I'm feeling half smart.
(Forgive the egocentricity of this entry. But it is in the forefront of my mind. I should feel fortunate that I have savings to worry about at all. I know the stock market is not a factor in many people's lives...)
I took one half of the available money out of the stock market in mid-July, but put it back in on Wednesday, the 3rd of August.
If I had waited just one more day! There was no reason to jump back in that day, I just had a moment to call my financial guy so I did.
I had avoided the first third of the downturn. I also put 35% into a 'safe' investment, which so far has proven to be pretty safe-- that is, it's dropped about 1% when the rest of the market has dropped 10 times that much.
So by my reckoning, I saved myself about half the available pain.
However, when I say available, I could've sold the other half in cash in mid-July as well -- but that seemed more complicated and more like panic selling.
So that makes me about one quarter smart.
Still -- I coulda been a contender. I could have crowed. Instead, I'm eating crow.
What now? I haven't a clue. And when I don't have a clue, I tend to just keep doing what I'm doing.
I think I have a tendency to not give myself enough 'lag' time. I think it's because I somehow believe the markets are more efficient than they actually are. I get the basic swing right, but the timing wrong.
I remember back to when I decided the comic bubble was about to pop. It was in March, (94?) and I was making my orders for May product. I cut back drastically on my orders for June, July, and August, believing I could sell any overflow from April, May during our 'busy' months.
What I didn't see coming was that the majority of the heavily ordered April, May product, didn't show up until Sept, Oct. and Nov. So even though I was right about the timing -- amazingly so -- I didn't realize there would be a six month lag, or delay.
I tend to be pretty good about my analysis, but I don't give it enough time to develop.
That's why, when this recession started, I told myself in advance not to expect any improvement in sales for at least 7 years, probably longer. 4 years into the recession, which I don't think ever went away for those of us on Main St., that estimate is looking a little low.
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9 comments:
Dunc, anybody who tries to time the market is crazy, and anybody who says he's got a system for beating the market is as crazy as those people who say they've got a system for beating the roulette wheel. Quit trying to play J.P. Morgan. Get yourself a well-diversified portfolio with not more than 30% in equities and stick with it.
I mostly agree with that.
But I know in my business there are times to get out to protect yourself, and times to get in to maximize returns.
In VERY broad strokes.
"But I know in my business there are times to get out to protect yourself, and times to get in to maximize returns."
True, but the stock market is influenced by too many variables and too many people -- sometimes behaving rationally, often not -- for anybody to confidently determine when to get in and when to get out.
What usually happens when amateurs like you and me try to time the market is that we end up panic-selling on the downswings ("locking in our losses") and buying on the upswings -- a great way to lose money fast.
But knowing that, why would you do it?
That would be like I was buying 3 weeks ago, and selling over the last 3 days, and I did the opposite.
The only other time I made a move was putting what little cash we had in our IRA's in the market in March, 2009, at the bottom of the market.
These moves seemed obvious. Like that a housing crash was coming was obvious.
Just because I didn't know exactly WHEN the housing crash was going to happen doesn't mean I couldn't make some educated moves.
It seems to me large timing issues are opportunities.
Not day to day trading.
I could be wrong. So I'm not betting everything I got, but trying to moderate the bigger swings with some hedging.
"But knowing that, why would you do it?"
Because emotion overrides reason sometimes. I'm not saying I do it, but if I tried to time the market I probably would.
Besides, the anxiety would be too great. Same reason I don't enjoy gambling much -- only for fairly small sums.
Just because I didn't know exactly WHEN the housing crash was going to happen doesn't mean I couldn't make some educated moves.
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There were a 1,000 'smart-guys' on wall-st playing the housing crash, but only one guy won big and won $1B that was paulsen, everybody else lost on timing. The problem when your going 'short' on markets is there is a time premium loss, just like playing 'futures' .. Thus your timing has to be exact, in the case of paulsen it was just dumb-luck.
But all great fortunes in human-history are about being in the right place at the right time.
Today its NOT about get-rich-quick, its about 'survival', but you should have all seen this coming 20 years ago, I could have sold out of real estate in 2004, but I waited until 2008, but I'm still ahead because now its down even lower, with NO HOPE of coming back for 10 years.
Today Bernanke&Geithner announced zero interest for 2 years, this means as HOMER always told us that the US economy will now be like JAPAN forever in the future, albeit with rioting when the non-white don't get their check. Austerity works in japan because of conformance, .. austerity in the USA will create a civil war, just another reason not to be there.
The dollar will collapse, you should have diversified out of the DOLLAR stock-market, and dollar assets a long time ago. The future austerity will ban flight of capital in every form. Historically when nations fail capital and the people flee.
There will be hyper-inflation in the USA because the dollar will go off reserve currency status, when that happens OIL will go ASTRO, which means pump prices go to $10/gal and everything in US is about 'cheap portable energy', when it isn't cheap anymore, there will be horrible inflation, that will make everyone crazy.
The rest of the world has no choice, there is no point of holding a currency that is losing 30% a year. No point unless your an idiot.
'smart guys' you never hear about, only dumb stick around for another hand, through out history the smart guys who won a big hand, cashed out and left the game, all those that stuck around and doubled the bet like Bend-RE (tm) lost their ass, ...
largely a mythology, just study history prior to 1920's companys issued bonds that paid interest, and held title to debt and a company liquidation, then in the 1920's corporations started selling stock that wasn't worth shit, you could call a BOND and demand cash, also a company could only create FINITE bonds because it was real DEBT on the books, but see stock could be PULLED out of the ASS like FED-RES print currency the GREATEST fraud in history is when the US-CORPORATION started selling stock post 1920's.
Today with the OREO the US government ONLY exists to protect that PONZI aka US stock market.
Is it safe?? Fuck no? Buy US stock your playing with fire, ...
Sure south-sea bubble and tulip mania was stock and railroads but they were all speculation that ended badly, thus prior to 1920's folks didn't BUY that shit, ... but during the 1920's GREED the stock market myth was created, and then it died until the 1950's and then ran the MYTH for 50 years, and now of course we're in another depression, but essentially ALL stock is a PONZI and worthless.
Because emotion overrides reason sometimes. I'm not saying I do it, but if I tried to time the market I probably would.
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Many good books, BUFFET, Faber, all say the same thing, be fearful when everybody is greedy, be greedy when everybody is fearful. Essentially be a contrarian, but there is more to it than that,
Like now there are games that win and games that lose. Currency is a good bet if your with a winner, and gold long haul.
On the other hand shorting and futures, and options will always can loss of capital, they're rigged games.
Like now you could take your chance and buy BAC ( bank america ) losing 10% a day, but personally this is why I always say this shit ain't coming back. With all the bad loans that BAC is carrying they currently have a negative net worth, even though the SEC say they're trading for less than bookvalue. The trouble is for almost every 'book' in the USA the books are cooked. Intangibles are assets, and real assets are collateral.
The back door of FED-RES has been open now for 3 years just to cover the losses on the CDS bets. The MTG RE shit is still hiding in the open and the shit isn't even at the worst.
The problem with playing the game now is you can follow the rules, but it has to be companys that make real product and have real assets, the trouble is most US corporations are in debt to the eye socket, as this has been the game since the 1980's.
Now we'll have a great RESET, which I think why the smart money is all in GOLD & CHF ( swiss franc ). Once the reset takes place then will be the time to hunt and buy bargains, because only a few will have been smart enough to hide and keep their powder dry.
By 'RESET' I mean the new SDR currency by the BRIC's or G20, until the world dumps the dollar and finds a new reserve of trust everything will be like now SGD, CHF, and GOLD. A little JPY, ... but essentially safe places to ride the storm.
Like I have long said the USA will revert to a PENAL colony something it does very well. Given the ameriKKKan love of sodomy.
Diversified portfolio ... Let's see
If you diverified in the DOW 10 years ago you would see a total return of 4%. That's 4% total, in other words a piggy bank at USBank would have been better in a savings account. Of course in reality in the last 12 year ALL returns from the stock market have been negative to date.
Had you held dollars you would have lost 40%.
Had you bought gold 10 years ago you would see a 300% return.
HBM is MSM to the bone, and these folks love to repeat mantras like 'buy & hold' and 'diversify', ... but unless you diversify outside of the USA, and did so 10 years ago, your BendFucked(tm).
Had you kept your money in a swiss account back 10 years ago you would be 87% richer not counting interest on your money.
Gold&CHF aren't going up, what you have to understand is that the US dollar has and is collapsing.
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