New Financial Terminology

[rdwhunter]

This year to date chart kind of puts in perspective exactly where the markets are going...

http://finance.yahoo.com/echarts?s=%...urce=undefined

Is that a chart or an LDP.

[GR5]

Thank you Landrover (oscar) Cosmic has not one SINGLE penny in the market and timing the bottom and recovery is impossible. There all different. I've heard that before, and they are. i have a chart somwhere that shows the difference in missing 10 keys days in a years return. When i find I will post..Panic panic, cosmic

[*DW*]

My company invest all our 401 K's with Merrill Lynch. I lost everything but 21 bucks last friday.

[BigL]

Here's some great commentary on the market. http://www.schwab.com/public/schwab/.../todays_market

[A&M 90]

Keep posting CC.

Folks will inevitably have different takes on "all things financial".

There are us who want to read your take on things. (Not saying at the exclusion of others' opinions) But we do want to read yours...

Regards,
Eric

[Snakelover]

i have a chart somwhere that shows the difference in missing 10 keys days in a years return.

Exactly. There are really only two kinds of market timers... the lucky and the broke... and the lucky ones just lack experience. Seriously, that is playing a game with all the odds stacked against you. Anyone who thinks they can predict the market in real time is fooling themselves. The market is driven by human emotions that can only be recognized in hindsight. By the time information that affects the market becomes known to you, the market has already taken it into account and moved on.

"Those who have knowledge, don't predict. Those who predict, don't have knowledge." ~ Lau tzu

[Landrover]

If I'm right, you will actually have money when the others that blindly trusted their financial advisors have nothing.
If I'm wrong, you might lose a point or two of return till you get back in the market.

I understand your view! I should be clear that I have 95% of my portfolio in long term/long record growth mutual funds. I don't do the "individual stock" thing! Been burnt a couple of times.
My 401K is set up the same way with zero of my companies stock in it. I do buy (outside of my norm) our company stock at 15% below market......thus what ever I put in I immediately make at least 15%. Matter of fact I need to see how much is in that right now....gotta pay for my Africa taxidermy bill. Oh, I also have about 8 months household expenses just sitting in Chase Bank gaining a whopping .4%! Just in case all this mess goes south!!!

[Shane]

cosmiccowboy, with all due respect, there is great risk in selling stocks and moving to Tbills or CDs or whichever "hide it under the mattress" investment you choose right now. Market bottoms are reached at the time of greatest panic and pessimism - always. Are we there yet? You obviously don't believe it's a possibility. I don't know, but I know that it is a definite possibility that we are there or are very close. We won't know for sure until we have the benefit of hindsight. The lower a market drop goes, the more people start to believe that "ZERO" is going to be the bottom this time, because (sing it with me) "THIS TIME IS DIFFERENT"......

Anyway, the risk of getting out of the market at this point is that when the rebound comes, it will be a surprise. They don't ring a bell or send out an email or press release to give you advance notice that the rebound will start tomorrow. When rebounds start, usually few people believe that it's anything more than a "dead cat bounce". By the time even the biggest pessimists are convinced that it really is the rebound, the market can be significantly higher than the recent bottom. If you are sitting in cash until you're convinced, you WILL miss a large chunk of the rebound. Oh, and you'll still be stuck on the same dollar value you had when you sold near the bottom. You won't benefit from the rebound, because you locked in your losses by selling low.

I have a client that did what you are recommending during the last bear market. He went to cash (against my recommendation) on 10/9/02 - the exact day that the market bottomed last time. Six weeks later, he was convinced that the market was rebounding so he called me to put him back into the market. What convinced him of the rebound? A TWENTY PERCENT rise in just 6 weeks, and he missed it by sitting in cash after making an emotional decision based on fear and panic.

What happens if I sell tomorrow and the market goes lower before bottoming and rebounding? Am I going to buy back in at the exact bottom? Not likely, unless I'm the luckiest phychic in the world. More than likely, I'll wait to see the bottom and then wait to see a big part of the rebound before I'm convinced. If I'm REALLY lucky, I'll buy back in before the market goes higher than it was when I sold. If I buy back in at or near the same level as I sold previously, I'm no better or worse off than if I'd just held in the first place. Sure I earned some measely interest rate for a little while, but I also missed out on some potential dividends from my stocks. Not much difference right now.

If we could successfully time the peaks and valleys, we'd be gazillionaires. Unfortunately, we can't. ALL the research shows that the more investors trade and try to time the market, the LOWER their returns are. If you know somebody that can consistently predict IN ADVANCE when the market is going to change directions, please PM me the name and phone number.

Was today the bottom? I have no idea. We'll know in a few weeks or months. But for most long-term investors who are currently in the market, this is a dangerous time to be selling. Sure, we could go lower from here before things rebound. But the rebound will catch you and me and the rest of us by surprise - just like the drop did. And the rebound will be as fast and dramatic as the drop. It isn't going to take 5 or 10 years to recover the 30% loss we've seen since a year ago, like some crazies on TV have said recently. You can look at past bear markets, like the chart shown above and see that it takes anywhere between a few months and a couple of years to recover a bear market loss. This ain't 1929. There are some similarities with the greed-induced debt and such, but the entire system is so fundamentally different now compared to what it was then that an 85% drop in the market, bread lines and 30% unemployment are HIGHLY unlikely to be repeated.

[cosmiccowboy]

Thank you Landrover (oscar) Cosmic has not one SINGLE penny in the market and timing the bottom and recovery is impossible. There all different. I've heard that before, and they are. i have a chart somwhere that shows the difference in missing 10 keys days in a years return. When i find I will post..Panic panic, cosmic

Checked the market today? This might have been one of those 10 key days you WANTED to miss.

[Shane]

I didn't miss it. I bought today at 2:58pm.

[qzilla]

I guess I was lucky or not but, me and my entire family went liquid on either May1st or 2nd. Not because it was bad but, we felt the upside was no longer there at this present time.

I have no idea what sparked this feeling but, my Dad (who is not a financial advisor) talked to us all at lunch and we pulled every bit of it.

Boy, it sure makes sleeping at night much easier!

[Landrover]

went liquid on either May1st
Boy, it sure makes sleeping at night much easier!

One good thing is that you pulled it on my B-day, which is also MAY DAY a communist/socialist holiday in most of the civilized world!
The sleep test (gut check) is a fair enough assessment if you are comfortable with it!

[Shane]

Yep, whatever works, whether skill or luck or a little of both.

I didn't sell out completely, but I took lots of profits and rebalanced towards bonds last year from July to October. Wish now we'd have moved out of stocks 100% so we could buy back in right now, but it's easy in hindsight. Just glad to have made the moves that we did make at the time. I'm hopeful that the last couple days' buying will be very profitable in a year or two as well. Time will tell.