If that sounds crazy just consider how huge an opportunity 2008. I did a good job at avoiding being a long during the crisis but failed at capitalizing at those once in a lifetime valuations. Even safe stuff like investment grade corporate bonds were priced for great returns there. But I learned my lesson. Of course, you dont want to make a mistake the other way by loading up on risk, being fully invested (or even worse, leveraged long) here because of the risks associated with a fed on exit mode, so you want to own some cash to benefit from turmoil. If you have income coming in, then even more, you want this market to fall apart.
Truth is, back in 2008/2009 I was too young and inexperienced. If I had the knowledge and skills that I have now as a trader/investor, I would have made a lot more on the way down and at some point went long big time. 3-5 years later I would have been able to retire if I wanted to. Instead I sat on short-term USTs and had to become a day/swing trader. It was good that I became one, its working out fine but it was a golden opportunity that I missed A similar cycle happened in Brazil recently, I sat out and then got in long close to the end of the crisis, so I do feel like now I can play this game in the right way now. To be cautious when its time to be cautious, and to take risk when you are supposed to take risk (and ignore everyone who tells you are crazy, you have to be studborn to be able to ride a bull market!)
2008/2009 was such a sweet opportunity because the way markets are priced, you could have just said "you know what? fuck it, im going long, not just long but leveraged long, in the tails you get killed, but with markets down 50%, it would have to be the tail of a tail, like a even greater depression". Even if markets dropped another 50%, you would still not get liquidated (assuming non-crazy leverage). And then you get benefit of retiring 5 years later. Its like a trade off, you take a lot of risk for 5 years (when markets are rewarding risk takers through good valuations, lots of negative sentiment) and take little risk for the next 20-40 years (when markets are not rewarding as much)
Question is, why didnt I got long huge (maybe even leveraged) Brazilian stocks given how good the opportunity was in the depths of the crisis? I thought about that but I decided against. Mainly because at this point in my life I dont need to take crazy risk to live off well. I'm already at a good point financially and being long so aggressively a stock market with such a big beta and with exposure to potential risk factors (like a banking crisis) just seemed too much. I would be risking my only farm to get 2 other farms. Not to mention that being wrong would cut my margins for daytrading
I understand your sentiment, I've been there too as have many others but the woulda shoulda coulda is pointless. All it does it create a negative feedback loop within your thoughts. I can show you trade confirmations from IB that I bought the bottom in size on March 9 2009. I then flipped out 5-10% higher and thought it a good trade. Woulda coulda shoulda. When I was 1st starting out more then a decade ago an old vet told me: After you exit a trade, close your eyes and never look back. I didn't understand what he meant then, but over time I fully understood it.
It feels like there is some good potential for this market to fall further. There are not hedges this time around (like USTs or gold), the only way for people to protect themselves is to go to cash or to short ES (or ZB I guess). September is pretty bad seasonality.
BRKB is trading at $145 a share, the Buffett buyback kicks in at $128 (120% of book value). Here is an article that is from late last year that shows how cheap this is compared to everything else "In my opinion, the results are pretty remarkable. Assuming no major insurance catastrophes and a normal economic backdrop, I estimate Berkshire will earn $26 billion of look-through earnings in 2016, or $10.55 per Class B share. Additionally, Berkshire maintains $12 in excess cash per share (total cash - cash outlay for PCP - $20 billion withholding requirement + cash from PG). At the present price of $133/share, this means that Berkshire investors are paying $121 ($133-$12) for $10.55 in earnings, or 11.6 price-to-earnings." http://seekingalpha.com/article/378...ated-11_6x-earnings-intrinsic-value-180-share I'm getting ready to buy quite a few of this soon. If this market starts to hold up and it looks like there wont be a correction, I will have to chase it. In this return starved world, BRKB is priced to deliver very good returns going forward
If there is one thing that I learned being more active in investing over the past year is that its a lot better to have the problem of buying something and then having it become even cheaper than not buying, in the hopes of it going down further, then watching it rise without you. In the first case you can do all kinds of things, you can sell more positions to buy more, sell calls against the position, etc. But on the latter case, the most likely scenario is that you will just watch as it goes without you, maybe for years. So I will avoid that by forcing myself to buy