Trying to Look Forward

For the last couple of weeks, the tone to many of my blog posts has been more constructive on the market than I've been in quite a while. I've even responded to the last two TickerSense Blogger Polls as bullish.

I am far from all in, as discussed at length in this week's video, but down 40% is a good time to start looking here and abroad.

As I try to look forward, it seems that (repeat idea coming here) the US is closer to a secular event while many countries, ex-Western Europe and Japan, have more cyclical issues.

The implication of this theory is that the countries that are only in cyclical downturns will begin to come back faster than countries dealing with more secular issues. A couple of places that might be in the club are Norway, Chile and Israel. Not quite making the theoretical cut include the US and maybe Korea. Korea  made more news this weekend. (I've never owned Korea and I'm not sure how popular it has been as an investment destination.)

Another repeat point is that I'm not focused on trying to correctly buy a bottom. I'm just trying to recognize the panic that has been created and lean a little against that panic.

Another segment to possibly favor could be stocks with their own long-term themes. This gets to be fairly subjective, but to get the dialog moving a little, this list might include infrastructure (projects that can get funding), alternative energy, and aging baby boomers. None of these are new categories; they have all had fits and starts but the money is going to be spent eventually.

One last idea (for now) is absolute return. There are plenty of products to research. Some have done well during this bear market and some have not. I have had good luck with the Rydex Managed Futures Fund (RYMFX). It had a rough stretch for a short while when crude oil started to roll over, but the methodology took oil out, and the fund is a couple of percentage points from its all time high.

Unfortunately for some folks, these types of ideas do not lend themselves to broad based index funds. While broad based has never been my first choice, the scenario I am laying out means slower average growth for US equities (something I have been theorizing for a while now)--this can't be shocking, since we're down on the decade.

So if the US averages 5% for some extended period you could either double your savings rate or seek out "normal" returns elsewhere.

Comments

[Smarty_Pants:]

Tomorrow, tomorrow,
There's always tomorrow,
It's only a day away.

2008 Oct 20 05:05 PM

[ETFnerd:]

roger has a penchant for saying nothing with a lot of words. would be interested in knowing what his clients are saying about the portfolios that he manages for them, preferably without editing for expleitives.

2008 Oct 20 05:34 PM

[timski:]

No actionable items, again. Sure, there might be compliance issues with speaking about client holdings if you're a money manager, but really Roger: couldn't you spend a bit of time with some analysis of particular comapanies which are NOT currently held by you?? I agree with ETFnerd, there's a lot of space taken up by little useful (to the average investor) substance, and this is disappointing for someone with your knowledge.

2008 Oct 20 05:51 PM

[moonbat1775:]

Yesterday, all my bubbles seemed so far away
now it seems that they are here to stay
oh, i believe in honest mo nay.

2008 Oct 20 06:30 PM

[phdinsuntan...:]

Net derivatives Risk 14.500
World GDP 65.610

Chile = copper
Norway = oil
Israel, oranges?

i guess yen, swiss francs still the best, maybe some gold.

2008 Oct 20 06:39 PM

[sickofthehype:]

Article should have been titled 'TRYING TO MAKE AN ARTICLE'.

2008 Oct 20 07:26 PM

[Kingsley An...:]

I can't someone lets this guy handle their. money. I wouldn't trust him with two dollars to go pick me up a coffee.

2008 Oct 20 08:24 PM

[Kingsley An...:]

If I recall correctly, he claimed this would be a "run of the mill bear market," or word to that effect. I don't think he was banking on a forty percent decline. Great call, swami.

2008 Oct 20 08:26 PM

[ashizashiz:]

2 Things
Oct. 15 (Bloomberg) -- Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 billion in government investment. Getting them to lend it out may prove a tougher sell. ``The truth of the matter is, they can't put a gun to their head and say you have to lend this money,'' said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington.

Actually Charlie, he CAN put a gun to their heads and make them do whatever he wants them to do. That's the whole point here. Spanky Paulson and his band of merry scumbags are the new Fascists: if they cannot get their way through lying (Which of course they did to Congress, but really they didn't have to because our Congress is replete with know-nothing, self-concerned, shit stains who care about as much for the common man as I care for the dead fly that is decomposing under my empty refrigerator...), they will get their way through coercion and force. It's that simple.

ALEXANDRIA (Louisiana), USA - US PRESIDENT George W. Bush said on Monday that he thought the US public's 'near panic' over the global financial crisis was easing as government-led economic rescue efforts paid off. After a round table with local business leaders, Mr Bush said 'I have heard that people's attitudes are beginning to change, from a period of intense concerns - and I would call it near panic - to being more relaxed.' People are 'beginning to see the effects of changes and the liquidity that is being pumped in the system,' said Mr Bush, referring to the US$700 billion (S$1 trillion) bailout plan.

I'm not sure who's worse, Bush or all of the people who believe him. Wow, it's really like living in a science fiction world, in which all of the citizens have their brains sucked out by some Fascist pig alien monster, and then they all stare blankly into the abyss with brain-numbing, empty smiles on their lifeless faces. First off, Bush is a liar and he's been lying to us for 8 years. That is pretty hard to refute. Secondly, the overwhelming majority of Americans have absolutely no concept either (a) monetary theory or (b) ever having had ONE original thought in their entire lives. The pretty little talking bobble heads on CNN and CNBC tell us what to think, what to feel...and that's what we do. The majority of Americans have never read any book, let alone a book about (God Forbid) economics. We watch TV and eat fast food in a gluttonous orgy of utter mindlessness. And George Bush's lies are spread by the empty-headed simps who sit in front of the FOX NEWS cameras and spew ANYTHING that they are told to spew. It boggles the mind. Bush says things are getting better, because he NEEDS things to SEEM like they're getting better. And we believe him because, well, because we are dumb. I mean, what else is there to say? Sorry for being so cold, but reality cannot be changed. And the reality here is that Bush is a liar, Paulson is a liar, and the entire system of FRACTIONAL RESERVE BANKING is going right down the shitter.

The global economy is in deep DEEP trouble, and hurling trillions of dollars of OUR $$$ at the situation, in order to increase lending and thus increase our level of DEBT, when it's lending and DEBT that got us into this mess in the 1st place, is madness.

So...I sit here in utter disbelief at how obtuse we are. Sure, in the near term things will appear brighter. The DOW will rise, because "panic and worry" will have been replaced by "optimism". I hate to tell you this: The situation that we find ourselves in has NOTHING TO DO WITH EMOTIONS LIKE PANIC OR CONFIDENCE, it has to do with DEBT. DEBT!!!!! And the more we allow criminals like Paulson and Bush to convince us to throw money at the crisis, the more disastrous will be the eventual outcome.

Einstein said it best:Insanity: doing the same thing over and over again and expecting different results.

2008 Oct 21 10:05 AM

[alajac:]

That big rally was on p-poor volume. This baby is going DOWN BIG.

To those who search in vain for 'job growth',
GET WITH THE 21ST CENTURY:
ROBOTS AND COMPUTERS
DO ALL OF THE ACTUAL PRODUCTIVE LABOR.
All that is left is arts, crafts, service,
and sh*t work that isn't profitable to automate
as long as there are $8/hr wage slaves
lined up for miles for every $8/hr job opening.

You can't get bank transparency when the government is guaranteeing the losses. FDIC and every other kind of government guarantee has to go.

Make the banks earn the bailout by giving them the money via equal-dollar distribution to every legal US resident ($700B divided by 350M=$2000 ea.) Then no other stimulus is needed. They'll have to get transparent and extend credit to earn the deposits.

When all governments issue new currency in this manner, there will no longer be an illegal immigration problem.

Write-in Alan Jacquemotte for US President

to show support for this plan,

and your disdain for the other candidates, who, unlike Alan,

didn't see this coming and don't know what to do about it.

2008 Oct 21 03:29 PM