Finding a picture of Hyman Roth with a shirt or not getting shot was tough to do.Markets occasionally have nasty periods and depending on your mind set or mental preparation can obviously cause anguish.
Personally I view these times with a (perhaps warped) sense of excitement. Regardless of anything, neither capital markets nor capitalism are broken.
If you are older than 15 years old you have clear and vivid memories of past market nastiness. If you are younger than 110 you will very likely go through future market nastiness. This is just how it works.
I have been writing for three and a half years that people should have a get-defensive strategy planned out ahead of time that they stick to when things hit the fan. At this point if someone has done nothing, doing nothing from here is probably not the worst thing possible.
I have no idea where the intermediate or long term bottom will be but I guarantee there will be people that sell into that bottom and that they will miss the ride up whether that starts today or two years from now.
The moderation I suggest (preach about, is that better?) means you don't have to be correct. Someone who is 15-30% in cash right now will capture a lot of the move off the bottom and has a reasonable chance of going down less.
11 comments:
Hope this gets over without making a big problem for everyone involed.. rather than deja vu - to all!! :-/
Roger. You are an antidote to the knee-jerk reactions of panic and moment by soudbite fear prevailing in most of the mainstream media.
I won't comment on the politicians.
thank you T
T is correct, although I am still rather bearish.
One of the problems is these things take so long to work them selves out. I think I heard it best described as a slow motion train wreck.
None the less I think I will move my investments up to 65 to 70% invested.
seg
Hey Roger,
I saw one of your articles (http://biz.yahoo.com/ts/080122/10399777.html?.v=5) that said it would list low stock market corelated etfs, but the article appeared to be incomplete/cut-off. Please post the low correlated ETFS on your blog. Thanks
And continued appreciation for your great blog.
that's the entire article. there is no list beyond what you see.
As I like to say, "offense wins fans, defense wins games". See my article on the topic for more details - http://tinyurl.com/3bg6gv
I applaud Roger for his willingness to have a defensive strategy and implement it. Far too often clients don't appreciate the fact that losing them less in a down market is very important. As compounding will show, losing less is more important than gaining more.
"If you see a defense team with dirt and mud on their backs they've had a bad day." -John Madden
Hi Roger,
I'm a regular reader of your blog and just wanted to say thanks - your comments encouraged me to take some defensive action before the worse leg of this sell-off began (it's been more vicious in Germany, where I'm livng). I went underweight on small caps and trimmed back some of our other equity holdings. I'm actually thinking at the moment that I have too much cash.
Your message has resonated with me because of mistakes I made in the2001-2003 decline: I went down to a very low equity position rather quickly, which wasn't bad at first, but then I never quite knew when to get back in.
Keep up the good work!
BWJR
Does anyone have a feeling on Tech. Is it now time to get in or increase the holdings MF - RCGTX is now at 40.20. Down 15 % over the past 7 - 10 days.
BWJR
Hmmm, the comments stop at 2.08pm... just about the time we headed up.
This kind of volatility gives the term "idiot savant" new meaning. I keep thinking I'm some sort of savant when I hit a lucky limit, but then I'm slapping my forehead as a confirmed idiot when mr. market offers it's latest "zig" when I had expected "zag".
TWM and SKF are but two examples of how you can lose your money in a hurry in these sorts of markets: the former touched 97+ yesterday, and the latter touched 146+. Now, respectively, trading at 84+ and 105+. Even discounting for their "double-short" design, it's a heckuva lot of vol.
While I've heard that tops and bottoms can contain extra volatility as the battle for sentiment is waged, and I've heard Roger say (again and again) that "this is the same as it ever was", I'm "over 15 and under 110" but I'm still surprised/frightened by the casino-like atmosphere.
Roger, keep pouring on the sanity - and the suggestions for low correlated safe(r) havens.
For anyone else, any good ideas on how to sell the vol with relatively low risk? (If it doesn't stabilize or come down from here, I'm likely to go all the way to cash and find another "less exciting" pasttime.)
Rick in NY
I have been one of the most bearish people on this blog, yet do not expect the sky to fall. But even I have put 60+ % of my assets in to equities in the last two days.
I Think rogers point is if you choose this business financial investing then you live with the volatility or don't invest or don't manage your own money.
I keep things simpler than buying or selling volatility. most people should not short or trade on margin. keep more cash in down markets (probably not as much as me :)
I think you have to learn to grin and bear the volatility at times. Of course I reserve the right to change my mind after this rally runs its course if it still looks like a big bear market (which is still my best take on things)
Rogers guide lines for cash levels seem reasonable guidance to me unless you are older. Then I would elevate them a little, but to be fair I think roger is giving generic advice for average age not special situation 75 year old individuals.
seg
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