yeah how the hell are we supposed to know which sectors are going to keep going up and which will keep going down. or when it goes from bull market to bear or bear market to bull. did gold peak or is it a dip for buying? did oil peak or is it a dip for buying? is the USD dead? it seems any trade would involve making some kind of directional bet. but yes not making any bets at all is probably a bet too. maybe the whole financial system will collapse and money will be worthless that would be great wouldn't it?
Absolutely!!! If a person had simply bought the S&P in January of 1934 with $10,000 (yes, a good bit of money back then), they would have been worth over $14,200,000 in 2002. That's in 2002, at the low, the crash, the market's death, blood in the streets, "it's never getting any better," etc., 2002. That's WITHOUT doing as tradestrong has suggested which is Dollar Cost Averaging. If one had kept adding money each month from then until 2002?:eek: HUGE $$$$$$$$$$$$ In my time I have not seen a better mothod of long term investing than a monthly DCA of a set amount buying more shares when markets are oversold, and less when overbought. Btw, if anyone wants to know, there were 69 reasons why not to invest from then until 2002. Depression, War 1941 (makes Iraq look like a pussy hair, and I was in Iraq twice with the Marine Corps and have that right to say so! Ooh rah! No, there was no 24 hr news back in 1941 streaming how many thousands of Americans were being blown to shit BY THE HOUR!!), Cold War, Missles, Vietnam War, Inflation, Deflation, Stagflation, Oil prices skyrocketing (1979, which I am old enough to remember the gas lines), Terrorism, etc., Anytime I have a skeptic in my office the first thing I do is show them the bad of each year from 1934 until 2002, then the simple S&P chart with numbers NO ONE can argue with. After that, if they want to manage their own affairs, I will print off a list of books they will need to buy, and self-evaluation exams they will need to take, that will enable them in about three years to have at least an idea of how investing works so they can at least paper trade (at least another two years+) before they should even fathom putting their RETIREMENT ACCOUNT in their own hands.:eek: Scary, but they do it all the time. That is... Lose their retirement assets in 1-3 years, adding liquidity to our markets (LOL!), and living off Social Security while cursing under their breath about why no one showed them the right way. Yes, I'll address this before anyone asks. "What if I put all of my money in the markets in 2003, and was going to retire in 2008?" Well, not many can say that. But if so, that means if one would have put ALL of their money in the SPX in 2003, they would have a +31.62% return as of today's volitale market. So those who say "cash is king," may be right. Today... Long term, I don't think so. Great post tradestrong!
I am loading up on GE. Love the prices. Low P/E, FAT dividends and they will be fine. Reinvest fat dividends.
cash is being devalued at a rate far greater than posted CPI, but you knew that. the stock market is acting like the market of August '87, but took until October to crack and then retested in Nov. but inflation is far worse now Dow 8000 is here if you discount devaluation based on whatever inflation rate you pick and the duration
The DJIA might as well be 4,000 in my area as many have thrown in the towel and cried, "the sky has fallen." These are people who would usually be buying equities, and aksing financial planning questions. Now they would rather talk about their toilet habits than stocks, and that's no shit (forgive the pun! ) What does that tell a guy who makes a living investing OPM? This may help. I had an 83 year old man call my assistant to make an appointment. She told them that I work with less than 100 Clients and am glad to meet with him and his wife, but they must be Accredited. (for and 83 year old, alternatives aren't suitable, as he may be dead before they mature/pay out.:eek: and maybe a 20/80-20% stocks, 80% cash and fixed income portfolio I'm thinking.) They were/are Accredited, and she set the appointment. He came in on a walker and she was helping him. His wife was 76. They sat down, and the first thing he said is "what's the DOW doing?" Kind of shocked by that, I told them that they could come to my office from the conference room, and we'd go from there. I showed them a 1 month, 6 month, and 1 year chart of the DJIA, the SPX, and Nasdaq. I even showed him a chart of the DJIA at 1 minute intervals. He wanted to talk about stocks!!! He AND she both wanted to buy "some stocks," and wanted to know what they should buy with 300m. They had a "we can't miss out" attitude, but it was late August 2007. A few weeks away from the top... Needless to say, they didn't buy any stocks, as mid October was setting up to be bad. To this day, they're in cash, and telling me "thank you so much for saving us, etc.," They didn't become Clients, but nice people. On the other side of the coin, I am speaking with Accredited guys my age in their mid 30's, and hearing how they're selling all stocks, and moving into "fixed accounts" with their SEP's. These are people who normally buy stocks, and invest in alternatives. Yes, all this movement OUT of the markets by young people at a low. They would ALSO rather talk about their toilet habits before talking about investing at this point 1 July 2008... Hmmmmm...
how hideous does it get? well fairly http://www.financialsense.com/Market/wrapup.htm dated 7/1/2008 if it gets archived
OK guys,great to get some different perspectives on what people should do,I wasn't just posting just for myself as I'm sure there are many others out there in a similar quandry. Interesting that no-one mentioned buying a house,renting it out to get the return then hoping for long-term capital growth,as many have mentioned scaling into buying shares as a 'bigger picture' position,it seems likely that in 10 years property will have survived this scare and the capital would be in line with inflation with rental income extracted from the property throughout that time - if foreclosures are spiralling out of control and no-one can get a mortgage/is too scared to buy then the rental market must be wide open.
I chose to put some assets in GLD, with the idea that the ETF won't call me up at 2 AM to bitch about a stopped up toilet. and I can write calls against the position for more income
LOL!!!!!! I agree! I HAD a real estate agent for a Client who just had to load up on rental properties from 2003-2006. He HAD a liquid net worth of around 1.6mm before buying the rentals. He wasn't happy with a 25.6% return he got in 2006, thinking he could double his money, and wanted to take 800m out of his Advisory account to buy these properties. The last time I saw him, he looked like he was 70 instead of 50, and was telling me about all of the maintenance people he's having trouble with not showing up, which is causing him to have to fix problems.:eek: He said, "when this real estate market gets better, I'm selling everything and (it's going to be a while I'm thinking), I want to put the money back with you and retire." After hearing his experience, and others who invest in rentals, I'm out! Buying GLD, and writing covered calls on GLD would be a MUCH better choice than owning an illiquid (troublesome) asset. If you're Accredited, a private REIT focusing on income may be suitable. I'm in one that has: NO DEBT low risk, no foreclosure risk, no high financing costs, favorable pricing from property sellers due to the ease of transaction and ability to close quicker, ability to sell holdings at opportune times without lender restrictions. STRATEGY Investing in a diversified portfolio of attractively priced income-producing real estate using ALL CASH. (Multi-tenant industrial and retail properties.) Once purchased, the property is actively managed towards goals, and sells the property once the goals have been met. Properties are purchased in an entrepreneurial niche so Investors see a clear pricing advantage from the beginning. Also, the Investor receives a preferred return of cash flow before the investment company gets paid. There are no investment or management fees. TAX BENEFITS Depreciation pass-through, Passive income generation, NO unrelated business taxable income (UBTI) generated. INVESTMENT GOALS Current income Capital preservation and protection Capital appreciation OTHER 75mm offering 25m minimum (Accredited's only!) MONTHLY distributions (for whatever reasons, a large majority like monthly over quarterly income.) 3-5 year target hold Asset backed investment Competitive risk-adjusted returns Again, I personally would not want to go "hands on" with rentals due to problems like daddyeaux pointed out (it's 2:00 am, and the toilet's stopped up-great example!) How about when the tenant has a cash flow problem? Or, they need to be evicted, and you have to wait two months for the hearing? That's if you can even get the sheriff to serve them papers in this decade.:eek: Then, theres the tenant who tears up things...