I wasn't going to post anything today, it's a holiday, I slept late, we are going hiking but there were at least three markets in Asia with 5 plus percent drops and at least six markets in Europe with four plus percent drops and a couple more that are close.A reader left two comments overnight saying that SPX futures were well into the 1200's.
At last look I see 1282.
We'll see if it carries over to Tuesday or not.
While this might trigger an emotional response, take the time remember that whatever is happening now or will happen in the next few months has happened before. You may not find it pleasant but there is nothing new.
36 comments:
"While this might trigger an emotional response"
especially with some workers
checking out their retirement
funds over the weekend and watching the news if they have
today off.
Tomorrow should be very interesting
...
thanks Roger
Do you still think this bear is moving TOO fast?
We may see the whites of their eyes tomorrow.
This retiree still believes in buying when there is "blood in the streets".I believe that if you buy now you will be very happy when you look back in a few years......even if there is more pain ahead and this turns out not to be a capitulation bottom. Now, if only I could sleep at night.....
anon 7:34, normal bear market activity includes feel-good rallies. This type of precipitous one way trade usually is followed by some snapback even if the snap back should be sold. the last week or two feels closer to panic than normal but keep in mind i don't need to be right about this description and chances are you don't either.
Retired in Prescott, your statement is of course true but anyone buying aggressively needs to be prepared for the next 20% being down and it taking a few months for that decline to bottom out.
I have no doubt about SPX 2000 but obviously no idea when.
I'm new to reading your site as of Wednesday, but find it very interesting.
I'm 30 and thinking about rolling out some public employee retirement (8K) from a previous career into my IRA. I want to role it out obviously at a low point. No one can predict the lowest low, but I'd like to get within 10% of the low if I could (does that make sense?).
My financial advisor is saying roll out and ride this back up...even if it takes time...since I've got time.
Comments or questions appreciated.
i'm curious at how retiredinprescott defines "blood in the streets". so far, there seems to be some "blood" on main street (for those borrowers losing their homes) and a paper cut on wall street in terms of the stock market (13% or 14% from the high is not that terrible--unless you owned mbia or ambac). bonuses on wall street probably went down a bit last year, but i have not heard that big layoffs started yet. some of the financial firms' stock prices have not done well so far. but how would you define the real disaster so far? where is the penn square (1982) or franklin natl or penn central (1974) or enron or worldcom? to use a slightly different analogy, the thunderclouds look very ominous, but has a tornado actually touched down anywhere??
Don't market time it. Roll it over.
Slept late? Oh to live the rock-star live of a portfolio manager! lol
There is indeed "blood in the streets", and whatever the outcome over the next several months, I believe we will look back on Q1 '08 as an opportune period to buy U.S. equities. Certainly a lot of foreign money is pouring in, right now.
KC within 10% can only be a guess. i have to admit i don't follow you as to why the level of the market has anything to do with timing a rollover.
blood in the streets might be like pornography, we'll know it when we see it?
that might be, for example, when people who now say its a good time to buy change their mind? I don't really know, i'm not a huge fan of the term.
Technically speaking the current drop in the S&P500 seems slimilar to drops in Mar and Sep 2001.
Both drops were about 20% and were followed by 10% V shaped advances.
If the fed "Just Does It" tomorrow, this pattern might just repeat.
So, kc, it might be wise to "Scale In" (Dollar Cost Average) into this market.
CA
CA, I think my advisor wants to break it up and drop in 20% per month for five months...that probably helps the emptions of the whole thing. I'm also thinking about rolling in another 16k from another save investment vehicle.
Essentially what I'm thinking is that my money is safe where it is a government retirement account and if the market is just going to go down for the next six months then why should I take it out of a safe "investment" and put in the market. But I'm a novice so I appreciate any advice I can get.
If this is a longer term bear market, with more downside to come,then there probably won't be a V bottom; a V rally perhaps but that's a different story.
People like to talk about the "July '02 bottom" or the "March '03 bottom" which is fine. But the fact is, SPX was basically range bound for the better part of a year. You could have waited until the range was broken around June '03 and still done quite well for a few years afterwards.
Obviously hindsight is easier but usually discretion proves to be the better part of valor.
You and I have been around a long time when was it ever the time to sell
during a panic? However this panic may be just what the doctor ordered
in order to get a rally. Notice I said rally - not new bull market.
That's all I'm looking for or hoping for - a rally back to the 55 MA.
If we V bottom on a panic tomorrow that could be the start of that rally
although I would have preferred we just worked sideways a bit.
I guess the foreign markets depend upon us more than most had thought to
buy their goods and services and if the U.S. goes into recession we may
bring them with
us although at the moment I think it's mostly panic.
This is the time where I internalize my understanding of asset allocation. I have been reluctantly holding some stodgy and boring stuff just because what seems to be a conservative (cowardly!) asset allocation requires them. I have a TIPs bond fund, short term treasury bond fund, foreign bond fund, Hussman Strategic Growth, and a ladder of CDs at my favorite credit union. These guys are saving my assets.
Tuesday I will watch with detached interest as the starting bell (starting gun?) sets off a lemming stampede.
Hi Roger
Canadian markets are open. And yikes. We're approaching -5% so it's not looking good here either.
The problem with the "Buy when there is blood on the streets" line is some idiot is always using it. I have seen it used to refer to 2% down days in a bull market when they should be saying "buy the dips".
I plan to be buyer when there is blood on the streets. I may also buy the comming bounce.
Nevermind the markets. What's really amazing is that your covered in snow in Prescott, while I'm enjoying the sun in Phoenix, located only a couple of hours away.
I don't know why everyone is so worked up. I just checked my stocks and I'm even for the day. Think I'll go take a nap.
Roger, Don Coxe recently reports that the yield curve is no longer inverted, that the two yr yield is less than the ten year and the libor rate is getting cheaper too. Did I hear right? Any comments?
RE bachelor party, In circa 1972 I was the best man and organized such a party in new orleans. I paid 50 bucks to the club mgr to make sure that my buddy was picked to help Sandra Sexton with "her" champagne bath. The groom was quite drunk and one might say interested; I was later shocked that he was shocked in that he did not know that "she" was a he.
I just got an alert from the only subscription service I use, one of the top timers in the country, and he repeated that his "indicators" were still in bull territory, but that due to the volatility, only dollar-cost averaging new money at this time, while keeping currently recommended diversified portfolios as is.
His aggressive portfolio is down 11.7% ytd. People are
beginning to get protective.
Also, listening to Don Coxes podcast Friday, he recommends staying long on food and energy commodities, and precious metals, since they are no longer cyclical commodities. At the same time, he says that now is not the time to buy cyclical commodities like base metals, etc.
With the downdraft of global equities, the whole premise of diversified portfolio construction needs reworking. I do appreciate the gentleman who had some kind words to say about short and intermediate term bonds. They are looking better all the time.
Enjoy the snow, Roger.
Scoot
back from our late started ("money never sleeps") hike in the snow.
a lot of divergent opinions. none of them will be exactly right (mine included of course) but they can all be partially right.
one thing i would add is that any trades you might make could end up looking very wrong at first. hopefully no one freaks out because of this.
While you guys are on holiday, here is an account of what happened today on the stock market in Canada as reported two hours ago: "The 520-point drop in the Canadian TSX, which is about or 4.1 per cent of the market, trimmed more than $70 billion in value on top of a 6.6 per cent dive last week that had already wiped out all of the market's gains for 2007."
White knukles Willy
This move is gonna wipe me out. I will be blowing out of my positions tomorrow and going short with everything. The DOW should hit 9k in a few week.
Doug
wow tomorrow is going to be bad
Anon@1:30 (Doug) is as good a contrarian indicator as you're likely to get on this blog. Tomorrow is not a day to be selling short. Buying, perhaps, but no way I'd short into a possible capitulation. You're arriving late to the game if you think that's going to work.
I'm looking for a gap-down open so we can get some nasty selling and setup for a decent bear-market bounce. Sentiment has gotten so extreme in such a hurry, that there has to be one around here somewhere.
If markets gap at the open, and VIX spikes, I will be covering most of my remaining shorts and starting to roll out of nearest term puts.
I am looking forward to Roger's reaction in the morning because I have a lot of respect for him in light of his actions in the past. He has been talking about a bear market for some weeks if not months now and it would seem that it has definitely arrived. Bear markets, according to other financial gurus, typically last nine months or so and mark the end of a business cycle. This is where we are it would seem. Rash actions now will only compound the pain.
I gather that, in the downturn period, there will be occsional rallies and that one should take advantage of these.
I am looking for advice from Roger on what sectors will likely eventually lead the way out into the light?
Any ideas Roger?
White knukles Willy, I believe that snippet is from earlier in the day. The TSX closed down nearly 600 and the Venture was surely worse percentage-wise. Call me crazy, but I was buying into that mess today ... producing miners who are selling at NAV or near cash-on-hand. BTW, it was a gap-down open pretty much across the board, which is why I am looking for the same tomorrow when US markets open.
There is no doubt of blood in the streets. Start here:
www.nypost.com/seven/01202008/business/
blood_on_the_street__trader_866023.htm
"In all my years in financial services, I have never seen it this bad," one high-powered securities industry lawyer told The Post. "I have owners of small firms calling me up saying their liabilities now exceed their assets, which means by law they are required to close down."
The lawyer said he had two 50-something Wall Street guys call him this week, who, he said, "had lost hope, crying on the phone."
"It is call after call after call like these," he said.
[...]
A trader at the New York Stock Exchange could not name a Wall Street firm that did not cut staff this week. Many swung the ax all right - handing out pink slips even as bonus season failed to lighten the dark mood.
Willy,
there will be plenty of time to sort out where leadership will come from.
a couple of pat answers would be everything that did poorly going in and during the bear. another answer would be semi-conductors, industrials and financials as jumping first to mind.
Fwiw, I'm selling my SDS....have got a limit order in based on SP 500 @ 1300, so god knows what sort of execution I'll get if the open is gap down....and will then sit on my hands and watch things unfold. IF there's a "bounce" down the road, might lighten up some on oil/gas at that point. I know...call me a wuss for getting out of the SDS, LOL.
Jan
Japan, Korea and Australia opened down another 4%
What Momo Fader said but only the very nimble w/ superb discipline and backup links to their transaction service should consider new positions IMHO. This smells like capitulation and snap-backs are common in that scenario but there is nothing to prevent a gap-down from continuing down once resistance is broken and if its strong enough and programs start hitting their triggers it can gap down again. I am making no prediction here, in fact I expect a bounce, but those who remember 1987 know what can happen when the triggers blow off: The system starts to lock up.
My own positions are in and I plan to go for a walk by the river tomorrow morning; it looks like it will be chilly but a fine day.
Drinking wine again and smiling
I do not think there is blood on the streets yet.
I think we are at the beginning of the middle not the end. That said I expect a wild ride this week and have no idea if I will place a trade. May bounce then again we may not. We will see.
If you think you can predict this week my hat is off to you. Personally I can not wait to see sami's view.
seg
ha ha, i am staying put.
As luck has it i have an early morning business flight and will not have access to the markets all day, plus i am mourning the Packers loss.
As all know i had closed all my retail shorts and my SRS way too early, 10 days ago and left a ton of money on the table. I have not done anything with that cash, it is NOT burning a hole in my pocket.
The only short i have now is united airlines, i could not resist the other day when it jumped 26% in one day on merger rumors.
I have been lightning up on my longs since Oct. via GTC stops, letting the market tell me the weakest positions to exit.
I just pulled all the remaining stops that I had in place. I see no reason to sell tomorrow. If we crash it will be too late to sell and will get bad fills.
If you read the book "The Market Wizards" and read the stories of those that escaped the 87 crash you will realize that it was not a single-day decision that made the difference but a process of listening to the market for months before the crash.
In short, i ain't doing anything this week, will wait till the dust settles.
sami,
I have to agree with you this week is not predictable. waiting for the dust to settle makes sense to me.
glad I am not in themarket.
Bob brinkers market timing comments were emailed on satrday before the turmoil started.
his dollar cost averaging comments could change. he has been wrong since november and lets face it no one is perfect.
Going against his advice has not been fun but I am still glad I did not listen to his advice.
Too far too fast!
Fasten your seatbelts...
Post a Comment