The Big Picture For The Week Of February 1, 2009

13 Comments

  1. “Enough cash not to freak out” I liked that one, and indeed is sage advice. As is indexing and allocating assets to fixed income. I don’t care what you say, individual stock picking is risky, risky business. Thanks for your honesty in that you have suffered in individual stocks too.

    I guess you are human afterall.

    Calm down, just a joke.

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  2. Off topic

    I have been reviewing some of Jeremy Grantham’s work at GMO, LLC. It is one of the few places that publish 10 year asset class forecasts and then actually reviews the performance 10 years later. All I can say is, “wow.” The firm has been amazingly accurate in their forecasts

    And I would add, their analysis shows that U.S. equities appear to have a bright future. So why not just go all in via an index fund now? Keep a little dry powder for living expenses as you suggest, harvest the dividends, and ignore short term valuations.

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  3. 6:31, it is a bear market because most stocks go down a lot. obviously (or not:->>) what becomes more important and easier is simply owning less stock as opposed to find the ones that won’t go down.

    6:41, indexing might be right for you. I have had some luck with managing things like volatility by using narrower products including stocks.

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  4. I think the WSJ might have the article you referred to.

    To add to the list – I think a couple of months ago Rhoubini told CNBC or someone that he was 100% equities. Which made zero sense to me. Heh.

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  5. So it sounds like you count your “emergency cash” as part of your portfolio. Interesting.

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  6. thanks for leaving the link, I forgot.

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  7. SD, more correctly i view it as one financial plan.

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  8. Why not go all in now? I can think of 10 trillion reasons.

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  9. maybe you should. my strategy has always revolved around demand for equities being healthy or not. I have nibbled a little as disclosed before but demand is unhealthy so I am not all in–far from it.

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  10. Roger, your dog is adorable. If you ever run out of ideas to discuss, just let the dog get all the face time. (And I don’t even like dogs, generally)

    Hyflux seems like it has a bulletproof market niche and good management–I assume that you like its prospects going forward? Better than the average infrastructure stock (VE, SI, ABB, CAT, etc.)?

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  11. Roger, I’ve been investing for over 40 years. In my opinion,the last 15 years did not seem to equate with the fundamentals when the market went up. I have 2 degrees so I didn’t think I was a total dummy. I tended to follow the masses, thinking the market must be discounting what I saw as not a great future; the market was anticipating the problems would be solved in the United States. I read the annual reports, listened to the CEO’s, elisted information from other sources, and made my bet (investments).
    I think this downturn is really, really different. I may be wrong, and after a short period, we may have another bull that surpasses the records of the prior. Even though I “only” lost 20% last year, I kick myself for not having better discipline. With the overall market down almost 50% so far, I’ve been through other recessions, but this time it really is different. This time the entire world is affected, this is not a localized event.
    At this point I trust no one.

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  12. Roger,

    If you want to avoid financial stocks an Islamic based Shariah index might be good. They avoid alocohol, gambling and interest based businesses such as banks or companies with large debt. This might be an easy way for someone in the financial sector to exclude those stocks.

    I don’t think the actual ETFs are out yet. IndexUniverse just mentioned the indexes.

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  13. Anon..6:49p
    Yes this market is different… the loss to date eclipses other recent pullbacks, that right there certainly makes it different and the baggage and skeletons surrounding this economy (market) have not been fully reconciled. Stand by for more pain. Also, try and use a little more technical analysis in your evaluation. Don’t fight the tide.

    I think the ’29 crash took about 18 years before that high was topped. My best estimate would be a minimum of 12 years dragging around here and lower (it’s really a guess). That’s based on that today we have a much larger population which grows at a faster rate (exponential math). That should lead to much quicker buying up of more “necessary” junk. Don’t worry, greed and irrationalism shall return!

    Reply

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The Big Picture For The Week Of February 1, 2009

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