He is absolutely right. Buy and hold is dead. It died in the early 80's. The mutual fund industry is there to suck in $$$ from the average joe and jane american. This is a Traders market and you better be on your toes.
Commodity futures should be for speculation and the stock market for investing. But the stock market has become the nation's largest casino. I found that out early in my investment career when a stock with good earnings dropped like a bomb with no bad news just because the overall market went in a nose dive. I was informed that "all boats fall with a low tide". In the short term, stock prices have no correlation with it's intrinsic value. Securities are the only 'product' that has an inverse relationship with the economic theory of price and demand. When stock prices are rising, the public wants to buy. When stock prices are falling, the public wants to sell. The manipulators have a made a fortune from this phenomenon.
I think this article and its title is one of Mark Cuban's greatest contributions to society. For all intents and purposes, the stock market IS for suckers. If average people assumed this, they would be much better off. Of course the elite 5% or less will make money consistently for the long term (even Jesse Livermore said there were lots of speculators in his day who become millionaires only to lose their entire fortune, I have no doubt it's any different today) from the market, but Cuban is speaking generally. I don't think he's foolish enough to say everyone in the markets are suckers. From the average buy and holder to even the sophisticated hedge fund manager, most people lose at the market. All markets are a zero sum game played against brilliant, driven professionals who do it 10 hours a day and have access to enormous amounts of information. Chances are, the average guy is gonna lose.
Barrons: Slow-Motion Capitulation By MICHAEL KAHN Sentiment indicators suggest that most investors have given up on the stock market by now. Will a bull market follow? Last year, we saw that market fall apart in what can only be described as a slow-motion crash. And now, thanks to the overwhelming effects of the economic crisis, we just may be seeing slow-motion capitulation. In other words, investors seem to have accepted their losses rather than panicking all at once. This might be taken as a sign that the market has already extracted enough pounds of flesh. I am not suggesting a bull market is around the corner. But my experience with the end of deep declines suggests that a major bear market will not end with a final portfolio purge, the classic kind of "sell everything" capitulation that countless financial commentators on CNBC and elsewhere contend is often the first step of a meaningful market rebound. Rather, a drawn-out period of fading interest seems to be the way true bear cycles end. Traditional sentiment indicators seem to be floundering with the rest of our technical tools. But rather than discarding them, we should change how we apply them. In other words, looking for a sharp spike higher in the Chicago Board Options Exchange volatility index (VIX) may not be the right plan. Investors are shell-shocked now, and since we've already seen a record high in fear as measured by the VIX, perhaps in this environment the final washout will be a process and not an event. Ron Brock, the managing director at Sheaff Brock Investment Advisors, confirms that his clients have indeed taken an attitude of acceptance. Very few clients threw in the proverbial towel. Taking that one step further, Eric Leake, chief investment officer at Anchor Capital Management Group, says that his clients were worried, if not scared, about the economy but are sticking with him. In other words, they are not second-guessing his strategy, and I'll take that as further proof of an attitude of acceptance. These are not isolated cases. A TD Ameritrade Institutional survey of registered investment advisers (RIAs) found that 93% of those polled say that their clients are not withdrawing from the markets. On the individual investor level, the American Association of Individual Investors, in its latest survey, reported that 55.1% of those polled were bearish on the market. This is very much above their average bearish reading of 29.7% and, again, suggests that most investors have already given up on the market. What does all this have to do with charting? My contention is that investors have capitulated by their attitudes and not by panic selling as we might have expected in more normal market times. If this is true, then the market does not need to see a major decline to set a final bottom. Instead, it needs to crush everyone's interest by just calming down and only grinding out little change for many months. I call it an apathy bottom. When people stop worrying about where the bottom will be, the market will give them one. This sort of attitude is not limited to investors. I have been following an online discussion group where experienced professional technical analysts have been tossing around likely downside targets for the Standard & Poor's 500. Some are using such esoteric analyses as Elliott Waves. Others use more traditional methods but the argument on how far down the bottom will be was robust. One member of the group, Alex Spiroglou, with Odin Capital Management, commented, "Whenever a market slide has become subject to a downside target auction, a bottom is usually very near." Again, with this much discussion, in this case by active bears, the market is sure to do something else. Sentiment analysis casts a wide net and is often hard to quantify. But if we can subjectively gauge the prevailing mood, then we can begin to understand if everyone has given up. Many analysts simply look at the media and what editors deem worthy of putting on their front pages. After all, the front or home page is what draws readers into the publication or Website, and editors position their offering to tap into what their readers want to read. So when a nonfinancial publication such as the Washington Post puts a comparison of the current market to the 2000-2002 Nasdaq and 1929-1932 Dow Jones Industrial Average on its Tuesday front page, contrarians take notice. This sort of major coverage suggests that the public is indeed very bearish and has already done whatever selling they are going to do. Again, it is an indication that investors have given up on the market already. Traditional technical reads on sentiment may be shaky at the moment, but if we piece together all these bits of subjective evidence, the case for market capitulation becomes plausible. And that would indeed be good news for investors, even if it does not tell us when, even on the order of a dozen months, when the bull might return.
A very interesting article. But when we see 250 point down days, that's not evidence of a slow bleed. That's still sharp down moves. I also think that in this bear vs. previous ones, you can't make a proper comparison because of the prevelance of things like triple bear etfs, no uptick, etc. I've done an informal and very unscientific "poll" of the folks in my office (remember, I work for big pharma, not a trading center) and everyone has resigned themselves that the market is just something that everyone is going to ignore for the next 5 years. They're done. They throw away their 401k statements, the talk about putting the money they have to spare into their house and paying down their mortgage, whereas they used to talk about buying into the market with it. Because they know I like to trade forex, they used to always ask me at lunch what the market was doing and what the big stories were. Now they don't, and when I volunteer, they ask me to shut up - they don't want to hear about the market. They don't watch CNBC at home anymore, they simply have written it off. I know my sampling (about 2 dozen fellow B+C level employees) isn't sufficient enough for sampling, but it echoes your article.
I think this article and its title is one of Mark Cuban's greatest contributions to society. I second that. And... I'd like to add that imo, his greatest contribution was selling mamma.com and being charged with insider trading. Basically, he was the first one with any balls to tell a ceo to f off and put his money where his mouth is.
I should qualify my statement that said "interesting article". I was referring to the article posted today, right above my comment. Not the original one in this thread.
The stock market is for suckers. And it sucks in millions of suckers and their $$$. The mutual fund industry/wallstreet dupes millions around the world to buy stocks and hold them and never sell. So many americans get crushed. Woooops ....there goes 50%+ of your investment. Buy and hold is laughable. If you can't hold stocks for a decade and profit then that is a ridiculous piece of advice to buy and hold. What do you have to hold for 2-3-4+? decades. That's laughable. But the ignorant masses buy into the mutual fund pitch and buys stocks and gets wiped out. Cuban has a point. The stock market is not for amateurs and the availability of ease to open stock accounts draws in many suckers that will get killed. The stock market is only for experienced traders and investors that are willing to take on great risk because that is what it is....extremely risky. An extremely risky place for the average joe to put their money. Every joe and jane wants to be a trader these days....So many get wiped out and blow up their accounts because they are way in over their heads and have no financial education and ability. Trading securities takes great skill and ability, but some think that any high school drop out can make themselves rich. Even with extensive education in finance that isn't even enough to guarantee success. But the dentists, doctors, autoworkers, unemployed, people who fail in other careers, >>think they can make it in the stock market. Lots of suckers out there. This website is a perfect example of the unable attempting to swim with the sharks. I love it. I have been taking their money for 30+ years.
when the market was getting torched last year I was getting calls left and right, people were in panic mode. I even posted it back then in a thread. Now those same people don't even want to talk stocks. My sample is also small, but the disgust in the market is strong across the board with my sample...no panic, no selling, just not looking to invest another $ in the market. I have no clue how much pain is in the horizon but by the looks of it, something bigger unkown catalyst is still lurking behind the gucci shoes in the dark corner of the closet...and it ain't stockturder either.... That's when ya buy and take some pain...peace