Tip-toeing back into the Market?

[Amnorix]

Is anyone else considering (or has already) tip-toeing back into the market. I have a long-term outlook, so mostly I'm ignoring the recent destruction while shuddering at the numbers and aggressively not reviewing my various statements.

But it seems like we MUST be pretty darn close to bottom. I put the slightest sliver of a toenail back in late this afternoon, but admit I'm not an aggressive fellow when it comes to money management, so I'm leery about exposing myself more than I already am.

What the consensus ye Planeteers? Anybody else considering this? Eyeing specific stocks?

[Stewie]

Merrill Lynch issued a big report today on the banking crisis.
Here are the main points:

1. Everyone is waiting for the big government solution.
2. Coordinated moves will not necessarily be effective, but it will be historic if it happens.
3. We are barely past the halfway point of the credit down cycle.
4. People will continue to crowd into treasuries Rosenberg.
5. Corporate profits not yet impacted will go lower.
6. Private sector interest rates are rising.

Merrill Lynch’s David Rosenberg, who is their chief economist corroborates my opinion. He states “It is truly a modern day depression, in our view- what else do you call it when an entire industry vanishes (investment banks) in less than a year: the ranks of the unemployed soar more than 30%, and nearly one in ten homeowners with a mortgage are either in arrears or foreclosure?”

Like us, he goes on to say “Now let’s not confuse that with the Great Depression - this is not the 1930’s all over again.”
More points:

1. The government will have taken over many banks before this ends.
2. Finally, Rosenberg states that the current money supply boost may not be inflationary. His argument is that the velocity of money is shrinking in the US and Europe, and that is clearly true.

Over the short term I agree with him. For this reason I stated a few weeks ago that the inflation rate would moderate for a few months.
It will moderate over the short term; long term is a different story. Once the velocity of money resumes its normal functioning, the massive amounts of money currently being pumped into the system worldwide will create a big inflationary bubble. The inflation will not hit in the next few months, but it will be big when it does hit. It could be, “Weimar on Weimar.”

Stewie's comment: I never try to pick a bottom. It's WAY too risky. Most money is comfortably made in the middle 60. That is, the middle 60% of market fluctuations. Wait until things stabilize and then wait a little longer. The same goes for trying to pick a market top.

[eazyb81]

What's fascinating is that gold actually fell off a cliff today. In an equity market like we had this week, that would normally be the flight to safety, but it's not happening. It's just a totally irrational market right now that is throwing fundamentals out the window. There are companies that are literally trading at 1x earnings.

I can't wait to read a book about this time period in 10 years or so after this has passed.

[Amnorix]

Originally Posted by eazyb81

What's fascinating is that gold actually fell off a cliff today. In an equity market like we had this week, that would normally be the flight to safety, but it's not happening. It's just a totally irrational market right now that is throwing fundamentals out the window. There are companies that are literally trading at 1x earnings.

I just heard that BP is at 5x earnings. Of course, earnings probably won't be anywhere near as high going forward as they were the last year or so, but still.

[Stewie]

Originally Posted by eazyb81

What's fascinating is that gold actually fell off a cliff today. In an equity market like we had this week, that would normally be the flight to safety, but it's not happening. It's just a totally irrational market right now that is throwing fundamentals out the window. There are companies that are literally trading at 1x earnings.

I can't wait to read a book about this time period in 10 years or so after this has passed.

That's the "paper" gold market where no physical gold is exchanged just ownership of stuff in vaults. The physical gold market is insane right now. The U.S. Mint along with other mints worldwide have stopped producing coins because of high demand. If you go out and try to by a 1 oz. coin you'll pay WAY north of $1000 if you can find any gold at all. The physical market could care less about the "spot" price. The spot market will eventually follow the physical market because it has to. These markets are totally nuts.

[2bikemike]

Fortunately for me I liquidated some of my assets before the chit really hit the fan. I am sorting through now trying to develop my plan for jumping back in. I think we have a little more pain to go through yet. I think we are going to see saw around the bottom for a little while. Right now we are still falling.

[HypnotizedMonkey]

whath a thtock mawket edeerrrrrr

[Mojo Rising]

I wonder how many of the market timers who got out of the market this time before October 2007, also got out during mini-bear markets during the recent bull market. Before the market peaked.

Did they get out at every 2 month decline? If they saw it coming why didn't they get out then?

I noticed a study by a company called dalbar that showed individual investors returned around 3% when the market returned 12% because of market timing and chasing performance. google dalbar study

If you have a financial plan and have followed it then you should not have cash to invest because it would have been invested in the strategy you started with. Unless, you are rebalancing.

If you have been able to call the tops and bottoms of the markets then quit your job and invest for a living.

[Johnny Vegas]

Well I've never sold one stock and I've taken a hit value wise, but I still have the same quantity of shares so I'll get my capital back eventually. When the market was down back in 2000 I was hurting again, but never sold a share and made crazy money by last year. More than I thought I would have ever gained. I just know that since I didn't sell anything I won't have to worry about getting in at the right time.

[beavis]

Originally Posted by Amnorix

But it seems like we MUST be pretty darn close to bottom. I put the slightest sliver of a toenail back in late this afternoon, but admit I'm not an aggressive fellow when it comes to money management, so I'm leery about exposing myself more than I already am.

In watching CNBC this afternoon, the consensus amongst the talking heads seemed to be that we are really close, and they were considering diving back in next week.

I've been burned too many times by the freakin' market. I'm in your boat, I'm going back in a dribble at a time.

[Rain Man]

The stocks may come back, but will it happen quickly? No idea. I always hear that it's good to buy in these situations, and indeed I'm doing it myself, but I don't see any inherent forces that always push stocks up after a downturn. Maybe I just don't understand it.

I'd prefer that they just go up 7 percent a year myself.

[Fat Elvis]

Originally Posted by Stewie

That's the "paper" gold market where no physical gold is exchanged just ownership of stuff in vaults. The physical gold market is insane right now. The U.S. Mint along with other mints worldwide have stopped producing coins because of high demand. If you go out and try to by a 1 oz. coin you'll pay WAY north of $1000 if you can find any gold at all. The physical market could care less about the "spot" price. The spot market will eventually follow the physical market because it has to. These markets are totally nuts.

Margin calls. The rapid and ongoing descent of the market is resulting in a lot of huge margin calls that need to be met and people/institutions/hedge funds are just doing wholesale dumping of anything and everything they have whether it is equitities or commoditites.

[Mojo Rising]

There is no way to call a bottom as much that is happening is emotional at this time.

Spend the time to develop a financial plan and stick with it through good and bad markets.

Control 2 emotions... greed and fear.

Don't buy at the top and don't sell at the bottom.

[Stewie]

Originally Posted by Fat Elvis

Margin calls. The rapid and ongoing descent of the market is resulting in a lot of huge margin calls that need to be met and people/institutions/hedge funds are just doing wholesale dumping of anything and everything they have whether it is equitities or commoditites.

That's part of it. The gold market is tiny compared to other markets so any player making a big move will affect the price up/down, but then it usually springs back from an overbought or oversold position. That's why there have been $80 moves up and down in a matter of an hour or two in the past month.

Ring Ring
Hello?
Margin calling!
I'm ****ed!

[PhillyChiefFan]

Yes I am, I'm young enough that this isn't affecting me as much as most.

Looking at getting into Vanguard 500 Index, it's very low right now.

Looking also at some alternative energy stocks, with the congressional support that just passed with the bailout, these companies now have a 30% tax break. I think this will be the new wave of big stocks.

Quanta is one I have been eyeing, only problem is Jim Cramer mentioned it on his show last week, so now EVERYONE will go and buy it this week.

Just hopefully this sector won't turn into a bubble.

[Buehler445]

Originally Posted by Amnorix

Is anyone else considering (or has already) tip-toeing back into the market. I have a long-term outlook, so mostly I'm ignoring the recent destruction while shuddering at the numbers and aggressively not reviewing my various statements.

But it seems like we MUST be pretty darn close to bottom. I put the slightest sliver of a toenail back in late this afternoon, but admit I'm not an aggressive fellow when it comes to money management, so I'm leery about exposing myself more than I already am.

What the consensus ye Planeteers? Anybody else considering this? Eyeing specific stocks?

I am NO investor, but I think it has a long way to go down. What you are going to see now, is consumer spending go in the toilet and business revenue to fall. At that point, major business stocks will go down. There have already been some layoffs around, and businesses are battoning down the hatches for lower profits. I'd imagine that company stocks are going to go lower.

Originally Posted by Amnorix

Any of us that are in the market are in that same position, so don't kick yourself. I saw that markets have lost $2 trillion over the last X period of time (1 year, or since 1/1/08) and that was either the gross number, or just retirement accounts. I don't recall because I shuddered in pain and immediately tried to blot that information out of my mind...

I figured it up on Thursday, and the DOW is at 60.07% of its 52 week high. Wow. Just wow.

Originally Posted by Dave Lane

I like GM or Ford other than that stay out the market is going to settle lower than this a week might save you 10-15% and you can buy more for the same $

Why do you say that? Do you think they are undervalued?

Originally Posted by DaFace

If I had any to throw in, I'd be all over it. Damn you student loans!

I hear you dude. Loud and clear.

Originally Posted by Stewie

Merrill Lynch issued a big report today on the banking crisis.
Here are the main points:

1. Everyone is waiting for the big government solution.
2. Coordinated moves will not necessarily be effective, but it will be historic if it happens.
3. We are barely past the halfway point of the credit down cycle.
4. People will continue to crowd into treasuries Rosenberg.
5. Corporate profits not yet impacted will go lower.
6. Private sector interest rates are rising.

Merrill Lynch’s David Rosenberg, who is their chief economist corroborates my opinion. He states “It is truly a modern day depression, in our view- what else do you call it when an entire industry vanishes (investment banks) in less than a year: the ranks of the unemployed soar more than 30%, and nearly one in ten homeowners with a mortgage are either in arrears or foreclosure?”

Like us, he goes on to say “Now let’s not confuse that with the Great Depression - this is not the 1930’s all over again.”
More points:

1. The government will have taken over many banks before this ends.
2. Finally, Rosenberg states that the current money supply boost may not be inflationary. His argument is that the velocity of money is shrinking in the US and Europe, and that is clearly true.

Over the short term I agree with him. For this reason I stated a few weeks ago that the inflation rate would moderate for a few months.
It will moderate over the short term; long term is a different story. Once the velocity of money resumes its normal functioning, the massive amounts of money currently being pumped into the system worldwide will create a big inflationary bubble. The inflation will not hit in the next few months, but it will be big when it does hit. It could be, “Weimar on Weimar.”

Stewie's comment: I never try to pick a bottom. It's WAY too risky. Most money is comfortably made in the middle 60. That is, the middle 60% of market fluctuations. Wait until things stabilize and then wait a little longer. The same goes for trying to pick a market top.

Link for that? I'd be interested in reading the whole thing.