We rented a truck and drove to Kona to get stuff at Costco. The house was completely empty when we bought it. We got a bunch of stuff over the weekend at garage sales but for some stuff it made sense to get brand new. Most amusing on the trip is that there is a Starbucks in Waimea, a neat little town that was just written up in one of the outdoor magazines as a great place to live.
Aaany-hoo... I really thought the market was going to get crushed on Monday, not crash crushed but maybe something like that 3.5% day we had a few months ago. I was really certain about this.
Of course that was very wrong. I did not do any trades to try to game this, that is not what I do. There are several points this makes, however.
Little dips come and go all the time, maybe they will come a little more frequently over the next couple of years than they have in the last few years, and getting this right on a regular basis is unlikely. Little dips means down a little and if you are an investor, as opposed to a trader, you need to be able to withstand down a little when it comes.
I would define down a little as 10% or less. If 10% sounds like a lot, I would urge you to get a Stock Trader's Almanac to see how frequently dips of this size come because 10% is not a lot, all the comments that came to this blog in the summer notwithstanding.
Although I do not subscribe to this approach an argument based on the numbers can be made that one should not try to trade 30% declines. Again that is not for me but the numbers lend some credence to the idea.
The next point to make is that if you are 50 or 60 or any other age where you expect to live a long time, and I would say a healthy 80 year old needs to plan long term, the market's action over the next few months will very rarely matter. This is one thing I sort of agree with Jack Bogle about (any heckles for my disagreeing with him on anything noted). Down a lot is a very rare occurrence. While I do believe in trying to protect against it, I am cognizant it does not happen very often which is why my process for getting defensive starts with a mild tweaking.
The last point is that despite what anyone thinks at any time for any reason they can be wrong. There were plenty of reasons for the market to fall on Monday and it just didn't.
Wikinvest Wire
7 comments:
Roger,
How are you dealing with the time difference?
Love Waimea,went horseback riding on the Parker Ranch, amazing
lol, i go to bed at 8:15
I expected further "softening" on Monday as well, and I, too, was mistaken. I expect DOW 17000 by Year End 2008. I will be either right or wrong. My expectations are, therefore, meaningless. My thoughts about the market are likewise meaningless. Ohmmmmm.
Rog baby,
why do you insist on thinking you can make a short term call on the direction of the market? You are almost always wrong!
Instead, why not focus on the real job at hand....portfolio construction? It has virtually nothing to do with making short term calls on the direction of the market.....
Anon 4:31 baby;
Speaking of porfolio construction...when are you going to treat us all here with a sample of your portfolio construction looking forward?
We won't hold our breath waiting.
I see DOW above 20k by next year end.
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