Thursday, August 4, 2011
08/04/11 The Market Sold Off?
I agree with Miles.
Let's review Buy-and-Hold 101:
(a) The strategy is buy and hold.
(b) It's not buy and sold.
(c) It's not buy and hold until a major sell off anoints you with the ability to predict market movements going forward.
(d) What would you do right now, anyway? There's only possible move- sell. That's right, sell at the freaking low of the year. The last time I checked, that isn't a strategy that pays off.
There was a major sell off today. If you have a LT perspective, it's a good thing! Think about that for a minute. 5 minutes. Here, take a hit- it's all groovy, bro.
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If Laz reads this blog, he's a smart dude.
ReplyDeleteI swung over to the uptown bar and noticed Patrick is leaving. Anyone know why?
ReplyDeleteMark- The one clear plus to buy-and-hold is lower levels of stress. It beats day trading hands down in that regard. Even if I'd been fortunate enough to sidestep the last ten days while holding cash, I'd still be saddled with the onerous responsibility of deciding when to get back in.
ReplyDeletefor what it's worth, it's pretty obvious that the world's banking cartel knows fully well what happened today and this week. i highly doubt they have "no ammunition" left. i'm quite sure we'll get a shock and awe rally just like we had a shock and awe drop.
ReplyDeleteSD - "Never mind", Mark? I do mind cuz SD is a disgrace to the petroleum industry, if that's possible. Down 12.2% today (second worst on my screen of 30 gas & oil stocks), then down an additional 4.2% after hours on earnings news. Maybe I'm just too PO'd at all of them since all my recent profits were flared off in two days.
ReplyDeletehttp://www.finviz.com/screener.ashx?v=111&t=CRK,GMXR,PVA,COG,PETD,SD,MMR,CRED,LINE,HK,WLL,XEC,CHK,MHR,DVN,ECA,EOG,APC,XTO,SWN,FST,GEOI,PXD,BEXP,KOG,NFX,DNR,CXO,MRO,PXP,UPL&o=change
jb- My port has probably experienced more or less the same hit yours has. It's all mental. That's not just a catchphrase- it's the truth. A LT perspective will clear your head.
ReplyDeleteThe 'truth' as I see it?
(a) I can't time the market. If it was possible, would there not be at least one system that worked?
(b) How many mutual funds outperform the market?
(c) How many hedge funds outperform the market without inside info?
(d) You CANNOT time the market.
Once that's clear, what's left?
I think we should just consider stocks a volatile asset class that will pay off 'pretty well' over the long haul. That's it. What are the alternatives?
I wouldn't give today's selloff a second thought.
Illi, Need to have stops on those degenerate oil names with no earnings and little production. Any metric used to value them are going to be suspect. Even if we do have a bounce back this area is going to lag. Hell CVX sold off 6%.
ReplyDeleteThe problem with a lot of "buy and hold" types is that they hold while things are good, but are panicking on days like today and get back in higher when it is "safer". The smart ones might not even know the market was down today because they are too busy with other stuff.
ReplyDeleteI still think you can improve on buy and hold if you are willing to do some fundamental analysis and get a good estimate of the value of a company, so you can buy low and sell high, but most people aren't willing to do the work.
I don't think most investors have even read a SEC filing, let alone built a business model to represent a business.
Seriously, how do things like HUN/WLT/ANR happen?
ReplyDeleteMarkW,
ReplyDeleteI think the market used to pretty much bottom during the day, but nowadays, there is so much futures trading, the S&P futures will often bottom in the middle of the night - just another thing to keep our attention on.
My bet for tomorrow would be a small bounce in the morning, followed by a sell off until Europe closes, then a bounce into the afternoon with end-of-day profit taking.
Used to own HUN - thank god I didn't today!
ReplyDeleteAsian markets falling like dominoes.
ReplyDeleteMore than just playing catchup to the U.S.?
ReplyDeleteBB- Thanks. Yeah, gaps are the normal now. I still think real turning points come during the day.
ReplyDeleteHUN. Me too traded it around 9-15.
Like MGIC a lot and have traded that one well also.
I don't sense panic in the markets. On the other hand, how else would you interpret the global selloff? Markets go down b/c investors sell. If they're selling this hard, then it must be panic.
ReplyDeletePersonally, I don't think we sell off much further, if at all. But by now we all know how much my opinion matters.
ReplyDeleteYeah bought HUN for the arb play on the takeout, took a loss when it fell apart, but got back in around $4 and made my money back and then some (I consider myself lucky).
ReplyDeleteMGCI had a suprisingly big hit today. Not sure if the Israeli Dinar got hit as well which casued a lot of this or if it was just a good stock for people to take profits in after the run the last couple years. I'm in MGIC since about $1.50 and have sold half, but think we get to $10 or $15 over time.
Alright. I'm calling it a day. Don't lose any sleep, guys. I'm old enough to remember October '87- you know, if I had decided to 'buy-and-hold' in September '87, it would have been painful a month later...and freaking unbelievable 12 years later.
ReplyDeleteHmm, silver has lost an entire month of gains while SVM lost a month and a half. The S&P has lost eight months of gains.
ReplyDeleteOCT '87 - I was buy and hold and on margin, then had to sell a lot on a broker call. That broker and house has long since been gone. I'm still here but have not been on margin since, except for a little over the top on occasion. Margin sucks.
ReplyDelete"the world's banking cartel knows fully well what happened today"
ReplyDeleteOf course they do, they shorted it right from the top! In fact, I'd go so far as to say they orchestrated a great majority of it, but there were plenty of signs.
I'm not claiming innocence, I saw it all setting up in the charts and made conscientious choices. If I'd have trusted the charts, I would've made a buttload of money. As it is, I'm in the red on SVM now...
Yep, I think that could've been the bottom today but the H&S seems to be in play and that points to 1150. Charts don't lie, right?
SLV - I have to admit I sold out my position late today (too late) but at a nice profit. I held from July 11 at 35.51 and sold at 37.63. Might become one of my many regrettable sells. Wanted to raise cash for bargains. Lower equity prices anyone?
ReplyDeleteDid not sell CISCO which today fell below my very low buy point of 14.91 a while back. Had a large profit for the last month which evaporated. No reason to sell a good stock with that much cash.
We have a major divergence gentlemen. The P indicator failed today.
ReplyDeleteDid GS remove AONE from it's buy list yet?
ReplyDeleteKnow what's held up the best through all this? HEK.
ReplyDeleteWell, at least there doesn't seem to be any more gaps in ALU. Wow.
ReplyDeleteFLR- Interesting report. 80% of back log is outside USA. Not sure what the historical average is, but I've never seen it at 80% and I follow this co.
ReplyDeleteSLV - Well there could be more downside involved in miners if not silver itself, SLW/EXK/CDE/GPL still have gaps-up to fill.
ReplyDeleteSomebody on a neighboring blog mentioned just yesterday that we are technically and fundamentally oversold with no mention of technical patterns. Wonder if that person failed to recognize the double top pattern playing out simultaneously with the H&S, or all the gaps up in silver miners, etc., or if they were being spiteful and misleading?
ReplyDelete"They tried to make the markets go to rehab, they said no no no."
ReplyDeleteThe world markets are a bunch of government stimulus junkies. The sell off is due to the junky not getting their fix from the printing presses. This is not going to be the bottom if Big Ben and the other central bankers think the market is going to go cold turkey. Withdrawls are a bitch! This is why I think a horrible job number will be more market positive than a decent job number. A decent job number pop will be faded and a horrible jobs number gap down will be bought with the anticipation of Ben starting up his helicopter. The Debt ceiling debate pretty much tied Obamas hands on any kind of econ stimulus policy or programs. Really the only thing he can do is start another war. Other than that he is a lame duck. We are at a pivotal point and although it is painful and will start a major sell off I think the best thing to do is to send the market to rehab. No one trusts a junky.
PMI - Warns it may shut down, looses -53.4%
ReplyDelete"I think the best thing to do is to send the market to rehab. No one trusts a junky."
ReplyDeleteIf you mean crash, that should've been the path from the beginning, and the insolvent banks allowed to fail. The moral hazard risks have only grown since, too much invested now.
Maybe the market has already priced in massive bank failures, etc. they have served little purpose anyway, keeping their junk assets hidden from sight and dragging the economy down like a boat anchor.
Another 500pts to go on the dow by my account. Damn, I sure hope that doesn't happen...
ReplyDeleteCP It was nice to believe that the economy has turned around and some how the market has started creating wealth organically through earnings ect, but every market downturn has been met with some market intervention since Iceland went belly up. THe market got a FIX at every problem worldwide. Save the counterparty bullshit. THe market has been a distorted discounting mechanism. A historic parabolic move up world wide with all rough patches smoothed over. One of the biggest bullmarket in history with the lowest interest rates in my life time and still no one can buy a house? Ten percent unemployment? Bankrupt Governments? And yet the market rises. Are we in some opioidic wonderland. Whats wrong with that picture. I'm sure Ben will give us a fix by the weekend, but just like any junky will tell you. You need a bigger FIX to have the same affect. I think we are only going to get a dime bag when we need a kilo. That is basically what happened in Europe today.
ReplyDeleteHere is what should happen. I know I am a real radical. Ben should say no more QE and I am raising interest rates to a whole .50%. The horror. Is our economy so fragile it cannot take .50% interest rate hike? Probably so. We would have a washout. Gold would be 800 bucks in two weeks. OIL would be 40 and all our big banks would go bankrupt. Should our market be near all time highs when it could not take a .50% discount rate?
ReplyDeleteDisclaimer I am going loooong when we get our FIX.
RB - I don't get the counterparty comment. I don't think anyone really thought the economy would ever recover in such short time, it's not like a light switch and building wealth is always more of a challenge than destroying it.
ReplyDeleteThe back and forth interventions could go on for a long time, I suppose.
Anyway, the clues were and still are in the charts, not sure why we aren't putting faith in them.
If oil were $40, would explorers still be capable of bringing it to market? They do have expenses. Maybe Bernanke should raise interest rates, and will, perhaps we should be contemplating the possibility. It should strengthen the dollar, I would think, but wouldn't that mean the debt would become more of a burden?
ReplyDeleteI don't see why global governments should be allowed to manipulate currency by financing the debt of other countries, that should be left to the free market. If this practice were stopped, then we wouldn't have vast amounts of money chasing these moves?
There are so many things wrong about various forms of government intervention it makes the markets go berserk. Why not just have government concentrate on making market participants less opaque and leveling out the playing field so everyone can participate? It's all the games that cause the rats to desert ship and stifle economic vibrancy.
All of the spirit of entrepreneurial investing has been gamed out of the system, that's why it constantly needs a fix, b/c once the opportunity which now lasts a fleeting moment, is gone, there's no more incentive when the known end result becomes immediate loss.
And what's with these 100~200 share trades constantly executing all day every day, who the hell is running that show and how can that be defined as contributing to the process of price discovery?
I'm thinking about buying a cab, I can trade off my iPad (Rebekah's iPad but I think she'll let me use it when she isn't playing solitaire) and catch quick naps now and then when I'm parked at the airport....welcome to life in rural San Joaquin valley
ReplyDeleteYeah, no way $40 oil is going to happen again other than a spike down like in 2008 / 2009 and, if you recall, it was only the current month futures that got down to that level - even the 2 month futures were $20 higher. Reality is the world cannot produce enough oil at $40. You can't build a $15 billion oil sands upgrader or pull oil from 5 miles under an ocean with $40 oil. Sure Saudi can still make a profit with their $2 per barrel costs, but reality is that most fields which can survive on $40 oil have long been depleted and we need to get the more difficult, more expensive oil now.
ReplyDeleteillini - LOL, what's a "bankster"? I suspect there are differing definitions floating around.
ReplyDeleteARCC - Double dip chart.
ReplyDeleteYa know, if gold and silver are so unimportant, why does everyone want to see them get crushed so badly anyway?
ReplyDeleteIf you really want to see a strong dollar, why not support something to create value instead of taxing anything that moves and socializing losses of the uber rich fat cat banksters, like make television sets, manufacturing equipment, teach foreign trade, science and chemistry in schools?
If you believe in counterparty risk and you trust your government with your wealth and they are transparent and honest then why not buy and hold a REIT stock with a good dividend, like AGNC?
ReplyDeleteI don't get the ill feelings over some metal that our currency used to be attached to till tricky dickey wriggled his way into selling off Fort Knox...
ALU?
ReplyDeletenew post
ReplyDeleteI'd certainly buy AGNC in a heartbeat if I didn't think something fishy and unstable about the state of our public finances wasn't going on behind the curtain...
ReplyDelete