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

I'm not an expert, but if people are holding stuff that has lost 90% of its value, I say the time to sell has passed. Maybe sell bits as needed for the capital loss, but don't sell everything. Obviously the decision is hard with something like GM, that probably should go bankrupt.

kudzurunner wrote:

Please address this specific dilemma. Would you, for example, advise folks who hold ANY bank stocks or ANY US auto mfr. stocks to sell now, even at hugely depressed prices, for fear of losing it all?

How do you make money "trading" if you are not on the inside. And what kind of trading has a time frame as long as five or seven years.

Flagpole = Cramer

Peeps = Schiff

How much money have you made with Cramer, and how much money have you made with Schiff...

You should dump your bank and auto stocks. The former are unstable, the latter are bankrupt.

If you are in mutual funds you are in stocks; so you are in danger of being wiped out; you also have a chance at solid gains. But not if you hold bank stocks or auto stocks, or value funds that concentrate in these. At best the bank positions will be diluted; but the auto makers are heading to Chapter 11, and even if common equity is not wiped out, it will take a steep haircut.

I've put 5k (using dollar cost averaging) into the market (five separate Vanguard mutual funds) in January and I'm already down 17% wtf. I wish I didn't listen to Flagpole's advice. I don't feel like waiting 10+ years to break even, should I suck up the loss and sell before I lose more?

"But you haven't lost until you sell" BS. I could've put that in a CD - at least I'd be up 3% instead of down 17% and counting. Even when I used to play poker I never had swings like this...

hate the stock market wrote:

should I suck up the loss and sell before I lose more?

That's up to you but I would.

Mutual funds are terrible investments, because you have absolutely no control of them.

However they are a goldmine for the brokers.

Flagpole is the Dr. Phil of LR investors...dispensing advice in easy bite-size sugar coated feel-good pills, with a healthy dose of self-righteous middle class opprobrium thrown in to remind everyone that those who got shafted, deserved it.

The market is low (cheap? Who knows), and productive capacity in the US is in excess.

Could it go lower? Of course...the stock market is the sum total of EXPECTATIONS of future residual earnings of productive capacity less liabilities, and those expectations are quite negative.

Buy some now. Buy some next month. Buy some at the end of the year. Its certainly cheaper than 2yrs ago. If you are just getting in, don't worry about it.

If you are funding a liability <2-3yrs into the future, do not put your money in stocks. You *could* be disappointed. You could also be very surprised - too much uncertainty.

Despite the rally '32-'37, it really took the US market 30 years to recover from the crash of '29-'32. New highs were not made until the 60s. So 14k for the Dow might not happen until 2030 at LEAST.

16/10 for the well-wrought and even-keeled diss on flagpole "sub s&p mile" willy and sagarin.

bravo!

Flagpole wrote:

Based on what others are saying though (specifically Jeremy Grantham and Warren Buffett), I'll tell you what I would do in your situation...

Since you bring up Buffet...

Buffett admits mistakes in annual Berkshire letter

Warren Buffett tells Berkshire Hathaway shareholders he made investing mistakes in 2008

* Josh Funk, AP Business Writer

* Saturday February 28, 2009, 9:12 am EST

* Yahoo! Buzz

* Print

OMAHA, Neb. (AP) -- Billionaire Warren Buffett says he made at least one major investing mistake last year by buying a large amount of ConocoPhillips stock when oil and gas prices were near their peak.

The famous investor recounted his errors in his annual letter to Berkshire Hathaway shareholders released Saturday morning.

Berkshire increased its stake in ConocoPhillips from 17.5 million shares in 2007 to 84.9 million shares at the end of 2008.

Buffett says he did not anticipate last year's dramatic fall in energy prices, so his decision cost Berkshire shareholders several billion dollars.

Buffett says he also spent $244 million on stock in two Irish banks that appeared cheap. But since then, he's had to write down the value of those purchases to $27 million.

Berkshire Hathaway Inc.:

Apparently that writer got his pee pee whacked for telling the truth and had to update the story and gloss over Buffets screw ups. I saw it on Yahoo! earlier and when I went back to the same exact link the title had been changed and the story softened up dramatically. Buffet as an oracle is way overrated.

Flagpole is a double talker who argues one view point but always covers his ass by adding a "who knows?" at the end of everything he hints as fact.

"you gotta be in it to win it, dont sit on the sideline, the market is at a 10 year low, blah blah, could it go lower? who knows? should you sit on the sideline? who knows? I wouldnt, but then again, who knows, after all even if im wrong, im in it for the long haul, so that makes me right, unless in the future something happens, cuz, who knows....i do....but maybe not.

J.R. wrote:

That's up to you but I would.

J.R., just curious. Did you switch your 401k/IRA contributions to cash/money market? I've had 90/10 in stocks but my overall balances have been the same or less for the past 6 months. Nothing like putting in a 5k lump sum contribution for my 2008 Roth IRA to see it go down to 4500 3 weeks later!!

Yeah, Buffett made some mistakes in the last year -- so did everyone -- and he's made mistakes before that too. No one is perfect. I sure don't think he's an Oracle, but for a brief time he was the world's richest man, and he got that way by betting correctly most of the time on stocks. It's definitely noteworthy when he says to do something -- he's back in the market, and Grantham says the next 5-7 years will be very good ones -- so either choose to believe them or believe it's best to buy guns and gold and head for the hills.

Almost every day there are more and more economists saying it's either time or just about time to get back in, and the reasons for doing so are mounting. Again, you either get in or you don't -- I couldn't care less...not like you're helping me with my retirement.

Hayduke wrote:

Flagpole is a double talker who argues one view point but always covers his ass by adding a "who knows?" at the end of everything he hints as fact.

"you gotta be in it to win it, dont sit on the sideline, the market is at a 10 year low, blah blah, could it go lower? who knows? should you sit on the sideline? who knows? I wouldnt, but then again, who knows, after all even if im wrong, im in it for the long haul, so that makes me right, unless in the future something happens, cuz, who knows....i do....but maybe not.

INCORRECT! I've said time and time again that I'm cofident the market will go back up, and well before I retire too. Where I've said "who knows" is ONLY with regard to how low the market will go and exactly when it will go up. Regarding its eventual turn north, about that I am certain.

kudzurunner,

I would NOT want to make the choice you have before you, and that's why I never put myself in that kind of position. I am never more than 20% in any one sector of the market for that very reason. If I had lots of bank stocks right now I wouldn't be happy, but I sure in hell wouldn't sell them NOW -- proabbly would have back when Bear Stearns went under. Lots of economists on the talking head shows on Friday were beginning to turn bullish on bank stocks. Jim Cramer still says to stay away though. I have SOME in my myriad of mutual funds, but not a lot.

hate the stock market wrote:

J.R., just curious. Did you switch your 401k/IRA contributions to cash/money market? I've had 90/10 in stocks but my overall balances have been the same or less for the past 6 months. Nothing like putting in a 5k lump sum contribution for my 2008 Roth IRA to see it go down to 4500 3 weeks later!!

I transfered 401k or 403b whatever it was, and mutual funds to self directed IRAs. At first I invested in precious metal stocks and a few others that did quite well with tremendous gains but then they started coming down. It didn't make sense to me to keep holding them when they were coming back down so I sold them. Then I did a lot of experimenting to figure out a method that works for me and have been using it since then, based on my own personality and price action. I'm still using the same self directed accounts, where the cash balance is kept in money market between trades.

Flagpole wrote:

[

INCORRECT! I've said time and time again that I'm cofident the market will go back up, and well before I retire too. Where I've said "who knows" is ONLY with regard to how low the market will go and exactly when it will go up. Regarding its eventual turn north, about that I am certain.

Hold long term, thats your advice? Thank you Mr Buffet.

My point is that people like you never have any insight to specific questions. You offer generic advice that isnt asked for, and then get very quiet when people treat you like the expert you want so much to be.

Hayduke wrote:

Hold long term, thats your advice? Thank you Mr Buffet.

My point is that people like you never have any insight to specific questions. You offer generic advice that isnt asked for, and then get very quiet when people treat you like the expert you want so much to be.

1) When did I EVER say I was an expert on buying for the short term in stocks? NEVER brother. I don't invest in that way (and most people who do SHOULDN'T), and because I don't I'm not an expert in it. I likely will invest in individual stocks a little bit (never less than 5 stocks at any one time) once my house is paid off in about 6 more years (because that's my criteria for that) and then at that time, I will school myself on some individual stocks, and I will then look at a variety of factors which will tell me when to sell or buy. Don't look for other people to be your savior brother. Why should you care what the level of my advice is (which is pretty damn solid anyway)? Educate yourself and be your own adviser. Go ahead and buy stocks and sell them frequently if you want. MOST people who do that aren't in a position to do so. Jim Cramer even tells people to be maxing out their retirement plans first and then spend "Mad Money" on individual stocks (which he says to never own less than 5, spend an hour each week researching each stock you own, and never have more than 20% in any one sector of the market); that is all GREAT advice. Where people run into problems is when they try to make a quick buck or get something for nothing -- GREED brings people down.

2) Buy and hold by the way is NOT my sole strategy, and certainly not for everyone. I wouldn't be recommending you hold on to everything now if you are close to retirement, but depending on how much you have, you MIGHT have to hold on to them a little while longer and hope they go back up -- that's a personal decision. Anyone under 50 though right now who is getting scared and selling their stocks is making a big mistake in my opinion. I am not selling anything (and by the way, 13% of my portfolio is in bonds), but I'm just 42 and have a long way to go until retirement yet. Also, even with the downturn I'm still WAY ahead of what I've ever put in the market, even including inflation. Selling now for people under 50 is a really really bad idea, and I'm hardly on an island with that opinion -- almost all financial guys right now are saying to hold pat with your stocks.

Market below 7000, abandon ship.

ships going down... wrote:

Market below 7000, abandon ship.

For most people, that would be a really bad idea; certainly would be a bad idea for me. I will enjoy a DOW below 7000 or below 4000 even really. Nothing in this market would surprise me -- too many of you people are freaked out. Not all of the freak out is justified. Some of you are just too young to remember gas lines in the 70s, the S&L debacle, the Chrysler rescue. Some of what we're seeing now is unprecedented, but it isn't ALL unprecedented, and it's not Depression level stuff either.

So, for most people on here who have been in the market for 12 years or less, a 7000 DOW is about where you got in and then you've been buying at higher prices than that for a long time, and now we're back to 7000 (and likely less by end of the day today). So, NOW you want to abandon ship? Buy high and sell low? What's that about? If you've only been in for 12 years or less, then you are probably younger than I am. PLENTY of time to rebound from where it is. If you want to be pessimistic so that you don't believe it will ever get back to 14,100, then be that, but do you think it will get back to 10,000? Or 9,000? That's better than selling today. I remain optimistic though -- we will have a roaring economy once again. We'll have to figure out how to pay the deficit down though then, but a roaring economy should help with that.