alphadominance

Yes, We Can End Market Manipulation

Absolutely a must. Well put article. Where is one expected to invest for their future when all markets are subject to being pushed ahead of a tidal wave of hedge fund leverage. Nobody but nobody should get to play be rules that aren't available to mom and pop. That means if we have margin requirements of 50% they should. None of this 50x leverage bull. Uptick rule and investigating complaints like they so resoundingly failed to do with Bernie Madoff are other critical first steps. We went through a fit of regulation after the excesses that led to the Great Depression. Finance has evolved far enough that we are again due for such wide reaching legislation. Otherwise we stand the risk of a repeat of the Great Depression in which everyone loses all faith in the markets, banks and currency. It's not a distant prospect if we don't act soon.

Should You Buy Stocks Before the Economy Recovers?

Timing the market has been shown repeatedly to be little better than taking your nest egg to the casino. Making fixed dollar investments over time is still a very effective strategy to mitigate risk and take advantage of opportunities without betting the farm. While I agree that holding securities indefinitely may no longer be effective, there is nothing wrong with averaging in and taking money off the table on a case by case basis when you have a decent gain. The average investor lacks the time or savvy to play the speculative gain anywhere near effectively.

The Great Depression vs. Today's Economic Crisis

Nicely put, I think there are eerily similar circumstances between our present situation and the Great Depression. While it's difficult to forecast accurately, I have my doubts about a speedy recovery. I suspect at the least we will have a protracted "flat" period as earnings and intrinsic value catch up with market values. Part of the problem is that virtually everyone is broke. The government, businesses and individuals are all cash strapped. How can we have a recovery without a return to greater consumption? However it works out I sincerely hope that America learns some fiscal discipline from this and reverses our course of negative savings and ever ballooning debt.
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2008 Was Crazy, But Predictable

What boggles my mind is that if it became evident to me that bubbles were blowing up everywhere over the past few years, how did the bigwigs miss it? Is it a factor of having too much at stack and being in denial? Is it really that our economy is a black box and nobody really can understand it, including our most vaunted officials and executives? It seems perhaps that they just don't care. Short-sightedness has become the plague of our economy and it is endemic from government, to business to individual investors. To some extent we all share in the responsibility by spending too much money we didn't have, but for those who are "in the know" it is inexcusable. I think actively managing the economy is a failed experiment because they keep hitting the gas when contraction is both necessary and good at times. We are supposed to have cycles, not ever growing asset values. To some extent our model of perpetual growth is unsustainable. In a perfect market with free information there should be no "alpha" except in new and growing markets. We need to come to terms with this and be happy with our modest 5-7% safe returns.
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Second-Guessing Buffett's November Bottom Call

History is myopic and we quickly forget the pains of the past. That said, I thought the conventional wisdom is to reallocate from sectors that are performing well to those that are not. By this logic, equities would be the sole refuge in the hellfire and brimstone of the present economy. True we may not be at the bottom, but trying to time the market is a losing game. I am already primarily in equities as I am young, and I view the present market as a chance to leverage my salary deferral to a higher degree than has been available to me in my investing lifetime. These are retirement assets and I have time to wait. If you are waiting in cash and commodities (precious metals) until you are confident the economy is recovering, you are going to miss the uptick. Why not start investing in equities in modest amounts over time, along the lines of dollar cost averaging? Maybe 5% of the amount you have to play with every two weeks or monthly until you are back invested. You'll mitigate the risk of sharp drops, yet get some benefit on the upside so you don't totally miss the market's recovery, whenever that may be. At present interest rates your cash assets aren't earning you anything in any case, unless it's peace of mind to cover a year's living expenses during these hard times.
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