March; a time for basketball madness, my favorite month of the year. Come this time of year my wife gets as mad as Adam looks for all the hoops I watch.Bob Pisani just had some unintended humor noting that this has been a good week for equities, just as we head into the red, because the Dow is up "1.5%" this week.
I am not sure that a 25%, or is that 33%, retracement after a (almost) week long panic constitutes a good week.
I do think that what we saw last week was a panic even if the magnitude was not substantial.
I would reiterate my expectation of more volatility to come. Another 5% plus to the downside should not surprise anyone. If it never happens, great, but do not let a move down catch you emotionally off guard.
Despite caution expressed in many circles before last week's hit it seemed as though many people were caught off guard, emotionally speaking.
12 comments:
I did some selling today and am now down to 30% long as reflected by my timing model. The 5dma firmly below the 75dma on both the Russell 3000 and unweighted Value Line.
It's going to take one heck of a rally next week for my model to suggest increasing long exposure. Or the intermediate term sentiment models are going to have to cycle down to OS a lot faster than they have been.
30%? yikes.
Not second guessing you or your model because clearly it has worked for you but I am saying that would be uncomfortable with that kind of a balance.
Which makes the point that there are many ways to invest comfortably that are valid.
I hope we get a 5% decline. If you do not want declines, then you do not want buying opportunities either.
30%??? I only seem to have brought myself from 97% to 85% invested. I am just not convinced this is the end of the Bull - yet. Although I do like the extra cash for now.
I am sitting about 20% cash after taking some profits early last week. I have been back to buying over the last week but am glad that I have some cash on hand. I don't understand why anyone would be surprised that we've had some selling, we are long overdue. My main concern is how earnings are going to be and what future guidance is. I think that is why we might just churn for awhile.
Don't worry Roger, half my investments are in my lazy portfolio: 82% equities, 18% short to intermediate bonds.
In today's Almanac, quote for today:
"Theres nothing wrong with cash. It gives you time to think." Robert Prechter, Jr. (Elliott Wave Theorist)
Tom K is clearly a character. He goes 30% cash in one account after the fall. Then he has another portfolio 100% invested. I guess your timing model tells you when to use the bathroom too. I know that you will significantly underperform in the year 2007 using these type of tactics. Ha, you can always buy back in 10% higher in a few weeks and claim you were 100% invested in one of your many portfolios.
There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main "sucker class"
There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time.
Reminiscences of a Stock Operator - Edwin Lefevre
Tom K--I'm in your camp though my model depends on body parts constricting that are not polite to talk about in public. I'm 65% cash and about 10% long and 25% in inverse ETF's. I see few things that will lift market fundamentals to goose performance higher. Further, it is clear to me that in the hoopla of people calling a bottom to the lenders and the homebuilders, we still had further to fall. It seemed self-evident 60 days ago, my surprise is that it took as long as it did to tickle the investment communities hysteria bone.
Anonymous 6:08 pm.: I'm not sure why your choose to hurl insults. How one chooses to invest is a personal decision based on personal risk tolerances. Not everyone requires being 100% invested in the market at all times. Frankly, it is a wonderful freedom to not have performance anxiety. Patience, discipline and courage to think for one's self are key to any successful plan (investment or otherwise), and Tom K demonstrates those qualities in spades.
Investing is not risky. Investing without a plan is very risky. My first big investment was Enron and I lost $2000. This $2000 taught me a lesson about using stops. I started reading IBD and adopted their rule about selling a stock after it drops 8-10% below my buying price. I can make 8-10% in a couple of weeks with the right trade, but 30-40% could take a year to fix. I would rather lose $30- 40 in transaction fees(selling a stock and buying the stock back)than $400. This past week, I sold out of everything once the market made its bounce and got me back close to my positions before the 400 point sell off. I am currently up 5% for the year. Buffett- Rule #1 is to not lose money. Rule #2 is to not forget Rule #1.
Most sentiment is that the market will go lower so I decided to pull everything off the table and watch everything from the sideline. If the market makes another dip, then I will be ready to pounce. If not, then I will slowly ease myself back into the waters and begin building positions in stocks I like.
Risk free trading is called arbitrage and I seek to get as close to this model as possible. Taking on risk is unwise.
On another topic, I have begun to wonder how the investment world gets away with benchmarking their records against an index. An index is an average of the best and worst stocks. Investing professionals should be picking the best stocks and beat the people buying the worst stocks. I think if I spent all day studying stocks and having my ear to the ground, I should be able to selectively purchase many of the best stocks in a given year. There is no excuse for these companies to own any of the worst stocks. Am I wrong to think this way? Is it too simplistic?
to 703 anon, i am very sorry phrase a response this way, not being sarcastic, but your conclusion/opinion has so many fallacies and incorrect assumptions embedded that I would urge you to read a few books, seriously.
To anon703,
Five percent is based on what amount of money because it is much easier to make that on 10k than 10m dollars. Some of you people who jump in and out of the market are obviously daytrading or not looking long term. Roger is managing money for the long term and going 100% cash would be irresponsible.
ann
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