Preparing for the Fall 101 comments
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The market is widely referred to as a discounting mechanism. However, its ability to discount anything extends only as far as the collective knowledge of its participants. And to be blunt, the vast majority of today’s investors— professional or otherwise— know little if anything about making money in the market.
With the advent of discount brokerages— E*trade (ETFC), Ameritrade (AMTD), etc— in the late ‘90s, a huge wave of novice investors entered the US financial markets. Between 1990 and 2000, the number of US households invested in mutual funds doubled from 25 million to 50 million. This wave of new, uninformed money supported two major trends: the Tech Bubble, and the rise of the financial media.
Regarding the latter, in 1990, stock market developments were relegated to 15 minutes of coverage on major news programs. Only ten years later, there were at least three entire channels—CNBC, Bloomberg, CNNfn— devoted solely to financial markets. The commentators and hosts of these shows looked good on camera, spoke knowledgably enough about markets, but in reality, didn’t have a clue what they were talking about. Their job was to provide content in large quantities, not content of high quality.
The issue of ignorance extends beyond individual investors to professional traders. As Bill King put it in an earlier essay, “There is a whole generation of traders whose knowledge of investing and financial history dates back to 1990 at most. Put another way, there are thousands and thousands of guys in their 40s who trade for a living and have never seen a real bear market or recession.”
These investors, while more sophisticated than their novice counterparts, are almost equally ignorant of any market development outside of their trading models and investment frameworks.
I mention all of this to illuminate why the market has rallied in the last two months, why investors need to be extremely cautious right now, and why the potential for a major market plunge in the coming months has increased dramatically.
As much as the financial media likes to refer to the Bear Stearns bailout and the Federal Reserve’s other recent actions as unprecedented, the reality is that similar events have occurred in the past. And history offers some striking advice as to what to expect for the remainder of 2008.
There have been three March financial crisis and subsequent interventions in the 20th century alone—1907, 1929, and 1980. And while the ones intervening changed— JP Morgan in 1907, Herbert Hoover in 1929, and Jimmy Carter in 1980— the effects of the interventions were always the same: The intervention marked a temporary bottom followed by a brief two to three month rally, then a very ugly fall (literally and seasonally).
Even if we overlook the intervention, the market has followed a similar pattern— brief summer rally followed by an awful fall— in years in which the first quarter was soft or recessionary. It did this in 1990, 2000, 2001, and 2002. Thus far, the market has followed this pattern to a “T”— the first quarter for 2008 was definitely a recessionary one and stocks have since posted a 2-3 month rally.
Thus, I believe the market is ripe for a major (20% or more) downturn in the coming months. Novice investors would do well to shift a sizable portion of their portfolios to cash.
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This article has 101 comments:
Why cash? Historically, when stocks crashed, gold rallied. See Year 2002 chart: finance.yahoo.com/q/bc...
I have learned a great deal, and am facinated and hooked, but I remain 90% in cash since fall of '07. I can figure out what should do well and why, on many occasions, but this market is too scarey for me to risk losing my money!
And if there is anytime during our lifetimes that "a coming doom" may actually come to pass, it's now.
never in the history of the federal reserve have they exposed themselves to significant balance sheet risk by directly backing funding of one private party to acquire another. this was unprecedented and it was a panic move, which tells you the mindset of the federal reserve about the stability of our financial system.
those legions of investors who have come to think that the all-powerful federal reserve can solve the collapse of housing, the evaporation of credit, a declining dollar, rising inflation and an increasingly-pinched consumer stretched to the limit because of a quadrupling of oil prices over the last 4 years i have news for you:
it ain't going to happen.
anyone who is strictly long stocks in this environment needs to reevaluate their strategy. we've just begun to feel the effects of years of cheap and easy credit. and the fed is out of ammunition.
Fact: The US stock market is now the most manipulated & corrupt market in the free world. Our own gov't and FED admit that they "influence" the direction of the market, thus making it very hard to game the market for those of us like me who use about 15% of our portfolios to "boost" returns by making directional bets on the market"
And I have been at this for 15 years already. I cant even imagine a novice trying to make money here.
However....
The 85% of my portfolio that is "long term" is, and continues to be, invested in individual stocks, that trade directly on exchanges, in countries that, compared to the US, are fiscally more responsible, do not manipulate their so called free markets, and do not face an insane amount of entitlement program problems over the next 25 years.
Thats probably why I am up 8.5% this year so far, and up over 120% in my portfolio since Jan 1, 2000.
To invest and "beat" Wall Street you have to ignore the noise and lies, and "buy them when nobody wants them" (and no, we are not even close to that point).
And when stocks are high and you have made boatloads you say to everyone else "Here, take mine"
That is how you beat Wall Street. Not by watching Mad Money, Fast Money, etc.
Good luck to you all. I really hope, that at some point, the criminals running our country into the ground, Kudlow and the rest of the bold faced liars on CNBC ,et al, get theirs for all their lies.
Don't think for a second that all the multi-millionaire CNBC anchors give a damn about the market going down, nor for the average american who is getting killed and going to get killed even more, regardless of how they spin it on TV.
Fast/Mad money are just noises.
Read Fischer Black.
What a farce, ECB at least has a clear focus. Life is simple, who complicated it?
I did not say that...
How well have the professionals done lately? Hmmm... doesnt look to me like the professionals know their arses from their elbows either! Honestly, I dont think I could lose billions if I tried to.
Sad truth, most professionals are greedy idiots who participate in rising markets. Anyone can make money in a bull market, anyone. Many hedge fund managers are ex atheletes and others who came into a little money and decided to start investing for others too. Time has shown now, that the bull is gone, that they SUCK. I consistently outperform the S&P, 80% of all mutual funds dont. But I am a poor novice who doesnt know how to make money. Give us a break!!! Most investors simply dont have the TIME, its not their job.
He has one thing right, the fall is coming.
What we're looking at right now is a consumer under pressure, unable to spend at the rate he was before. Yesterday's performance was a perfect storm of rising oil prices and unemployment. Rising oil prices affect the ability of some businesses to survive, much less operate at a profit.
Still, gas is cheap in the US, about half of what it is in Europe. Homes are cheap compared to Europe, and getting cheaper. Unemployment is 5.5%, but that's a rate that most European countries would love to have.
I think that the financial news channels tend to drive the markets faster in either direction, but I'm not sure they have any long-lasting effect. America has incredibly strong brands that will be dominant for generations, and these brands are doing well in developing markets. I'm a skittish bull these days, doing OK on my energy-related stocks, getting slaughtered on BAC, and breaking about even on my REITs.
There is a lot of liquidity around waiting for a signal to join the party. We'll see what happens to that money when the market makes a move up.
Thats over for the foreseeable future. We are going to see an epic bust in home prices, and consumer spending. Combined with severe contraction in credit, we will have deflation in all assets and a sever e and protracted economic downturn.
Consumers have finally noticed that it takes two parents working to maintain a standard of living that one did 30 yrs ago, and that everyones quality of life and family is actually worse. Government lies about inflation, employment, and prices used to propagate the bubble, in addition to blatant market manipulations, have destroyed all confidence in the governmental oversight of financial markets.
If it gets bad enough, we could see a revolt against the US government and pigmen.
@The rest of the commentors - I'm not selling, a long bear market would be a wonderful thing. Scare as many as you can, I need to keep buy for the next two years and a new bull would only slow me down.
Is what's happening around you ($150 oil, rising unemployment, declining home prices, banks struggling, etc.,) sign of current and continuing prosperity?
I can't predict the future with certainty, but the present sure looks pretty bad. Better to sit out and miss a small gain than to blindly stay put and suffer a huge loss.
Get out, sit back, relax and let the skies turn blue again...
Check out SDS... is an Ultrashort (2X inverse) fund on the S&P... up about 7% today alone and doing good for the year.And DBC is a good all around commodity bet. It went up 6% today. Being in the stock market is like gambling to a degree, but my gut is definitely more involved this time. And the market is going to go on a diet. We are going to get a reality check. We are basically going to resemble Europe as our unemployment and gas goes up....
We had a 1st week in 2008 that was DOWN;a DOWN JAN;& NEGATIVE MoMo!
also the DOW UTIL's are tracing out the same topping pattern that it did in #2001. Then as it appears now JUNE will drop off of a cliff! The trigger? who knows, but the news will accomodate the trend!
The fact that America suffers from an epidemic of obesity is a spiritual symbol of our culture. It couldn't get anymore literal.
Study a movement called Calorie Restriction. An adequate survival level for calorie is around 1000 per person.
And for the record, I can be a frivolous carbon consuming fool at times. But I definitely welcome any changes. Hopefully I can handle it too.
That index run-up was totally manipulated - volume has been 1/3 of a true, expected rally's volume.
If this article was posted even a few days earlier, it would have some value. Posting this after the friday bloodbath shows he's just another lemming following the herd to create fear after a down market, they are the same ones that were posting bullish crap when the sp500 was at a double top at 1420 a few weeks ago.
Dont listen to any of those "experts", seekingalpha is a cesspool full of those amateurs. Use your own technical and price/volume/time, filter out all the noise. I belive we still have a few relatively large down days left, then the market should be bottoming out, setting up for a good summer rally.
Unfortunately, I think we may be reentering a period similar to the 1970's and need to be very defensive and look for 1) preservation of capital and 2) returns to offset the coming inflation.
to get everyone's mind off the doom and gloom.
Isnt that the US way these days?
Unfortunately, I fully expect this may happen in the not too distant future and oil will likely be the published reason (supported by all the other excesses of the past 5-10 years).
This is truly a different environment than anything I've seen in my 45 years of investing. Couldn't be happening at a worse time for all the baby boomers who have attempted to be responsible and build wealth for retirement.
The masses will push their credit card to the limit to stock-up in times of weakness. Head out today and see what the average middle-income family is doing....
Did you know that in July of 1936 it was 108 in Minneapolis?
It was 104 in 1934,
and wow, in the same year it hit 106.
Holy crap. the end is near. The oceans are going to boil and our only hope is to vote for Obama.
This is the typical SA article where the buffoons preach to the buffoons.
The only difference here is that the author actually called the buffoons buffoons in the article. Nice job you all.
Not one lick of sense amongst the whole of you.
If you are so sure the market is about to tank, then why not recommend shorting the market??? The fact that you recommend cash and not shorting clearly shows that you don't even have enough confidence in your own theory to invest in it!
If the market goes down 20 % in few weeks I will be up 40 %.
I am a novice and have put 1.5 millon in the above etfs.
If any expert has a better Idea please let me Know.
HILARIOUS. full of holes, me thinks....
so bill king is saying that having experience that spans EIGHTEEN YEARS (thats 18, folks) isn't really enough to qualify one to trade profitably. GENIUS. are you kidding me?? how many years would "qualify" someone as legit in his eyes?? traders have the ability to open long and short positions, making them adept and profitable in ANY kind of market.
also - you go on to say in the next paragraph:
"These investors, while more sophisticated than their novice counterparts, are almost equally ignorant of any market development outside of their trading models and investment frameworks."
well which are they, graham? INVESTORS or TRADERS? two different animals completely. you YOURSELF acknowledge that. your comparison is completely moot, and how can you make a blanket statement that most TRADERS (who have been trading PROFITABLY for 10 + years) are ignorant of any market development outside of their trading models and investment frameworks? (once again you are throwing in the old "investment" word....). do you know ANYTHING about trading? if you did, you would know that discretionary traders ALWAYS take into account the market developments outside their trading models.
sloppy and lazy writing, graham. shame on you for even printing this.
you said: "Their job was to provide content in large quantities, not content of high quality."
you certainly got that right.....
well i ask you lemmings? are we in a bear market? i'll bet you say YES, and bill king, himself, has said that we are IN a recession. wo WTF is he talking about?? it really annoys me when people lazily make sh-t up, just to bring home a point......
as George is fond of saying, "bring it on" boys..
Anyhow, what got me was a description of a cycle that was known in the markets even back then ~ depression, revival, prosperity, over-extension of credit, then back to depression... sound like the housing bubble? its an old story...although i believe what Cragg called depression we call recession.
What is different now is PETROLEUM. If we are running into a production ceiling...expect wars...famine....major problems globally.
That'll potentially destabilize markets to say the least. I say, on US exchanges, go with commodities, top defense contractors, and oil futures...see where that takes you over the next three years.
The worst thing an invester can do is to go in and out of the market like a scared rabbit.
Are you the expert?
If you are a long term investor, maintaining a larger than customary cash position is very wise. It is not a bad time to realize some long term capital gains to increase cash. After all, you may not have the current tax environment in the future either. Finally, I agree with the comments others have made about diversifying globally.
You can read his alerts here:
hottingersignals.com/e...
Thanks for a thought-provoking article!
The emotional ranges of the comments above tell me that you have indeed struck a nerve.
The endless arguments about whether an article like this is 'right' or 'wrong' or 'too bullish' or 'too bearish' actually proves your case.
The point many have missed is that the current market is a more dangerous place to be simply because it has become a 'trader's market', with breakouts, breakdowns, rallies, and failures all over the charts. (A 5-second glance a 2-year weekly chart of SPY will illustrate this change from pre-November 2007 very clearly.)
It is clear to me that many of your readers have never traded in an environment like this before!
There will soon be only 2 kinds of traders out there; the nimble and the dead!
wouldn't it be interesting if 401's were also required to allow purchases of actual treasuries?
what would many 40 to 50 to 60 yr olds choose to put their $ into as they age?
free markets? - let individuals have full choice in their 401's
Then a new crash will occur because by then it will be apparent that inflation, the housing depreciation and high oil prices will have dug deeper into the economy more than anyone originally thought.
And we will all know that we will be in a recession (long and nasty) that will not recover until late 2009, early 2010.
And even then P/E ratios will continue to adjust downward and commodities will continue to rise until the year 2017. That will mark the end of the bear market that started in 2000. By then P/E ratios will be much lower and American society will have changed a bit.
Now am I supposed to stay in cash until the year 2017?
Or until November 2008? Which is it because I believe what I said will pan out to be correct.
There is always a bull market even in a bear market. Even when the market crashed 400 points, there WERE gainers.
So this article is a mixed bag. Whats an investor to do? What do you do with your 401K when the crappy index funds you have available all lose money over the long term?
When the SPX is LOWER in the year 2017 than it was in the year 2000, how are you supposed to build wealth?
You become a SMARTER investor. But yeah he is probably right, a lot of people will get hurt. Keep your 401K in the "stable valur fund and get that 3-4% steady every year is the best you can hope for.
Daffy- You should do yourself a favor and stick with topics you actually know something about. I can tell, quite easily that you know squat about climatology.
For your benefit, what you are describing are meteorological events. Meteorology is for short timescales; there will be anomalies (periods of heat or cold, drought or flood, etc.).
Climatology is based on long timescales, usually decades to centuries. To illustrate, a week of above normal temperatures really won't affect climatological results that much. However, ten years of above normal temperatures will.
In other words, you can't point to your thermometer and say, "It's below freezing outside, so much for global warming." It doesn't make any sense. That would be like me pointing to a single blade of dead grass on my lawn and saying, "There's a blade of dead grass, so much for Chem-Lawn!".
Another piece of information you overlook is that the warming is an average taken over the globe, not your backyard or any particular city of choice. Some places will get warmer, others will get cooler, and yet others will stay the same. It's the overall global average that is going up, not your backyard.
Lastly, global averages have been rising. Now whether you want to believe it is anthropogenic (man-made), or some natural cycle, or a combination of both is up to you. The copious scientific research pretty much lays most of it at our feet. But what do scientist know compared to some semi-anonymous poster on a financial board.
As far as the article goes, I'm sending the author a bill for the bandwidth I had to use to download it. While it is pretty clear to see that market it is for some rocky times, it has little to do with some spooky global conspiracy or the general intelligence of the investing population. The sky is dipping, not falling. And for anyone on this board, that shouldn't indicate a time to panic, but a time to buy.
~X~
The biggest problem we face is the falling dollar. The glory of the market is that sooner or later, corrections happen. Take any money you need in the next six to twelve months out of the market to protect it and let the rest ride. Don't try to time it, just stay diversified and rest easy. Things may get ugglier. So what? We've been through this sort of stuff before. We'll get through it again.
Finally, don't trust a Press that is desperate to see their candidate win this Fall. They will do all they can to make people feel like they are reliving the Great Depression. They did it for Clinton 16 years ago, they tried to do it for Kerry in '04 and they will do it for Obama this year.
I agree with your commentary completely. The market has transitioned in its dynamics significantly since the 90's with the advent of "home trading". Unfortunetely the main stream media keep telling people to "buy the dips" irrespective of the potential for a long and deep bear market. I studied the tech bubble crash of 2000 and the same situation existed then as we have currently. Only a few people were candid enough to speak up about what they saw coming with the crash, and those who did speak about a significant market crash were often ridiculed by the media that was interviewing them. Same thing is happening again now. Good article Graham. Chuck www.rebeltraders.net
The fact that a Obama win in November will probably result in a 30% cumulative tax increase within 18 months, plus a wind fall profits tax on our oil companies along with a cap,tax and trade deal relating to carbon dioxide emmissions will only further sink the American cousumer and taxpayer. The result will be more increases in costs of all energy, more increases in food costs and more inflation all around followed with more government regulation and of course the extra taxes.
What will not occur is any market solution to one damn problem facing us. This is especially true of oil and energy because the Democrats and their radical environmental friends will continue to block efforts to drill for oil domesticly and off-shore. And block the building of new safe nuclear plants. plus block building more oil refineries, and coal to liquids plants. Note: Teddy Kennedy did not even want a wind farm in his back yard. So much for Democrat solutions
Heck most people are unaware that in additiion to having to import about 65% of our oil supply yearly we also have to import about
18% of our refined oil products thanks to Democrats and their radical environmentalist friends.
When the market wakes up to this reality it will most certainly head lower because withot adequate and affordable energy all else stops.
That loud talking former Israeli war minister - threatening to attack Iran - created the vision of a closed Straight of Hormuth and $300 oil.
Maybe he should be investigated to see if he had a lot of short positions.
Dan
There are problems larger than the Fed. The intergenerational liability of $50 Trillion is one example. There are only two solutions for this debt, and both involve destroying the dollar: one is repudiation, the other is monetization. Hobbes' choice.
The inflation solution was already being pursued with quiet determination since 2000, and would still be under quiet pursuit had the credit bubble not burst and shined a spotlight on it.
I've been out of (most) US stocks and into PM's, miners, TIPS (getting out of them now as well), and shorts since fall 07. No regrets. I am amazed at the resilience of bullish sentiment, as I suspect is the author, and I have come to the same conclusion as to the source of this undying bullishness: inexperience. I think it is an excellent example of a paradigm, and one that I have been ranting about here and elsewhere.
Anyone who takes off his rose-colored glasses and looks at the banks can only come to one conclusion: they're broke. Epically broke. The Fed has loaned them more than half its balance sheet, and that is only enough to make them seem solvent as long as we don't discuss Level 3. Non-borrowed reserves in July was $40 Billion; today it is NEGATIVE $130 Billion. It has never been negative before in history.
The Fed is "exchanging" its Treasuries at the TSLF for radioactive RMBS; the banks then use these Treasuries at the Fed as collateral at the Discount Window. Why? Because the banks' balance sheets are shredded, and no bank trusts any other bank's collateral for overnight funds. The banks have no cash (reserves) of their own to meet reserve requirements and no assets either. THERE IS NO MONEY. Wait until the next $5Trillion of Level 3 hits the books. And it ain't going to hit as AAA either, since MBIA and Ambac finally got downgraded. So much for timely due diligence. When all these downgraded "assets" hit the books, guess what happens to reserve requirements?
Yet some of you keep buying stocks like the Fed has your backs. Good luck with that. The only way out of this is the printing press. Ask oil, oil already knows.
nobody knows shit. including me.
There is some, I believe, TRUE info in the article and in the written responses...as in "true" from that omniscient all correct perspective.
a bunch of squirrels posting ideas about how to get 100 nuts in a forest with 5.
shorts....seriously. as long as there is a market, it will go either up or down.
Ok.. once you get that idea, try to watch the thing and see how high or low it goes... try to watch its movements like you are stalking prey... watch the parameters... jesus, i barely have time to explain this.
Expert? no. but i understand a little.
The markets will wobble and sway their way downwards as the pont of indifference between losing your cash on inflation or losing your capital altogether varies based on sentiments and manipulation of central bankers.
If you have the cash in hand - you may have to do a little hard work these days - and directly find, buy and manage companies with positive cash flow - using actual money. These are the only guys who will be the winners. The rest of us will be fleeced to pay off the bankers and the feds of this world - as they both need each other to survive, and they have the rules on their side to make sure they survive, and at your expense.
What is needed is a clear and delivered message of putting interest rates UP - to put some back into the US $. It will flush out the bad loans and all those who took a fat chance will pay for their mistakes and (unbacked) greed.
If this does not happen, it will be a slow slide to hell, and you will pay for it anyway in stagflation. However the bankers and the Fed will always prefer the slow boiled frog to the quick leap into the fire -the first way they get to stay in their jobs and plead that they had no choice. The result is the same - but the process even more protracted and painfull. Easy money is over - the system is striking back. Have an nice day.
No, you should realize what's happening here and takes steps to protect yourself.
Every generation ignores the lessons learned by the previous and it's time for a class at the school of hard knocks for a generation of young investors.
Thet theory that you buy and hold for the long term is gone.
I have no loyalty to any particular stock or sector. On a given day or set of days I invest only in sectors and stocks that are on an upswing.
Since I started following a short term oriented trading strategy I have realized a gain of 65% in just the last 2 months.
I plan to make money no matter which direction the market goes. I really don't care where the market ends -- I just plan to enjoy the ride and make money.
In the process, there will be some of both. For example, how many $100,000 medical procedures do you think that Obama's recommended government health programs will be able to provide for those over 85 years old. It is harsh to say this, but reality is that the nation will untimately "sacrifice" the elderly by refusing the pay for state of the art medical care AND by inflating the economy as a hidden way of taxing all savers.
Add to the above the following:
1. Trade protectionism will destroy export markets.
2. International strife will strain our will and financial resources (e.g. North Korea, Iran, fundamental Islam, left wing dictators).
3. Global warming and other enviornmental issues will create political roadblocks to efficient economical responses to the various challenges.
4. Consumer debt, as measured by any historical metric, is grossly out of balance. This will mean years of substantial pull back.
5. Everyone, both private sector and public leaders, is primarily out for their own short term monetary gain. Each will engage in whatever lies or intellectually dishonest statements they believe will give them something today. The distrust of the people for both business and government cannot be overstated. Even well meaning, creative and honest proposals will be savaged for political reasons.
Finally, we are in for a ruthless competition with the rest of the world. We have had it too good for too long and we lack the willpower needed to handle the tough times. We will turn on each other before we will honestly determine that we need to change the nation in responses to the realities of the world. Just like the fundamental Islamists, we will be satisfied if we have someone to blame.
The above is the bright side.
Consider these possible future events: Nuclear terrorism; killer antibotic resistant bacteria; a return to ethnic and religious tribalism; global warming out of control; breakdown of worldwide financial systems and resulting riots over food and energy (already beginning). Bad enough for these to possibly happen...Worse yet, we simply cannot manage our minds and emotions to deal with either the RISK of any of them, or with the consequences of any of them.
drivel. pure and simple.
i am trying to figure out what is NEW on your list
what is wrong with you people?? i'll bet you're a SCREAM at parties!!!
Disprove my statements, or not. I'll wait patiently while you develop a coherent argument that explains why negative $130 Billion in nonborrowed reserves is not a problem. I am understandably anxious to hear how how the US Congress will deal effectively with $50 Trillion in intergenerational liability. Your explanation of why the TSLF could close tomorrow and everything would be rosy will also be welcomed by all. I for one will be all ears when you explain why a chart of USDX since 2001 doesn't show that inflation was the government's deliberate and preferred policy. Lastly, I can't wait for you to tell us clearly and unequivocably why we should hold dollar-denominated assets.
There is always some yahoo predicting the end of the world, just as there is always some yahoo that believes stocks always go up. There is always someone who says "this time it's different." Believe what you want. But if you want to demean points presented by myself or others, then it is probably advisable to say something more than:
"wow swrichmond - kinda pessimistic, aren't we? although things aren't going swimmingly, i don't understand the purpose of your post. should we all go out and kill ourselves?"
Or this equally valuable gem:
"drivel. pure and simple.
i am trying to figure out what is NEW on your list
what is wrong with you people?? i'll bet you're a SCREAM at parties!!!"
Well?
:)
You make fun of my statements and then tell me you don't give a f*ck what I think? I'll bet you're a scream at parties.
:)
As far as I can see, this is still a bull market... Yes, the bull keeps hoppping around, but that's what bulls do best (well, second-best). I'm up 33%, so far this year! In twenty-three years of trading, I've NEVER even come close to this level... EDS (takeover), solar (bandwagon) and IPI (IPO). Frankly, that's what scares me! If a high scool grad and colllege dropout, like myself, can turn six figures in five months (OMG, capital gains tax!), there's something very strange going on... I get very suspicious when things either go too well, or too horribly. All that I can say, is that I am thanking God for his blessings and I intend to give Uncle Sam his cut, too... Oh yeah, I've gotten frightened into cash, three times in the last 9 months, but cash is only good for buying stuff and the only stuff I buy is stock... Buy and hold will kill you, right now, but you can still be fully invested (even on margin), as long as you like reading lots of reports and staying online, during market hours... Think of it as you would a job and it's not that gruesome. Stressfull? You bet, but so was working at EDS, on the GM account. Even those without a job, still must work... That's a part of life and I do not resent it, in fact, I love it (even when things aren't going so well, because it feels awesome to head into a choppy sea, with confidence and faith, in God and in myself.)
Though, volatility is the very thing that puts pizza on my table, I sincerely hope that things slow down... This thing could get out of hand and if it screws the country, it won't matter how wealthy you are. No rich man wants to be surrounded by a bunch of unhappy folks, some of whom, believe that you've ripped them off! Create opportunity for others... Hire people to do housework, yardwork, whatever. If you can't share your fortune, then you are very unfortunate, indeed!
Best of trading, gentlemen.
I see that most readers do not agree with him ; fine, at least he writes what he thinks. I hope he will change his mind and go long if he sees that he made a bad call.
Nothing wrong with saying "I made a bad call" , I am cutting my shorts, and going long.
I am bullish on US equities ; and specially on the $USD (probably the most undervalued asset out there)
I am bullish on techs (using QQQQ index to go long)
US real estate markets is really undervalued ; so if you own Pounds or Euros, you should consider a trip to America and buy some properties.