Friday, June 10, 2011
06/10/11 Key To The Highway
Guys- Why let short-term market moves throw you off your game? No one saw yesterday's rally coming, no one tipped us off to this morning's gap down. But a long-term perspective includes plenty of both. We risk money on the dips and rises of stocks/funds in hopes of a decent retirement. Is there a better way?
The key here is to get on the highway, and stay on it. You get off, you may never find your way back.
When the moon peeks over the mountains
I’ll be on my way
I’m gonna roam this old highway
Until the break of day
It's a pretty nice day out there, and I'm on vacation. Apart from this post, I'm wasting no time thinking about the markets.
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2nd - Being long and nervous is good IMO...being long and panicking? Not so healthy.
ReplyDeleteYogi Bear, glad to hear you are safe. Any fish stories?
ReplyDeleteRe: Kudos
ReplyDeleteSubmitted by Telestar3d (534 comments) on Fri, 06/10/2011 - 13:18 #87412 (in reply to #87408)
Yes, I agree the selloff is controlled and somewhat hidden through rotation, but now they are hitting more and more sectors. The clue to me was the breakdown of individual stocks which has been ongoing for a while.
At the end of QE1 we sold off SPX -17.12% (1219.80/1010.91) with QE2 ending we are down -7.10% (1370.58/?), but as usual your individual stocks are reacting with much more downside volatility. So based on this the selloff could be in beginning stages.
I actually think that this summer is going to be a great time to accumulate select gold equity stocks and gold bullion. The monetary problems of the US are not even remotely being addressed and we still have negative real interests probably for as long as the the FED insists on low rates for an extended period of time. Japan anyone?
Time will tell, GW thanks for the 13/34 cross I like it.
Went through most of my stocks again this morning to see if there was anything I should sell to raise cash for buying later and, unless the world is falling apart, still like them all on a valuation basis.
ReplyDeletePretty sure Q2 earnings will be good again. Just wonder how much pain we get before this and what level we start earnings season from.
If I look at Cisco as an example, trading at a P/E of just over 6 if you take the cash off the books, profitable through the recession and growing customer base. Hard to see much more downside.
2nd said, "We risk money on the dips and rises of stocks/funds in hopes of a decent retirement. Is there a better way?"
ReplyDeleteHope is not a plan, but buy and hold is if that is your thing. I'll just say this, my step father was/is a buy and hold type of person and has basically done so since say 1970 or so. I tried desperately to get him to sell his banking stocks since I knew they were basically insolvent due to derivatives they had on their books. He lost a lot of money.
You know what he says now, I will never buy a stock again and hold it without a pre-determined stop as protection for getting out. I think he likes 15%.
Anyway you are really bright (as everyone here is, I my be the least bright)and we all get to choose the path we trek.
Cheers T3d
I'm still waiting for the signal, no need adding as long as prices keep falling and repeating dead cat bounces.
ReplyDeleteInteresting if banks are in control of this, at some point it becomes self destructive me thinks.
Frank Wolf and Mark Warner propose a business grant system to bring jobs back home, LOL I tend to agree.
One thing we can always count on are governmental policy reversals.
commercials selling the ES here at the lows
ReplyDeleteAgree Telestar3d - you can't just buy and hold a STOCK forever. If you want to do that, but a mutual fund who will watch this and make the moves for you. I know many people who think all there is to investing is buying, but any company can get into trouble or get overvalued.
ReplyDeleteSlowly started adding to my micro-caps which have been hit exceptionally hard the last few weeks.
LME Copper inventory chart:
ReplyDeletehttp://3.bp.blogspot.com/-wdLveD5tsS8/TfDhJSFXBUI/AAAAAAAADc4/dshhTCrwZWs/s1600/lme-warehouse-copper-30d%2B%252806-09-2011%2529.gif
Normally, as copper inventory begins to reach a peak, copper prices begin to find support in anticipation of an inventory reversal.
This cycle might prove interesting...
ok we be bouncing from here me thinks; bought some SPY $127 calls just now that expire today at $.56
ReplyDeleteGold - BTW, I'm still hanging onto the $1600+ gold target prior to Labor day.
ReplyDeletet3d- I disagree. Hope is a strategy. Hope is woven into the fabric of human nature. It is the driving force behind our accomplishments and dreams. Without it, many of us would be dead, or least walking dead. In that sense, hope will drive this market up for generations to come.
ReplyDeleteMost day traders grind away for dismal gains. If you enjoy it, as I did for a time, then time spent on the field is its own reward.
ReplyDeleteDoes hope 'work' as a strategy in real life? I can attest to it. It's gotten me through many of life's brutal alleys.
ReplyDelete"Without it, many of us would be dead, or least walking dead."
ReplyDeleteI've met plenty of people for which I have no hope whatsoever...
No one here will be retiring on 1-2% per annum gains on cash. What's the alternative? Play the odds.
ReplyDeletePlanning, analyzing and making educated decisions is better than pure hope. Sure, you hope the decisions work out, but it's better to put the odds in your favour.
ReplyDeleteI find the problem with hoping is that it sometimes prevents your from action. For example, "I hope my abc stock gets back to where I bought it so I can sell it" instead of trying to figure out why it is down and if you should sell out, buy more or just hold.
Maybe it's my sales background coming through. You want to get beat up in a sales meeting - try telling your boss you "hope the customer will sign this month". Then be prepared for hours of work to build a plan to try and move things along.
Hoping is not a bad thing, you just need to make sure it is not misplaced.
Hope is not a trading strategy IMO, it very well can be in other walks of life as you say.
ReplyDeleteAlternative? Play the trend of the market, of course there are three major ones, ST, IT, LT and LT probably has not broken yet, but it could be close. The problem is waiting for the LT trend to confirm your are usually already damaged in terms of capital. No easier answer!
I just think that after a market up 106.74% off the bottom is not the ideal entry level for LT success. You disagree, that's fine and what makes markets.
http://screencast.com/t/SkFfVMGUS
Please remember, I enjoy debating and often have very different views than others, its not personal, but I'm sure you know this.
I wish great success for everyone here and never begrudge anyone's gains since I know how hard we all work for them.
Cheers T3d
From the monthly chart above.
ReplyDeleteThe last three LT bull runs are as follows:
1994 to 03/31/00 256.03%
10/30/02 to 10/31/07 105.04%
3/31/09 to 5/31/11 107.71%
We are certainly due for a bounce here the question is will that be the last train out?
Done for the day, I hope.
correction:
ReplyDelete3/31/09 to 5/31/11 106.71%
Guys- All I'm saying is: if you want to retire with a decent portfolio, put your money in the market. I have a few bets on individual companies, but it's mainly a bet on the US/world economy. I won't try to time market movements- I don't think I can (and I've tried). There are no ideal entry points.
ReplyDeleteIt's really all hope (even the Apostle Paul would agree).
Building a plan? Educated decisions? Sure, it's still all hope. There are no guarantees.
There are other 'guidelines' out there also. The 80/20 rule. The 'fact' that the vast majority of things we worry about never happen. Our own experiences in life.
Blend all of it, and I have to conclude that buy-and-hold is the way to go.
We even worry about the 'wall of worry.' It's quite clear that they're working on the wall.
ReplyDeleteWhat about 1982 to 2000? What if it's 2009 to 2025?
ReplyDelete"I won't try to time market movements- I don't think I can (and I've tried). There are no ideal entry points."
ReplyDelete2nd_ave -- it is hard to time the short-term market moves, but it is easy to time the moves in valuations. Over the last century, the performance of a buy-and-hold strategy in S&P over the next 10 years had a correlation of 1 with the Shiller P/E ratio of S&P on the day it was started. Lower P/E ratios implied higher 10-year returns.
I think it is a mistake to put all one's capital into buy-and-hold of S&P now. With a 10-year horizon, we are GUARANTEED to experience a wide range of P/E ratios (from 24 we had one month ago down to low teens on a major market sell-off). The obvious strategy is to wait for the P/E to drop below 20, and then start adding gradually to one's position for every 2 point drop in the Shiller P/E.
The market downturn over the past month has to be the most widely predicted market downturn. And it still happened... How about that?
ReplyDeleteThe problem with 'analysis' is that multiple interpretations exist, and all of them make valid points.
ReplyDeleteI suggest if you can't time the market then legging in is a superior strategy as opposed to picking a spot and "going all in", legging in is my interpretation of how the 401K concept is structured.
ReplyDeleteAdd to that the caveat of prioritizing adds on weakness (an attempt at timing on the first order) and especially capitulation events (second order) if possible, and your probability factor increases linearly, IMO.
Of course, an even better buy-and-hold strategy is to buy ECUXF now and see it triple in 1.5 years. :)
ReplyDeleteWe are supposed to buy the strongest stocks in a downturn, right? Well, ECUXF is up 10% since May 5, while S&P is down 7% since then. Over the past 6 days ECUXF has been flat, while S&P has completely collapsed.
I totally agree, CP. "Legging in" on weakness is THE strategy for those who don't want to time the market and who are patient enough to wait for weakness.
ReplyDeleteThis is the strategy I used with ECUXF, as I've been scaling into it linearly since $1.10 until about $0.7 over the past few months, EVEN THOUGH I was sure that it would be above $2 by the end of 2012. Still, I didn't go "all-in" right away, but kept adding on weakness...
ReplyDeleteMaximum pain and injury (my concept) involves a meltup into close and for days to come.
ReplyDeleteAnother big dump of 288k of MITK, at $5.75.
ReplyDeleteNo, CP -- I am afraid the maximum pain is the drop in S&P to pre-QE2 levels below 1100...
ReplyDeletecp -- Something from Steve Grasso --
ReplyDelete"At 1257(flat on year) managers that r lagging on their performance or wished they got longer earlier get a 2nd chance at 2011. Do they buy? I question the resolve of managers at that level"
Import costs are up 12%, that's a nice trend in terms of jobs creation, IMO.
ReplyDeleteThis would erase all the wealth effect from QE2 and put Bernanke in a silly spot of having wasted so much money, increased US deficit and having accomplished ABSOLUTELY NOTHING.
ReplyDeleteWTF is going on with MITK...they really need to get listed on the Nasdaq pronto. It's being pushed all over the place.
ReplyDeleteBTW - A month or so ago there was another trade $0.70 below the market price that was a pre arranged deal...looks like this is the same deal. Why can't we get in at the price this person is buying at?
I did speak one of their offices yesterday and they said the Nasdaq listing takes about 8 weeks so assuming they applied the day of the last quarterly conference call when they announced it then we're looking at about 4 more weeks.
MITK looks like a good stock for stink bids.
ReplyDeleteDavid -- We're on the same page...it's all going to amount to ZIPPPPPPP...
ReplyDelete"maximum pain is the drop in S&P to pre-QE2 levels below 1100"
ReplyDeleteThere's as close to an add signal I could imagine. Hopefully you took profits somewhere along the line and held them in cash or even UUP, which not only gives you the dollar gain but also gives you more dollars than you would've had in just cash.
MITK is getting accumulated guys...I think this thing is going significantly higher. There's no way there is this much volume in the stock on these big blocks without it being accumulated. I watched the last 20 minutes or so and there were several big blocks on the Ask that just got taken right out. This tiny little company is revolutionizing the banking industry. I guarantee that a lot of the banks will be closing down branches because of their software and the media will start covering it and putting two and two together on it...
ReplyDelete"put Bernanke in a silly spot of having wasted so much money, increased US deficit and having accomplished ABSOLUTELY NOTHING."
ReplyDeleteLet's brainstorm on where that would potentially lead in a longer time horizon???
2nd,
ReplyDeleteBuy and Hold is not a bad approach.
If you want to try and buy based on value (and it should increase your returns), you have to find a way of valuing companies that works for you. Whether that is a brokerage that provides good information, running stocks screens, reviewing fund manager holdings, a newsletter, etc., doesn't really matter.
But timing your buys based on valuations definitely adds to your returns. Take a look at the Tweedy Browne "What has worked in Investing" report I mentioned before. You don't have to read it all, but it makes a very compelling case for buying low valued stocks based on easy to get information.
Short Term Trading for profits is very hard and most people are not successful. If you can do it, all the power to you, but I found it to almost be more luck than anything else.
So since this market so famously meets expectation, wouldn't we anticipate a ~10% haircut from the high, putting the S&P at say, 1236ish, below the current 1250 200SMA, which would be perceived as a technical failure not to be bought but sold in yet another "capitulatory" event that materializes only in hindsight?
ReplyDeleteWhat has worked in Investing:
ReplyDeletehttp://www.tweedy.com/resources/library_docs/papers/WhatHasWorkedInInvesting.pdf
CP that makes sense to me
ReplyDeletekeep this in mind: divide SPY by 10 and it's down from $13.7 to 12.7. Not exactly devastating.
ReplyDelete>> "maximum pain is the drop in S&P to pre-QE2 levels below 1100"
ReplyDelete> There's as close to an add signal I could imagine.
CP, do not mistake ME for the crowd. :)
"Let's brainstorm on where that would potentially lead in a longer time horizon???"
ReplyDeleteTo higher gold/silver prices, obviously. That's why I am so cool with my ECUXF investment. It cannot go anywhere but up, especially if the economy begins to weaken again and any hope for reducing the budget deficit evaporates.
"which would be perceived as a technical failure not to be bought but sold in yet another "capitulatory" event that materializes only in hindsight?"
ReplyDeleteDuring the past 2 years, I've seen plenty of such patterns, where a previous low/support was taken out, only to reverse with vengeance and leave everyone behind. I am afraid this won't materialize this time because there is no more help from the Fed on the horizon.
"Hopefully you took profits somewhere along the line and held them in cash or even UUP, which not only gives you the dollar gain but also gives you more dollars than you would've had in just cash."
ReplyDeleteCP -- you saw everything that I was doing. I was scaling into ECUXF with ALL the money I had and then borrowed $12K on the credit card and invested them into ECUXF as well. Should have left a few K lying around to buy puts on IWM, but didn't...
Schwab wont let me place a MITK trade AH's now.
ReplyDeleteWhat about you guys? Just place a limit sell for $20.00 or something and see if it goes through.
MITK - Hell no, I'm holding out for considerably more than $20!!!
ReplyDelete(just kiddin, don't have any to sell)
CP- See if you can buy some. Bid 1 buck.
ReplyDeleteMark - I don't think you can trade OTC stocks after hours.
ReplyDeleteMark - no prob putting in an order to sell MITK via fido
ReplyDelete"I don't think you can trade OTC stocks after hours."
ReplyDeleteOnly way I can buy OTC even during normal hours is by phone unless I sign up for the ridiculous BACML keycard system. Nice to have them protecting me from myself. ;)
Thanks Bro. Must be a Schwab thing. BTW, shoot me you new phone number and ignore the email I just sent.
ReplyDeleteMay 16, 2011 HARLAND CLARKE CORP. Other
ReplyDelete2,142,856 sh Direct Sale at $5.60 per share. $11,999,993
That was hit on MITK last month. Didn't last long just as today's late hour hit.
Harland sells checks among other financial products.
Music lovers, check out google.com for the latest Google doodle, a playable electronic guitar in honor of the late Les Paul.
ReplyDeleteI am seeing Buddy Guy tonight. Awesome. Wonder if Buddy was talking about the market with this song.
ReplyDeleteOh, I've just got to let her go
Because this little girl is runnin' wild
I said I got to let her go
Because this little girl is runnin' wild
You know she whupped this whole game on me
And now she won't even apologize
Oh girl, girl, girl, girl, girl, girl
You take all the happiness out of my live
Hey girl, girl, girl, girl, ah
You takes all, all the happiness out of my lives
You go to 7-11 on me
Just like a gambler with a crooked dice
http://www.youtube.com/watch?v=-vq0qeTojnE
RB - Stay loose! ;)
ReplyDeleteEUO - Guys, I think they're sunk! Or is that, Skunk?
ReplyDeleteIlini- How the hell to you play it?
ReplyDelete