Being a continuous doomsayer on markets and the global state of affairs is appealing to many. It sounds cool. It makes you seem like you know how the world really works and nobody else knows what the hell they’re talking about. You’re calling out the media and that “Wall Street Machine” for their positive propaganda. It’s sure a heck of a lot more rewarding to people than saying, “I really don’t know. I’m not in a position to make predictions and you shouldn’t be listening to predictions”. Well, the perma-bears were all up in a tizzy back in August when the dreaded prophecy was borne of blood once again. It made all the headlines and was the talk of even the non-financial pundits, but alas, what happened? I’d posted on August 15 (here) why nobody should care about the Hindenburg Omen. Here’s how the market performed since then:
Thank You Sir, May I Have Another?
(click to enlarge)
An 8.45% return in 2 months on common equities, amplified if you hold high beta shares like me (see recent portfolio update). Most people are happy with an 8% return per year, let alone a 2 month period. If this is the worst the naysayers can throw at us, I say, “Thank You Sir, May I Have Another?”. I’m not saying I have all the answers or that I can predict market moves any better than the next guy. What I am saying though, is that anyone that claims they can predict major market moves is full of it and you should take their advice with a grain of salt. On any given day, CNBC can dig up any number of top hedge fund managers, Nobel laureates and top CEOs and they’ll get 9 different predictions out of them. Each one may have a very compelling thesis. In my youth, I’d actually go out and trade based on how influential their proposition was. And after I lost enough money I figured out they were mere mortals. The reality is, markets confound even the most experienced, intelligent and historically successful figures.
Set a strategy, stick with it, keep your costs low, don’t deviate, and go make some money!
Thoughts?
{ 19 comments… read them below or add one }
So you are saying go all indexed?
Where’d ya read that? I do index for long-term/retirement but trade short-term (not advisable for most admittedly). What I advise was don’t let “experts” and supposed omens deter you from your core investment strategy. If you sold all your equities in August because of the dreaded omen, you missed out on the returns equivalent to an entire year historically. It’s tough to make up for a couple gaffes like that.
I did take some profits off the table and AAPL was included. I don’t regret it either as it was already 200%+ profit already for me since I bought it. I don’t want to be greedy and wanted to lock in my profits.
I’ve seen some people state it will go to $400, or $1000 a share??
I still don’t think the market is cheap by any standards (overall that is) but with QE2 coming it is going up mainly for that reason. If and when the FED pulls back or if QE2 is smaller than expected could be some interesting times.
I hear ya, Pigs Get Slaughtered, right? I bought into Apple at $89 during the crash in 09 and started w 100 shares and I’m down to 30. I’ve sold off a few here and there along the way bc it was taking up too large a portion of my damn portfolio! Same w Baidu. I wish I had more of those problems. I do treat my trading strategies differently than long-term investment strategies and try to differentiate that in my writing as well. I can say emphatically that in my retirement accounts, I’m not shifting money in and out of the market – that’s off-limits and subject to my retirement strategy planning.
Yea I agree regarding retirement.
Though in the past 10 months now have 5-9% in cash in our retirement account (it’s mostly a fixed income 3.5% APY till March 2011). The only purpose of this is pick up more stocks when we experience a large correction.
http://investorjunkie.com/3374/asset-allocation-2/
So tell me, was my unbridled enthusiasm since the summer when all you guys made fun of me on Twitter not SPOT ON or what? lol
Just call me brilliant!
Cheers
I’ll give you credit for being optimistic. But the economy’s still a mess. These are stocks, denominated in US dollars which have been totally debased by the actions of the Fed. If you value these gains in terms of the Euro or gold, the only true global currency, stocks are actually flat over the past few months. But since I get paid in dollars, I’ll take it!
I still view the economy, unemployment, housing and prospects for a healthy recovery as completely unrealistic under the current administration. Just this week, he’s coming up with a new attack on multinationals, looking to tax them into ceasing overseas investments, pretending that this will create hiring here. It’s just another money grab.
Thx!
Time to lock in the gains!
No offense Sam 2 months does not make a trend. If you are correct by end of next year, yes but like Darwin said we aren’t out of the woods yet.
Thanks. I figure I’ll never “win” with you guys. Which is why I keep my winnings and financials to myself.
There will always be naysayers and such. However, if I look at the large positions (as opposed to sub $25K positions per stock) I’ve taken since this summer, and what their returns are, I’m satisfied.
At least for me, I have no issue with you “winning”. If you made bets in the past two months and won and if I happened to ‘lose’ so be it. I’m fine with that, there’s no personal attack on you. I’m also happy with my returns overall. You know as well I do, what counts is the long term returns not the past two months, that’s all I’m stating.
Fact remains regarding the economy there are some major headwinds. Unemployment probably being the biggest issue. While you Sam may not see this issue yourself, the issue is real. The “new normal” might be high unemployment for years to come.
Sam,
I don’t think you interpreted my article or my replies the way I intended. Yes, the stock market has been on a roll. I’ve been fully invested – very aggressively. What I bust on you for on Twitter updates when you cite a full bus in San Fran as evidence that the US economy is booming. The US economy is in a shambles.
Stock Market = Good.
Economy = Terrible.
There are myriad reasons for the disconnect and they need not be correlated, as they often are not.
If you look at the prior recessions, from business-cycle peak, 1973, 1981, 1990, 2001, etc – in each of those cases, % employment was back to parity within about 2-3 years. We are in year 3 since the 2007 peak and employment is -5.6% from start (unprecedented and the trend is not up). We are simply not getting back to parity fast, if at all, ever.
So, while things might be peachy on your block, much of the country’s a mess.
That’s all. We’re all celebrating in our stock investing successes here, but I do caution about prospects for the economy at large.
IT’s not just my bust, it’s EVERY BUS, road, restaurant in America. The economy is ROCKING! That is my point.
We making big bucks is nothing special, b/c EVERYBODY is.
I was chuckling to myself about the ‘omen’ when I read my September statements. Of course, I am not saying we are recovered by any means. However, it just means that you can’t count on anything that hasn’t happened yet, and history does not always predict the future. (As we are learning every single day in this screwed up economy.)
Sam, I like you. But I fear you are completely disconnected from reality.
Are you mistaking the US for The Matrix or a happy dream you had last night?
There is no data to support your assertions whatsover.
The economy is terrible.
I think Darwin is right. The economy is a mess. The stock market has been rising on hopes of QE2 solving everything. In the long run, it won’t. It will likely make things worse.
The mortgage mess in the U.S. is set to whack the banks again and it’s a good bet that the U.S. taxpayer will be on the hook again one way or another. John Mauldin’s letter this weekend has a great excerpt from a letter David Kotok received that explains the real problem with property rights in the U.S..
As for stocks, I’ve stayed out for some of the reasons above, but I’m happy to see some folks making a buck on this rally. 🙂
I love your CNBC comment. I an a fan and generally watch off and on during the business day. As a financial advisor, however, I am concerned that my clients and others are getting a mixed and perhaps a biased message. Many of the guests are pushing their viewpoint in support of the product or service they are offering.
Investors need a strategy and they need to stick to it. They also need to monitor that strategy and periodically adjust based on changes in their lives, their goals, etc.
So the moral of the story is have a diversified portfolio and hope for the best?
I’m not into hope. I’m into not tinkering with your investment portfolio because the mainstream media pushes an alleged “omen” which failed to materialize several times prior.
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