. I applaud the ability to recognize what your weaknesses, but I shudder at the idea of trusting anyone else to make my investment decisions, particularly people I don't know (note: you may know these guys, but I still wouldn't let what friends say impact my investment decisions without doing a hell of a lot of research and soul-searching first).
Good luck to you!
One Month Update:
One of the interesting financial points to watch as the markets begin to fall is financial impact of dropping securities and companies that own the offsetting hedges. Improper hedging tends to show up in times of market stresses and the oil drop is quite significant and unexpected -
Interesting timing. I bet this goes lower now than anyone thinks. 1500 or so is what I think, so 1400?
Interesting timing. I bet this goes lower now than anyone thinks. 1500 or so is what I think, so 1400?
It will go until the hedge funds are done selling. They got caught hard by the sudden large drop in oil prices. This usually causes more of a washout type event and then rebound once the sellers are out. We shall see.
We're still well above 1800. We still haven't made it to a 10% correction, which would be 1817. Once we breach that, I might get more excited. Don't know why 1700 something wouldn't hold.