Why pick bottoms? I don't get it!

Discussion in 'Trading' started by short&naked, Oct 8, 2008.

  1. Do you really think you will get rich in the long run by picking bottoms? Look at a long term chart of the SP500 and be honest with yourself: How many of those bottoms could you have picked sucessfully? You get rich through compounding over time, not picking bottoms.

    A friend of mine (boomer, of course) called me up frantically, telling me that she bought a boat load of stocks expecting to hold for the long term. There is no written law that a market can't tank further than you think it will (especially this time around) and you could get stuck in a position for years if your timing is off.

    The extra bit of return you could get from picking bottoms is simply not worth the risk in the long term. I have no clue why people do it.
  2. Some folks ARE in it for years. And if they are, this seems like a good time to buy if you've got cash on the sidelines. Yes, it could tank more, but don't you think we're at least in the same zip code of the bottom if we're not at it right now?

  3. Possible, but it's very hard to say. The bottom in 2003 came about when interest rates were at 1% and credit markets were beyond being too lax. All that money flowed into the markets. At that time the P/E was > 20! (i.e. even after the sell-off)

    The entire rally from 2003 - 2007 was a scam.

    I still think it is wiser to wait for some bottoming. The markets will usually stall around a certain level for a few months.

    I see many people who are fearful that they will miss the bottom. This is a very dangerous mind set.
  4. I agree I have no idea why they even bother trying to talk about what the market might do.... It's a complete waste of time and effort.

    I am short a basket of stocks: DRYS,JRCC,ERTS,BTU have been for over 6 weeks now. So I'll ride the trend until it ends.
  5. ROFL:

    The entire rally from 2003 - 2007 was a scam.

    I made geat money from it.....so whilst you call and debate I simply go with the flow. U know what I am putting you on ignore. First one. Adios loser
  6. Another very successful trend follower, no doubt. :p
  7. impactions?