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Top 162. May 24, 2000 3:19 AM

» pjstack - I still don't get it.

Roger says the Bear is here, but I still don't know what he is doing. NOT buy stocks? What? Buy gold? CD's? Bonds? AK 47'S and ammo? What?

WHAT, for cryin' out loud? You guys have been fussin' for so long that you probably figure that we all know all the ins and outs of your thinking, but I'm just new here. So, what exactly is Roger advocating?

Buy? Sell? Hold? Commit suicide? WHAT?

His posts are long and turgid - I haven't read them all - how could I? In a nutshell, WHAT does he advocate?

I'd just like to know.

Phil Stack.

(P.S.: I don't mind insults - I just would like to know WHAT the punch line is!)

-- posted by pjstack

Top 163. May 24, 2000 4:15 AM

» rasputin - I gotta' admit...being 100% in cash is boring, but...

the total market is down 6.5% from where I got out in mid-January. I figure that my fixed investment earned 3% since then. It's all Vanguard 401k money and no tax consequences. That's a net difference of 9.5%. Kirk, you said you're about even for the year. I'm sure that I couldn't pick stocks as well as you and couldn't count on the kind of performance you manage to achieve. So, boring as it is...I've followed Brinker's advice and will wait for his buy signal. A bit less wear and tear on the nervous system. Good luck to us all. We're all gonna' do just fine, long term.

-- posted by rasputin

Top 164. May 24, 2000 5:44 AM

» Rande - Lots of posts -- good to see people arent' just interested in t

Lots of posts -- good to see people arent' just interested in the markets when things look rosy. Here's a couple of thoughts:

"Brain dead" -- Sometimes it's the obvious which escapes us, the things to which we say, "duh." If staying the course with a prudent asset allocation and DCA if you're still in saving mode sound boring to you, so be it. It just happens to be what works. If that's not enough to keep you satisfied, if you crave more action, perhaps you need another, less costly "hobby."

"Where is the bottom" -- As Kirk says, nobody knows. But I do know one thing: it is absolutely, positively the wrong kind of question to be asking. It presupposes that timing the market is possible in the first place and such a belief can lead to regrettable short-term action which, over a lifetime, is eventually gauranteed to reduce wealth.

-- posted by Rande

Top 165. May 24, 2000 5:56 AM

» Rande - Speaking of thoughts, here's some that are good to re-read from

Speaking of thoughts, here's some that are good to re-read from time to time. No time like the present:

Speculation: The activity of forecasting the psychology of the market. Speculative motive: The object of securing profit from knowing better than the market what the future will bring forth. [John Maynard Keynes, "The General Theory of Employment, Interest, and Money"]

There's something in people, you might even call it a little bit of a gambling instinct . . . I tell people [investing] should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas. [Paul Samuelson, "The Ultimate Guide to Indexing"]

....there are confident ones; they move from ninety-ten in stocks-bonds to five-ninety-five in stocks-bonds. That implies a degree of self-confidence bordering on hubris and self-deception. Over the decades, when both groups...have equal limited (!) ability to "time," the cautious chaps who alternate between sixty-five-thirty-five in stocks-bonds and sixty-forty are likely to end up with a superior risk-corrected total return score. [Paul Samuelson, "Journal of Portfolio Managment," Fall 1994]

As I have often argued: Even the Almighty cannot determine a single correct value for the market as a whole. [Burton G. Malkiel in How Much Higher Can the Market Go $$ from The Wall Street Journal (9/22/99)]

TIPS! How people want tips! They crave not only to get them but to give them. There is greed involved, and vanity. It is very amusing, at times, to watch really intelligent people fish for them. And the tip-giver need not hesitate about the quality, for the tip-seeker is not really after good tips, but any tip. If it makes good, fine! If it doesn't, better luck with the next. [Reminiscences of a Stock Operator by Edwin Lefevre]

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight![Reminiscences of a Stock Operator by Edwin Lefevre]

Potential .400 hitters in the stock market are falling short of their goal because growing numbers of today's investors are sufficiently educated, sophisticated, and informed to block their way, just as batters capable of achieving a .400 average have fallen short of that goal since the old days because defending teams have developed sufficient skill to block their way. No successor to Peter Lynch has appeared on the scene, and even Warren' Buffett's touch is not as magic as it used to be. [Peter Bernstein in Where, Oh Where Are the .400 Hitters of Yesteryear? in the Financial Analysts Journal (November/December 1998)]

The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike. [John C. Bogle in Common Sense on Mutual Funds]

Any individual who is not professionally occupied in the financial services industry (and even most of those who are) and who in any way attempts to actively manage an investment portfolio is probably suffering from overconfidence. That is, anyone who has confidence enough in his or her abilities and knowledge to invest in a particular stock or bond (or actively managed mutual fund or real estate investment trust or limited partnership) is most likely fooling himself. In fact, most people-probably you-have no business at all trying to pick investments, except as sport. [Gary Belsky and Thomas Gilovich in Why Smart People Make Big Money Mistakes]

The Internet has rapidly become capitalism's great equalizer, giving even individual investors of modest means access--free in some cases--to the kind of information that until recently was the province of Wall Street's financial elite. And it not just about access. It's about speed . . . Of course speed and access to reams of information can't make up for bad judgement. ["Internet Financial Advisor" from Fortune's "Technology Guide"]

-- posted by Rande

Top 166. May 24, 2000 5:59 AM

» JackSwanson - Folks.....

This is the worst environment for stocks in 30 years, so how does BAT come up with a projection for 5500 on the nasdaq this year? I don't get it.
After misguiding so many people, BAT will fade away, and there will be no more TV shows.

The Rev. Jim Bob Cramer, I think we'll learn that his hedge fund has blown up.

-- posted by JackSwanson

Top 167. May 24, 2000 6:13 AM

» Rande - Jack,

Jack,

Did you read the quotes in the post above yours? You won't find the "guru of the day" up there, but there are some pretty respectable sources that have stood the test of time. Don't know whether we'll be reading Battapaglia and Cramer 20 years from now, let alone a year from now, but "the worst market in 30 years?" C'mon. After five years of nearly 30% returns in the broad market and a short-term prabolic rise in the tech stocks through this March, what did you expect? That it would go like that forever? The current environment is a natural reaction to a proactive Fed and some valuations that got too far stretched in one direction. The world still turns and good businesses aren't about to shut their doors. This is a Fed-led, valuation correction that will pass. Meanwhile, the longer-term fundamentals are still in the early innings of their development:

Technologically-driven productivity gains

Global competition

Pervavisive spread of the Internet

Communications/wireless revolution

Global monetary and fiscal discipline

Increased mobility of capital and labor

Global shift to privitization (including self-directed retirement accounts)

Demographic-driven liquidity

Entrepreneurial bus. culture, spreading globally

Geo-political stability/spread of capitalsim

Worst environment in 30 years? More like best environment ever if you've got vision and a time horizon measured in years and decades rather than weeks and months.

-- posted by Rande

Top 168. May 24, 2000 6:53 AM

» Mark_J - you know, Rande, about 6-ish weeks ago, you wrote about how folk

you know, Rande, about 6-ish weeks ago, you wrote about how folks could sell a security for a tax loss (if you're down), and buy a like-kind security. (For example, sell Ameritrade and buy ETrade). You get the tax write off, and you're still in the same-kind of stock should the market rally.

I believe you have to wait at least 30 days before you can re-purchase the previous security because of the wash-sale rules. If 30 days have gone by now, and the securities have continued to drop, you can now sell the security you bought 6 weeks ago for the tax write off, and by the other one back. (For example, selling the Etrade and buying Ameritrade back.)

Is that right? If so, may be time to evaluate those holdings again and determine if it makes tax sense to do the ol' switcheroo again.... (Especially if you have some capital gains from selling 40% back in mid-January!)

-- posted by Mark_J

Top 169. May 24, 2000 7:09 AM

» Rande - Mark,

Mark,

Yes, the wash sale rule applies to "substantially identical" securities -- you can't recognize the loss if you maintain the same position within 30 days of the sale in either direction (61 day window). What I talked about in mid-April during the last swoon was taking recently purchased shares that might be down (say, reinvested distributions in a tech fund from late last year or shares purchased early this year), selling them, and immediately reaquiring a position in a similar, but not identical, vehicle.

For example, you could sell shares in an actively-managed high-tech fund that might be showing a loss and switch right over to QQQ. Not a timing move in or out of the market, just a sideways move that provides a number of benefits:

1. Beneficial tax loss
2. Lower ongoing expenses
3. Better ongoing tax efficiency
4. No change to asset allocation, even for 30 days

-- posted by Rande

Top 170. May 24, 2000 8:26 AM

» Roger_Babson - Hey, Rande!

You wrote:

"Technologically-driven productivity gains

Global competition

Pervavisive spread of the Internet

Communications/wireless revolution

Global monetary and fiscal discipline

Increased mobility of capital and labor

Global shift to privitization (including self-directed retirement accounts)

Demographic-driven liquidity

Entrepreneurial bus. culture, spreading globally

Geo-political stability/spread of capitalsim"

If you knew history, you would know that what you present above describes very well (Good job!) the period of the early 1880s to the early 1900s. After the secular bull market in stocks from 1869 to 1881, quess what happened to stocks for the next 16 years?

Some here will have heard of the Panic of 1873 and the depression that followed into 1877-78. But what most will not know is that, following the depression (the worst in the country's history at that time), stocks made a marginal new high into 1881, as did real GDP.

However, thereafter, stocks entered a 16-year secular bear market, real per capita GDP trended down to the level of 1873, and there was a depression following the Panic of 1893 that was the worst in U.S. history to date (two severe depression in 20 years).

Knowing this, for the vast majority of savers in the market (age 40 or older) with the most to lose, you would not be so sanguine about stocks or long-term real per capita GDP growth.

Good luck.

-- posted by Roger_Babson