Yesterday after the close, as I usually do, I went to the gym. As I waited for the next song on my iPod to kick in I heard two guys talking about the stock market. After the gym I went to Walmart and heard two other guys; "the most you can lose is $500." The crisis has made its way to main street.
To any of my friends (acquaintances really) at WisdomTree, the dollar has had a big rally (I think counter trend) against almost everything. This might be a good time to to launch some of those currency ETFs especially the ones from some of the healthier (relatively anyway) economies like Israel, Norway, Chile and even though it is in a recession Singapore.
At some point in the last couple of days I said I thought we might see daily moves ratchet down to only 4-5% and bingo we get 4.77% yesterday, too funny.
A lot of chatter about Hungary being the next Iceland. One of the WSJ blogs interviewed Hungarian central bank Governor Andras Simor. A couple of interesting things he said were that Hungarian banks are owned in large part by banks from other European countries, so they are not like Iceland because of this and a few other things. He also said that Hungary is not a big country like the UK so they need help from their friends. No mention of all those mortgages taken out by Hungarians in lower interest rate Swiss francs (mortgage carry trades) and the recent skyrocketing if the franc against the forint.
In an article for IndexUniverse, John Serrapere (who's work I respect) laid out a case for a very big rally. A quick reminder is that 20% rallies during bear markets are common occurrences. My own take is that the faster it comes the less staying power it will have. Watch out for a lot of glee and pronouncements that the bear is over-- if John turns out to be correct.
I made a comment in passing in yesterday's post; "...or you could double your savings." Doubling is probably a tall order but what about 10% more?
Here is a link to Jeremy Grantham's latest.
It seems that a lot of people, especially those who have felt every bump down, are looking to find a new investment strategy based on the performance of their old investment strategy. Maybe some people do need to make changes but doing so within a few percentage points of the bottom, the bottom for now anyway, is likely to be a very bad idea. If you are down 35-40% you have confronted most of the risk of your allocation you might want to hang around long enough to reap some of the reward of that allocation.
Charles Kirk interviewed me for his blog, it ran last Friday. I think you need a login to see it. It is quite lengthy. I think it is ok to share one question and answer so:
Kirk: Generally speaking, do you believe that investors should implement passive or actively managed strategies in their approach and why?
Roger: I think the number of moving parts in an investor’s portfolio, assuming they prefer to do it themselves, should correspond to the amount of time they want/are able to spend managing the portfolio and studying the markets. For people who do not want to mess with single stock selection, ETFs now allow for embedding some very narrow themes and exposure into a portfolio. Between the many choices in sector and theme ETFs, people can create very sophisticated portfolios.