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Re: Financial topics
Posted: Thu Oct 09, 2008 3:48 pm
by Gordo
OK uncle, I'm back on board with the rest of you guys on the dark side
We are starting to get real close to the 2002 lows now on the major indexes, and there is absolutely nothing to like about this market action. The gold trade was wonderfully profitable, but now its time to play it safe. If we get a real crash, I will have plenty of powder left to scoop up true bargains.
John, one thing you should be careful about going forward, when you are talking about P/E ratios - you have to look at normalized earnings. There is no question that earnings will get hammered with the economy, and that will inflate P/Es, its much more meaningful to look at normalized earnings. We aren't at a point yet where this is significant, but it will become significant at some future point.
Re: Financial topics
Posted: Thu Oct 09, 2008 4:30 pm
by axis_of_evil
Gordo wrote: If we get a real crash, I will have plenty of powder left to scoop up true bargains.
Yes, but will you know when to buy? There are many false recoveries in a true Depression.
Re: Financial topics
Posted: Thu Oct 09, 2008 4:47 pm
by Timon
axis_of_evil wrote:Gordo wrote: If we get a real crash, I will have plenty of powder left to scoop up true bargains.
Yes, but will you know when to buy? There are many false recoveries in a true Depression.
There is a Chinese idiom:
"Men die for greed, bird catched for feed"
Re: Financial topics
Posted: Thu Oct 09, 2008 4:56 pm
by Witchiepoo
axis_of_evil wrote:Gordo wrote: If we get a real crash, I will have plenty of powder left to scoop up true bargains.
Yes, but will you know when to buy? There are many false recoveries in a true Depression.
What I'm planning to do, and I'm still thinking it over which is why I'm posting here, is wait til it's obvious. Like a drop below 5000 or something. Even then, I'm not buying right away. I don't see a "true" recovery for at least another few years, and even when it happens it will be very slow, so what's the hurry?
In the meantime, having zero of my dollars in the stock market makes this whole thing fascinating to watch for me personally. Like a slow-moving train wreck.
Re: Financial topics
Posted: Thu Oct 09, 2008 5:06 pm
by John
I've posted this on the web log so many times, but apparently it
still hasn't sunk in.
Please read it carefully, especially the part that I've bolded.
John Kenneth Galbraith in The Great Crash - 1929 wrote:
> "A common feature of all these earlier troubles [previous panics]
> was that having happened they were over. The worst was
> reasonably recognizable as such. The singular feature of the
> great crash of 1929 was that the worst continued to worsen. What
> looked one day like the end proved on the next day to have been
> only the beginning. Nothing could have been more ingeniously
> designed to maximize the suffering, and also to insure that as few
> as possible escaped the common misfortune.
> The fortunate speculator who had funds to answer the first margin
> call presently got another and equally urgent one, and if he met
> that there would still be another. In the end all the money he
> had was extracted from him and lost. The man with the smart
> money, who was safely out of the market when the first crash
> came, naturally went back in to pick up bargains. ... The
> bargains then suffered a ruinous fall. Even the man who waited
> out all of October and all of November, who saw the volume of
> trading return to normal and saw Wall Street become as placid as
> a produce market, and who then bought common stocks would see
> their value drop to a third or fourth of the purchase price in the
> next twenty-four months. ... The ruthlessness of [the stock
> market was] remarkable." (p. 108)"
John
Re: Financial topics
Posted: Thu Oct 09, 2008 5:25 pm
by Matt1989
You can literally feel us teetering over the edge. The Dow has lost like 17% of its value this week alone. A panic obviously refers to the mood of a population, but these are 'panic numbers.'
With regard to the last few posts, I think John is really feeling like a Cassandra now.
Re: Financial topics
Posted: Thu Oct 09, 2008 5:45 pm
by John
Matt1989 wrote:You can literally feel us teetering over the edge. The Dow has lost like 17% of its value this week alone. A panic obviously refers to the mood of a population, but these are 'panic numbers.'
With regard to the last few posts, I think John is really feeling like a Cassandra now.
I have a very dark feeling about what's going to happen to me. I
identify closely with the mythical Cassandra, hated and disbelieved in
her predictions, and then reviled and raped when the predictions came
true.
John
Re: Financial topics
Posted: Thu Oct 09, 2008 5:51 pm
by Graham47
John, for those of us that are pretty new to your website and don't have the time to research all you have said on how to avoid the current major melt down, what are the best bets to be safe?
Is it wise to take cash advances on 0% credit cards and stash the cash? Do you think people should stock up on food stuffs? My wife has 45k in her 401k and I have 25k in my deferred comp, both of which can't be taken out unless we lose our jobs or quit. I have heard the only other way to get at this money is to file for divorce, get the money and re-marry afterwards, is this worth it in your opinion or am I thinking crazy stuff here?
My job is not in jeopardy, but my wife works for an airline and I expect it won't be long and they will go belly up (they are already hurting), so maybe we'll be able to get her money then.
Or do I just invest in guns and ammo to protect what I do have!!
Re: Financial topics
Posted: Thu Oct 09, 2008 7:47 pm
by Witchiepoo
I still don't think that some of you guys get it. There ARE no safe bets.
What I've been talking about is considering a long-term investment strategy, and only because I just gained a good sum of money from the sale of my house earlier this year. As the market tanks over the next few yrs, I'd be a fool to not at least think about getting in. But, like I said, it would be a LONG-TERM strategy, like over 20 years or something like that.
For the next 5 years or so ... forget the guns and ammo, those things can be stolen and used against you. I'd rather have a large dog. Maybe two.
Hey John, how about inviting our little friend (you KNOW who I mean) over to this forum so he can start telling you how full of crap you are again?
Re: Financial topics
Posted: Thu Oct 09, 2008 7:52 pm
by Matt1989
Witchiepoo wrote:
Hey John, how about inviting our little friend (you KNOW who I mean) over to this forum so he can start telling you how full of crap you are again?
He wouldn't come.