Get killed in the stock market?
Athanasios 27 Feb 2009
I run into a lot of people who are down 50% or so and are just holding instead of making the most of this opportunity. Look for something down 70 to 80% that has low debt, high cash per share, and good long- term prospects and you will make a bundle.
A few that I have moved into:
CBI, KHD, ISRG, NTE
I have cost averaged on DOW
And there are many others to look at like:
HNR, USL, etc.
I just wanted to add this since we had some stock discussion in the past. Now is the time to be greedy for big returns in solid companies. Do your own DD as always.
Mind 27 Feb 2009
Really have to be super selective right now. I agree with most, that there is still some downside risk, another couple hundred on the DOW over the next couple of months. What I am trying to plan now is how to play the inevitable inflation coming soon (a month?, 6 months?). I suppose some commodity stocks would work in an inflation play. Companies with a lot of cash might actually not do well, depending on the amount of inflation. I was thinking of buying some metals or food commodities. Even though I am a novice investor, I know I do not want to hold on to my cash during an inflationary period.
Athanasios 28 Feb 2009
cathological 28 Feb 2009
Live Forever 28 Feb 2009
It has got to start going back up at some point. Now, whether that point will be in 2 months, 6 months, a couple years, or longer, is anyone's guess. Just like any bubble bursting, this is only a temporary state. If I had any money, I'd start buying in about now since the prices are getting so enticing.I think the stock market is going to keep going down... or plummet. I suppose if you had good timing you could make money off a dead cat bounce here and there. But I'd hold off on buying stocks if I were you.
thefirstimmortal 28 Feb 2009
The old don't try to catch a falling knife advise. It is sound advice too, and there is likely to be more downside to this market. It is rare that anyone catches the exact bottom so it is usually best to wait until the market starts trending up. It is unlikely that it will trend up soon.I think the stock market is going to keep going down... or plummet. I suppose if you had good timing you could make money off a dead cat bounce here and there. But I'd hold off on buying stocks if I were you.
Zenob 28 Feb 2009
It has got to start going back up at some point. Now, whether that point will be in 2 months, 6 months, a couple years, or longer, is anyone's guess. Just like any bubble bursting, this is only a temporary state. If I had any money, I'd start buying in about now since the prices are getting so enticing.I think the stock market is going to keep going down... or plummet. I suppose if you had good timing you could make money off a dead cat bounce here and there. But I'd hold off on buying stocks if I were you.
The SPX violated it's low at 741. That opens it up for a drop to the 630-640 range. Ultimately before the market can start to make any kind of meaningful recovery we will have to visit those low 600s(or possibly even lower). We could see a bounce up to the 850-900 range before we do but it's looking less and less likely. There is still a massive amount of junk assets that have to be flushed out of the system and a real value(of basically zero) assigned to them. This is why all the banks and their apologists on tv are always bad mouthing "mark to market". They all know that they have huge amounts of assets on their books that are essentially worthless and under no circumstances do they want these junk assets marked to their proper values. If these assets were valued correctly, most financial insitutues would be insolvent. So far pretty much everyone has underestimated the severity of this thing. Don't be one of them.
Here's a few things to try and keep people from getting torn bloody.
This is a severe recession boarding on a depression. If you try to "average in" on the way down with this thing you are going to get torn to shreds. The talking heads on all the financial networks were talking about how "depressed" prices were last year and how they were once in a lifetime buying ops. If you had bought any of their picks at that point you would now be down +90% of your initial investment(most of them were plugging financials then).
Cash is a position. Don't be afraid to be all in cash. You are better off just selling and going to cash then trying to trade a violent market like this without the proper skills to do it safely. It's vastly better to earn 0% on your money then lose +50% of it by buying falling knives and just hoping for a turn around. Capital preservation trumps earnings return.
Don't get confused by the numbers. If you've lost 50% of your investment, you have to make a 100% gain on the capital you have left JUST TO BREAK EVEN. As I said, if you are getting smoked, zero returns on cash is better then losing your capital.
Gold is possibly a good trade going foward but right now it's correcting. It went up and put in a double top and it's pulling back right now. It has a nice well defined upwards trend channel. I'd be looking to get in on a succesful test of the bottom of that channel. However, if we do have a "crash" or just severe selling, gold won't save you. When panic is in the air, EVERYTHING get's tossed overboard, that would include gold.
I attached a picture to show you how severe this is. It shows the SPX for the past 20 years. We have already blown past the bottom of the dot com crash. Today we also violated that 741 low we had back in Nov(not good). Look at this chart and tell me where you see any kind of support below there. It's basically empty air till you get to 600, and there's not much support there to speak of. You can also see how severe this is by how fast it's sold off. The dot com crash took 3 years to get to a bottom. We've already past that point in just ONE year.
Attached Files
lunarsolarpower 28 Feb 2009
http://money.cnn.com...osses_continue/
Mixter 28 Feb 2009
Small to midsize agricultural companies in asia/stable emerging markets
or any water purification companies in asia/stable emerging markets
& with inner value well beyond the stock price
The next question is if this combo really still exists
But really, just stay away from stocks. All big companies can break apart, all small and midsize companies, even valuable ones, can slide into bankruptcy right now, because their next bank loan won't be granted.
I lost 0%, got rid of anything remotely like stocks in late 2007 and try to buy supplies and non-luxury assets I need for real life anyhow, ideally with little value loss over time. I did some investing with small sums during the 2000 crash, and gained something here, lost something there, ended up with maybe 5% loss.
Speculating is like lottery for rich people, only real investment by banks and investors is a significant long-term value to the market and thus can lead to significant average gains. It starts with several tens of thousans of $ into one hand-picked company. Funds are somehow in between.
Edited by mixter, 28 February 2009 - 11:17 AM.
Athanasios 28 Feb 2009
One stock I am in I bought at about half their cash value even though they are still profitable and have an impressive track record. Another that I bought was down 80%, share price of 7, earned .77 in Q4 and forecast conservative earnings for 09 of $2. The day they announced those results they dropped 30%. I bought a truck-load.
Companies have a value that is not linked to their stock price. Yes, be careful of what they value their assets for if you are going to calculate that in..
I dont mind catching a falling knife if it means I bought $2 for my 1.
I think the rich see this as an opportunity to buy half the world on the cheap. I also think that those too scared to look at stocks at all right now are going to be the ones who get screwed the most, unfortunately on the way down and up.
My .02, good luck all.
Edit: After thinking about it a bit more, I realize that a stock price is a mix of people's ideas on a companies long term value and the stocks near term value. My assertion is that too many are betting on the near term side of things making a huge opportunity for longer term bets. I think this is especially true considering the track record of people predicting markets over the short term.
Edited by cnorwood, 28 February 2009 - 05:18 PM.
Cassox 28 Feb 2009
Brainbox 28 Feb 2009
It has to go up at one point in time. The question is when but I'm almost sure it is not now. The background of the decline of stocks is a lot more complicated and fundamental as compared with any recent crisis I'm aware of. If creating bad banks and spending lots of tax money on dead cadaver industries is the only thing economist can think of, I'm afraid it will last for some time. Its not only of economic nature, but the political component due to human tragedy as a result of unemployment is huge, resulting in compromises regarding the way our tax money is being used.It has got to start going back up at some point. Now, whether that point will be in 2 months, 6 months, a couple years, or longer, is anyone's guess. Just like any bubble bursting, this is only a temporary state. If I had any money, I'd start buying in about now since the prices are getting so enticing.
On the other hand, if all private stock investors would start being optimistic and invest all their capital back into structural healthy stocks, who knows what positive outcome could be generated. Maybe that's a reasonable scenario given the circumstances. The question is how to organise such an initiative.
What about a government insured investment plan for private investigators? Instead of throwing tax money into black holes with huge event horizons that assure that nobody can see nor understand whether this investment will ever generate a reasonable economic or social leverage.
Live Forever 01 Mar 2009
Yep, this is exactly why I reallocated now. Everyone is saying the world is going to end.
One stock I am in I bought at about half their cash value even though they are still profitable and have an impressive track record. Another that I bought was down 80%, share price of 7, earned .77 in Q4 and forecast conservative earnings for 09 of $2. The day they announced those results they dropped 30%. I bought a truck-load.
Companies have a value that is not linked to their stock price. Yes, be careful of what they value their assets for if you are going to calculate that in..
I dont mind catching a falling knife if it means I bought $2 for my 1.
I think the rich see this as an opportunity to buy half the world on the cheap. I also think that those too scared to look at stocks at all right now are going to be the ones who get screwed the most, unfortunately on the way down and up.
My .02, good luck all.
Edit: After thinking about it a bit more, I realize that a stock price is a mix of people's ideas on a companies long term value and the stocks near term value. My assertion is that too many are betting on the near term side of things making a huge opportunity for longer term bets. I think this is especially true considering the track record of people predicting markets over the short term.
I tend to agree with your overall assessment. If you always go with the "common" wisdom (what the stock market is a good measure of), then you will not make the kinds of massive gains that some will. I suppose it all depends on someone's level of risk that they decide on. (Although I personally don't think it is that risky to buy now that the prices have fallen so far; The only variable is how long it will take to see the gains, but as long as it is not a short term investment it seems decidedly unrisky to me.)
thefirstimmortal 01 Mar 2009
I dont mind catching a falling knife if it means I bought $2 for my 1.
I think the rich see this as an opportunity to buy half the world on the cheap. I also think that those too scared to look at stocks at all right now are going to be the ones who get screwed the most, unfortunately on the way down and up.
My .02, good luck all.
Edit: After thinking about it a bit more, I realize that a stock price is a mix of people's ideas on a companies long term value and the stocks near term value. My assertion is that too many are betting on the near term side of things making a huge opportunity for longer term bets. I think this is especially true considering the track record of people predicting markets over the short term.
If your looking for ten-baggers, waiting for a better price would be helpful. Fortunately for you your youth is going to be a big help. You made a good deal, if the market continues to fall you will be able to make great deals.
Athanasios 01 Mar 2009
If your looking for ten-baggers, waiting for a better price would be helpful. Fortunately for you your youth is going to be a big help. You made a good deal, if the market continues to fall you will be able to make great deals.
One of the interesting things about the chart above is the best deals I found after the 2000 crash were in 2001, in which I made 300% in my portfolio that year. I am thinking it may be similar this time around. All boats lowered with the waterline but at this point bargain hunters are starting to prop up stocks that deserve it. I am sure the overall market has some more to correct but I think it will be much more selective. Hedge Funds are close to having dumped what they were forced to sell.
Trying to time the bottoms has its merits and those who are savvy might want to try, but I doubt the average joe that also has a day job will have much of a chance. I might hedge a little with some options for the short term on my most vulnerable stocks, but I doubt my ability to time the last 20% of the dip.
Mind 01 Mar 2009
DJS 01 Mar 2009
I tend to agree with your overall assessment. If you always go with the "common" wisdom (what the stock market is a good measure of), then you will not make the kinds of massive gains that some will. I suppose it all depends on someone's level of risk that they decide on. (Although I personally don't think it is that risky to buy now that the prices have fallen so far; The only variable is how long it will take to see the gains, but as long as it is not a short term investment it seems decidedly unrisky to me.)
If you're talking about investing in an index fund then I agree with you. Betting on ponies way exceeds my risk tolerance (and financial knowledge level) at this point.
DJS 02 Mar 2009
platypus 02 Mar 2009
PWAIN 03 Mar 2009
Mind,
If all government intervention odes is to avoid a depression and replace it with 2 or 3 recessions 5 years apart, it would be worth it. think of it like this, hold your breath for 10 minutes or for 3 minutes 20 seconds 3 times 10 minutes apart. Which do you prefer? it is the difference between complete wipe out once (lose job, home, family etc etc) and just hard times several times(cut back, half pay packet etc etc).
niner 03 Mar 2009
This is a good argument against a buy and hold strategy, particularly one that owns the market (in the form of index funds rather than individual stocks). Whether in the early 30's or today or sometime soon, buying healthy companies at cheap prices can still make you a lot of money. There were a couple of great years for the market in the early 30's. People who bought at the top were still screwed, but people who played it right made a lot of money.During the Great Depression, I think stock fell by 89% so if the same thing happens again, we can expect the Dow to fall below 2000, even as low as about 1600. It then took ages to go up again (25 years to get back to it's previous high). So if depression, wait until it at least crasks the 2000 mark and then get ready for a long wait.
DJS 03 Mar 2009
This is a good argument against a buy and hold strategy, particularly one that owns the market (in the form of index funds rather than individual stocks). Whether in the early 30's or today or sometime soon, buying healthy companies at cheap prices can still make you a lot of money. There were a couple of great years for the market in the early 30's. People who bought at the top were still screwed, but people who played it right made a lot of money.During the Great Depression, I think stock fell by 89% so if the same thing happens again, we can expect the Dow to fall below 2000, even as low as about 1600. It then took ages to go up again (25 years to get back to it's previous high). So if depression, wait until it at least crasks the 2000 mark and then get ready for a long wait.
My logic is fairly simple. If you buy into an index fund now at 6800, even if the Dow drops to 4000 (which I think is highly unlikely), the chances are still overwhelmingly in favor of the markets rebounding for in nice profit at some point in the next ten years.
Sticking your money in an index fund right about now amounts to saying, "I think things could get even worse than they are now, but I don't think this is the end of civilization as we know it."
DJS 03 Mar 2009
This is a good argument against a buy and hold strategy, particularly one that owns the market (in the form of index funds rather than individual stocks).
It's a good argument only if you accept the initial proposition that the Dow could fall below 2000 and never recover!
Edited by N0NZER0, 03 March 2009 - 03:45 AM.
niner 03 Mar 2009
Well, it's a pretty good argument if you ride the market all the way down from 14000 to 2000 and it takes a quarter century to come back. I don't think either of those things will happen though. But then, if I could predict the future, I'd have more money to play with right now.It's a good argument only if you accept the initial proposition that the Dow could fall below 2000 and never recover!This is a good argument against a buy and hold strategy, particularly one that owns the market (in the form of index funds rather than individual stocks).
forever freedom 03 Mar 2009
lunarsolarpower 03 Mar 2009
This monday was ugly indeed. It`s amazing that we keep finding new dirt under the carpet. Buying and holding long term is still a great strategy, though. The market can`t keep falling forever and i don`t think it will fall much further, although i wouldn`t have guessed that it would go this low.
Really?
This isn't exactly something that came about overnight.
I really think there's a good long way to go for this economy based on the fact that nothing fundamental is being done about the state of affairs. Pouring borrowed/printed money into smoking carcasses of the derivative trade might keep things rolling for another day but the mountain of derivatives only gets spun larger and more entangled at every step. Transparency is beyond possible for these things which means that no market can fairly price the entities that are a party to them.
Here's a more recent piece:
http://www.vancouver...9152/story.html
JLL 03 Mar 2009
This is a good argument against a buy and hold strategy, particularly one that owns the market (in the form of index funds rather than individual stocks). Whether in the early 30's or today or sometime soon, buying healthy companies at cheap prices can still make you a lot of money. There were a couple of great years for the market in the early 30's. People who bought at the top were still screwed, but people who played it right made a lot of money.During the Great Depression, I think stock fell by 89% so if the same thing happens again, we can expect the Dow to fall below 2000, even as low as about 1600. It then took ages to go up again (25 years to get back to it's previous high). So if depression, wait until it at least crasks the 2000 mark and then get ready for a long wait.
My logic is fairly simple. If you buy into an index fund now at 6800, even if the Dow drops to 4000 (which I think is highly unlikely), the chances are still overwhelmingly in favor of the markets rebounding for in nice profit at some point in the next ten years.
Sticking your money in an index fund right about now amounts to saying, "I think things could get even worse than they are now, but I don't think this is the end of civilization as we know it."
Remember that rebounding is not enough when inflation is high, as it probably will be.
platypus 03 Mar 2009
http://marketsci.wor...ly-seasonality/
Athanasios 23 Apr 2009
Given this, I decided to take out 40% of my current total portfolio and sit it on the sideline until September where I will consider putting some of it back in.
What do you all think, are we stabalizing or setting up for the next downturn in stock prices?