RE: Here's hoping you didn't miss the bottom of the market...

The Concrete Runner wrote:

I got out of the market with most of my money when the index was between 11,000 and 12,000. I predicted a low point of 6,868. I'm going to let it go down to 5,858 before I start buying again.

You may want to wait even longer. I predict it will go below 5000 before all is said and done.

Sagarin,

You say some things that make me think you don't really understand how the markets work. First of all, what was not to he happy about a 14,000 DOW, especially when I first got in at 2,700? My value on paper was at its highest point then, so sure, why not be stoked about that? Secondly, when the DOW drops, it just opens up a buying opportunity. I would prefer the DOW just slowly climb and never go down, but I'm in the world of reality, so when the DOW goes down I use it as a time to buy.

You say we've lost 12 years. I disagree completely. First of all, I received dividends all those years, and secondly, you are comparing a PEAK in 1997 to a trough now. I have WAY more shares now than I did in 1997, and when the DOW goes back up again (and it will), my value will EXPLODE. I never even made any purchases when the DOW was above 14,000. My twice monthly purchases just never hit that peak. The average of the DOW now since October 2007 is UNDER 10,000! This means that when the DOW reaches 10,000 again, anyone who was in the whole time (like me) will be even for this bad period. The longer the DOW stays below 10,000, the lower the average goes and the easier it is to even out during this bad time. With the serious GAINS I had in the 1990s and from 2003-2007, once I hit even with this bad time, I'm seriously in the money...this is why I don't mind and would even like the DOW to go lower and lower.

You see Sagarin, I don't need the DOW to get back to 14,000 EVER in order to be at the same level of value as I had then. I could do a quick calculation to determine, but as of today I'm guessing 12,500 would do it for me, and the longer we're below that number, that average just gets easier and easier to hit (because it lowers). I have enough invested and invest enough each year that if the DOW slowly increased to 14,000 by the time I retire in 17 years, I would have more than enough. I expect it will do better than that even as not all of this down market is fueled by reality. Fear has driven it this low (and probably even lower). I'll take advantage of other people's fear. This bad period is going to make my retirement even sweeter than it would have been.

The Concrete Runner wrote:

I got out of the market with most of my money when the index was between 11,000 and 12,000. I predicted a low point of 6,868. I'm going to let it go down to 5,858 before I start buying again.

Sounds awesome to me brother. Timing the market is not what I'm into (as is evidenced by how you missed the peak), but it is people like you (and there are LOTS of you out there) who are just waiting by the sidelines with cash ready to pump up the market. Money in Money Market Accounts is staggeringly high right now, and that money is waiting there to be put back into stocks. I actually hope you get lucky enough to time it right this time so that you make a killing (because I hope the best for people always), but regardless, when that market goes back up, I will make a killing, and you will be one of the millions that helps pump it back up again. So, maybe so that I can make a little bit more, maybe you can wait until the DOW hits 5,000 before you buy?

It's fools like you that hide your head in the sand as to the true realities here...that have voted this know nothing into office so that he can "transform" or "remake" America (his words). Open your eyes man....if that's possible! He's sinking the ship and you're waving pom poms! You and your ilk are responsible for buying into this "hope" and "change" nonsense, and now we're all going to pay....big time! One month! That's all it's been.....one freakin month and look at the devastation he brought us. It's only going to get MUCH worse....BECAUSE of HIM!!!!!!!!! YOU are the delusional one, with recklesss party loyalty. Look at the efforts made to block reforms of Freddie and Fannie from the left. Come on...be real! Here's hoping you sleep well after ushering in this era and this President. Just wait for the foreign policy debacles that follow. Yeah....we're loved now.

Sir Lance,

While I would have said it with a nicer tone than you did, I agree with your sentiment in this post to Sagarin. The economy was in the crapper when Bush was in office, and Bush and McCain and their Republican cronies all were for bailouts, but now it's all Obama's fault? WOW! I sure don't think Obama is a savior, but he's stuck with some very tough situations that require drastic measures to get us out of. McCain would have done similar things had he been elected.

Anyway, nice post Sir Lance.

Still time to buy stocks and catch the falling knife.

How can a guy get off his soap box, especially when he is being erroneously vilified by lesser mortals whose understanding of economics comes from the editorial pages? So, just a couple of SIMPLE points, because this is not a political thread.

Voting for balance is a general thesis and a good one to live by when you've got a government hell bent on swinging too far in one direction, and then, short-sightedly swinging the pendulum all the way back in the other as a knee-jerk reaction. I actually voted to re-elect Clinton, but Clinton also showed that he understood the value and significance of cutting taxes on capital as well as reining in the welfare state. And he was anchored by fiscal conservatives. I switched from libertarian to an independent to "work within the system," but I am rapidly going back there because our government just continues to fail us. I did not vote for McCain, which means I, in essence, did vote for Obama, which is not voting for balance. I will generally vote the fiscal conservative, be it Republican, Democrat, or libertarian. I would have voted for McCain if he had tabbed Romney, yes. I will vote for Obama if we have a fiscally conservative Congress, and he gets religion over the next two years.

This isn't about Buffett's getting trapped by the very types of instruments that he famously characterized as financial weapons of mass destruction. Thanks for the useless link (you're going to educate us? Thanks for the morning laugh). Buffett made some bad bets on the index AFTER the implosion, and he's made bad bets on oil, rails, etc., in effect a bad bet on the economy. As I said, no one is saying this guy isn't smart. But let's see how he does from 2007-2017, not just the credit-bubble inflated years of 1990-2007, which benefited his darlings, the financials, the most as they climbed to over 20% of the S&P 500.

Anyone who has read me over a period of time absolutely knows that Greenspan was the only one basically screaming in his Congressional testimony that Congress needed to rein in the GSEs in a big way, lest they risk a huge structural calamity in the financial system, and that our growing off-balance sheet, Enron-type liabilities needed to be brought back on balance sheet and addressed, as fast as possible. Go back and comb through his testimony as I had to for YEARS. Fell on deaf ears during Clinton's watch, Bush's watch until 2005, and now I sincerely doubt the same message has been conveyed to Obama, because his actions certainly don't indicate an understanding of the gravity of the situation that he confronts.

The Dems are clearly not responsible for the current mess, but they culpable going back to the Clinton era when credit bubble I during his watch led to the tech bubble which crashed and led to credit bubble II during Bush's watch and the housing bubble. The Clinton Administration was largely responsible for expansion of the GSEs, and banks were strong-armed to start making housing "more affordable." Bush expanded the GSEs even further until it was too late. But, the GSEs are largely the bastion of the left, they were levered some 40-50 times, with an implicit government backstop -- in essence the worst kind of irresponsibility. All of this, along with goverment chartering of ratings agencies, served to obsfucate the availability and pricing of credit, and the private sector collateralized it and spread it all over the world.

Anyhow, I was watching Larry Lindsey on CNBC this morning, and he couldn't have been more correct. Part of what is spooking the stock market is the bond market, which is reacting to Obama's attempting to cram his welfare state through. Foreign investors have shown they will willingly subsidize whatever is necessary to save the financial system, but they aren't going to lend to implement a social bonanza. That's why Clinton had to go to China to beg for more "investment." As he put it, at some point, the President must stop campaigning and start governing. The budget has gone from 4% of GDP to around 15% of GDP, and only an extra four percentage points of that will come from domestic savings, much of which is perpetuating the slowdown. Clearly, Obama intends to get his redistribution and welfare pacakage done while he has the political capital, and he corectly surmises that it may not be there in 2010. But, make no mistake, the market is telling you that his policies are dreadful, especially when we are already on the precipice of borrowing, borne out by spreads on CDS equivalent insurance on sovereign debt. We are going to throw the baby out with the bathwater as I've warned all along.

Your post is hilariously stupid. While there is lots of blame to go around (and of course it is not all the repubs fault), you trying to pin the current debacle on Obama's one month of office is beyond irrational. You realize that the news that economy contracted at its worst rate in a quarter century (-6.2% GDP) and AIG losing 62 billion for the worst loss is US corporate history is what made the market crash even more, right? And when did this all happen?? LAST YEAR DOUCHEBAG. It just got reported but it happened while your beloved Bush, the man who just left office with the worst approval rating in the history of the Gallup poll ( 40 pts below Clinton and Reagan, and even 20 pts below Carter) was STILL in office.

Yeah, but that was Obama's fault, right? Because he was running for president, huh?

Republicans got their ownership of all 3 branches of gov't for nearly a decade (yes, more republican appointed justices by far), and now you see where it has gotten us. But sure, blame Obama's one month. Jackass.

Mez...let's take the emotion out of it...

But in essence, at least when it comes to the economy, you are right.

The sense of things here in Washington - at least among those with an economic bent (there are some here with limited interest in politics and infighting - I am one of them) - is that Obama's budget announcement is simply stunning - and not in a good way.

He is a statist and considerably to the left of most politicians and most working and taxpaying Americans, but he earned a legitimate reputation as a good listener to all sides of a position. But his budget reflects a transformation that is greater than anything I have seen in my five decades. All fine and well - voters put him in office - but the economic system is in cardiac arrest and there cannot be worse a time to enact policies that transfers wealth to the Government and the less productive like never before when whatever wealth and productivity we have known is disappearing.

I was in the markets until these last two weeks. I will not get back in them until the administration tilts far more realistic. Just me? I doubt it - the equity markets are voting just like me - and don't think for a moment that the equity markets don't matter - if risk capital doesn't prosper - there are no jobs for the everyday guy in the street. And the bottom line is that people must have opportunities to work.

I hate to simplify things, but first and foremost Obama must fix the banks. And fixing means not propping up asset prices or delaying the write down day of reckoning for the banks, but getting the troubled assets (mostly bad mortgage debt) down pronto to price levels where the asset price ratios to income are reasonable. Would it harm the banks? You bet. But let's get it over quickly and spend 2-3 trillion on that rather than expanding the size of Government right now. Do the essential thing, and do it well, and do it quickly. Bush didn't do it - and pawned it off on Obama. So be it...time for Obama administration to step up.

What would be the most desirable would be for Obama's mega transformational policies to "fail" quickly - permitting his administration to right its course. Any long or drawn out failure could lead to a decade of depression. The market may drive him there. And Geithner and Summers will tell them that, if they are not at his ear already.

Yeah, he missed the peak. But compared to you he has already made a killing by getting out before the crash. Even if he misses the bottom just by getting back in on the way up his portfolio will have outperformed yours substantially.

huh? wrote:

Yeah, he missed the peak. But compared to you he has already made a killing by getting out before the crash. Even if he misses the bottom just by getting back in on the way up his portfolio will have outperformed yours substantially.

I think you need to rethink that. Did he get dividends to the tune of tens of thousands of dollars while not in the market? Did he dollar cost average the whole time so that when the market goes north again he had MORE shares that will explode in value? The average of the DOW since October 2007 is now just under 10,000. He got out at about 11,500. Statistics show that when people "get out of the market" that they actually spend most of the money they would have automatically invested, so did he actually save all that money? Perhaps he did. Timing the market is such a bad idea because you need to get it right on both the up and the down, AND then you need to have the money invested in something else that makes money while you're out, or you're just staying stagnant. He's already missed the peak, so he bought at 14,100 and then guaranteed a loss by selling at 11,500. I've not guaranteed a loss. He can not recover from that loss -- that's a loss he has. I have no such loss and in fact have acquired tons of shares and earned lots in dividends (dividends tend to go UP when the stock prices fall -- though some companies are cutting back now).

He's waiting for about 5,800 DOW. Will be interesting to see if the bottom is about there -- could be. But, for people who want to time the market, when their time hits, there are usually reasons to not buy then...I think it will go lower, etc. Wanting to time the market is just a GREAT way to end up not putting enough in. His way is SUPER risky, and proven to not work over the long run.

I am not taking financial advise from Bruce Buffer, sorry.

Sir Lance-alot wrote:

At least Buffer recognized before many that derivatives were going to sink us all. Since they were so ingrained in so many investments it was nearly impossible to avoid being knocked down by them. But in 2002, yes, 2002, he was warning against catastrophe because of them. Read this:

Oh, and you haven't made any money until you sell flagpole.

Genius, who is trying to pin the fallout on Obama? Is that what you read, because I can see I'm clearly wasting my time if that's the case. It would be like trying to blame bubble bursting I and the recession of 2001 on Bush. That's NOT the point. The point is that much of the crisis was discounted by the markets. But markets are FORWARD-LOOKING, discounting future ecomonic prospects, as well as the outlook for earnings and price stability. The market starting deleveraging, part II the second week in February, the very day Geithner opened his mouth and has gone downhill ever since. Go view a chart for yourself. Rates are creeping up toward the long-end, because the market is spooked about this administration's policies and what it will mean long-term structurally for economic grwoth and the bond market (and I'm not just referring to the welfare state, but to the Fed's printing press and monetizing of the debt and Bernanke's piecemeal "see if this will work" approach that is a year-long in duration now). I've been warning ad-nauseum that government paper is rapidly becoming sub-prime, and the current administration clearly doesn't get it with that idiotic boondoggle proposal.

But you don't have to listen to me. Just watch the market. This isn't political ideology, though you wish it were. You are not an economist or a market strategist, and your utterances and fruitless links and insights make that utterly clear. But you're not the only one on here who "opens his mouth and removes all doubt." You could learn something from me, as much as that makes your ego-ridden skin crawl. The question is, will you listen? I doubt it.

Spot on mez. But I have seen nothing to indicate that our economic strategists fully comprehend the magnitude of the problem themselves. Have Bernanke or Geithner done anything to give you that confidence? You would be alone if so. As I said, this isn't a political debate, nut an economic one. Let's hope O gets religion, and quickly, because we are at the "tipping point," and I'm not sure we haven't crossed it.

One more thing....I don't think overly politicizing this issue is helpful. The causes of why we are here are many. In fact, if one looks at the growth of debt - 3X times GDP growth over the last 20 years - this problem is a long time in the making.

For some reason -- all of us - politicians of all stripes included - continually subsidized cheap credit - and the kind of price credit should have obtained was never reached. Credit was very dear in the recession of the early 80's - but the destructive force of too much leverage was kept out of the hands of many.

My point above (I should have posted as Mez redux) is that there are concrete things that should be done - and Obama must resist the temptation - which simply has to be tantalizing given the political leanings - to exploit a crisis for mega change when the patient - our economy - is in an ICU.

Fix the banks. Find a way to actually mark to market the level III assets and get them off the books - there are several plans that do it - and be honest and pony up the money to cover the disastrous losses - now. 2-3 trillion now will seem cheap later - as hard as it is to believe. Again, do one essential thing well and quickly. Politicians find class warfare fashionable, and the bankers want to keep their jobs - so delaying is the order of the day. But forget it - get it over with now.

Would there still be pain? Of course, but without functioning financial intermediaries, we are operating without oil in the engine and perhaps not a functioning transmission.

Fixing the bank mess right now could be as easy as offering 4% fixed rate mortgages to anyone who qualifies (and those qualifications should be TOUGH for those who don't yet have a home and much easier to meet for those who are in one with a bad mortgage, but available to anyone in good standing who would like to buy or refinance a home). Have a window of opportunity -- 12 months, 18 months, whatever. This enables people to keep their homes, allows others to drastically increase their spendable income (which helps the economy) and allows banks to not have to take back a ton of homes. If they would do this, it would go a long way to fixing the housing crisis on which would help the economy greatly, and it wouldn't cost a ton either.

I like Obama and think drastic action is necessary, but I'm not on board with everything he's doing.

God, it's like banging my head against the wall.

Sagarin wrote:

God, it's like banging my head against the wall.

There's a statement that says nothing.