I was quite public about my sale of Bank of America (BAC) in the low $29's because of my lack of faith in the merger with Merrill Lynch.I was "right" for a minute or two, then I was "wrong" when they banned short selling and now "right" again because of the earnings, dividend cut and capital raising.
Well, no, that is completely bogus. The timing clearly turned out to be unlucky. When you sell something that thing will either go up or go down after your sale.
In the video over the weekend I conceded the timing was poor (which it was) but if you couldn't tell I wasn't too worked up. I sold for a fundamental reason; lack of faith in the merger. That could be wrong, the merger might work very well but I will not be right or wrong for months.
When something needs to be sold, regardless of the reason (fundamental, rebalance, profit taking, panic) sell it but it doesn't make sense to get too happy when a sale is right or too upset when a sale is wrong because you will have some of both.
32 comments:
Roger. Off topic, but you did not comment on the chart overlaying economic and stock market cycles. Chart posted at Trading Goddess:
http://tradinggoddess.blogspot.com/
in the article Monday Market Meltdown - Global Edition. I look forward to your thoughts on recommended or appropriate sectors during the various phases of the cycles. Thank you.
Exactly. And I think if anything you should be happy you sold it because you definitely won on decreasing vol in your portfolio.
This was a great post! I really enjoyed what you had to say! I wanted to offer you a link to another blogger who is doing great work. His work is about emotions, and how it affects our financial decisions, and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work. His name is Brent Kessel, and you can view his blog at http://brentkessel.com/wordpress/.
If I only had a nickel for every time a pundit pumped one of those "high-yielding" financials, this year.
very few people saw trouble with financials.
all i can say is inverted yield curve; bad for financials
Roy,
Let's combine our nickels and buy a yacht. I'm getting them for every time I hear "this time is different".
Roger, I think I remember you saying that you liked questions
from your readers... Here is one:
If a company in an ETF goes under
is it replaced with another company...as they did with AIG
in the dow, being replaced by
KFT? thanks
Roger, just some follow up on a previous comment and your response. At age 74 and only retiring in about 5 months, when all earned income will stop. Lucky me I was able to earn income until now. I never spent enough time doing a retirement asset allocation since I have been quite aggressive and mostly in equities, about 80% while earning income and doing well in the market. I used a retirement monte carlo plan and found I could withdraw 4% from my plan until I ran out age 95. Frankly, neither my wife or I expect to go much past 85. All it says is I would have below average risk and an allocation of 30% stocks, 60% bonds, 10% international. I do have anumber of good mutual funds and stocks a few bonds and cash. Now the job of what to use and how to begin. It's a terrible time to have to sell equities & funds and put into bonds. Any thoughts that might help from your knowledgable investors and you? Any website asset allocation software I can benefit from?
Ron
Now where are we going?
bye bye 1095
http://stockcharts.com/charts/historical/spx1960.html
ETFs simply mimic an index. when changes occur within the index, changes will then occur in the ETF. it is possible that changes in the etf would have a small lag in making changes but it will track the index.
Ron, the issue of what to sell, assuming dividends and normal, even if infrequent, portfolio turnover doesn't cover the income need then you drift into the realm of financial planning. Portfolio maangement is no financial planning and unfortunately even if i wore that hat it would drift into the realm of specific advice.
apologies.
as i mentioned many times, 1095 was predicated on my belief that the bear market would be within the realm of normal; 30%.
if we have even truly gone worse than normal, i don't think that is where are, i would submit that worse than normal is in the eye of the beholder and subject to a couple of variables.
For example, what if we crash down 20% from here the rest of the week, make the bottom, and are back to 1100 in a month? Some would call that worse than normal but I'm not sure.
what if it drifts between 1000 and 1100 for five years, well in terms of price we could argue not worse than normal but in terms of time it would be far worse than normal.
my focus was normal bear market and of course that could be wrong but it is too early to know either way whether the bear is worse than normal or not--that is the important thing. my being right is not something someone should care about because i don't care.
i am just trying to go down less and protect as best i can.
http://tinyurl.com/4gdvkh
I think it is different this time.
carry trade....
thanks,
90% cash
another minus 9% day....at this rate we'll be to zero in less then a month. At least the markets can't drop below zero (unless, of course, you're leveraged)
meant minus 5% day (not 9%)
People are hurting. excuse the language but this is bullshit. Many people I know have lost nearly 40% since the top last yr. These are people's retirement that the greedy wall street fat cats are playing with.
"Due to recent budget cuts, lack of funding facilities and the rising cost of energy, the light at the end of the tunnel has been turned off."
from Cara blog
a little humor comes in and at the same time anger.
both valid coping mechanism but also divergent extremes.
even if normal bear market is dead wrong this is what happens during every cycle.
They said if 1080 didn't hold it
was "look out below"! Yikes
996...the low double bottom
would be 800.
If they find Binn Laden
will it rally;-) ?
a name from the past
http://www.sicksaver.com/
we can get a group rate;-)
hide the razor blades!!!
Woohoo! Another nickel.
LOL!
maybe bailout version 2 will involve the government reimbursing me for bad stock market investments.
hey, why not, they're bailing out homeowners who made bad investments
i would prefer a monthly stimulus check of $2000-$3000 per spouse.
as long as we are printing money, and i don't there would be an inflation problem for at least 2 months.
http://seekingalpha.com/article/98844-is-the-bear-market-almost-over-for-the-s-p-and-silver
anon 12:14--Ron, I'm a retired investor with a self-directed IRA. I found fundadvice.com and ifa.com to be good starting points, particularly if you favor indexing. I'd also suggest that you check out the Morningstar discussion boards. They've one dedicated to investing during retirement. Read a lot and get a financial advisor if you don't want to do it yourself. Good luck.
Faith in merger?
BAC and Countrywide....
Quite frankly I am amazed on how little they have written down their assets from that merger.
It isn't like Countrywide only orginated or bought clean loans. Right....
Fannie, Freddie, Every Subprime orginators - became toast... Remember many of those subprime orginators were bought up by the investment banks...
I am amazed by the little damage that BAC has taken for the takeover of countrywide.
Doesn't that seem strange? Did their borrowers just happen to be the only ones (majority) who actually sent in their checks?
Countrywide was the number one mortgage orginator before their demise. Chase, BAC, WF and Quicken were the rest to follow. Chase, BAC, WF service paper, quicken does not (it sells loans asap, holds lower risk, but lacks liquidity in tight markets, ie today).
Why haven't chase, bac, and wf have shown heavy write downs?
I don't the answers but are those questions even being asked?
Their write downs have been pathetic over the past few months.
They are saying that there could be another 500 billion in writedowns...
Based on the vix over 60 are you looking for a short term bounce?
Roger,
You are now officially wrong. It would best if you just accepted it and admitted you were wrong IMO.
On the other hand I am still rather impressed with your methodology and how your portfolio has performed. You are doing significantly better than the indexes and this is an impressive feather in your cap so far. We will see if you loose the advantage on the way up. Still you may smooth the ride even if you break even and that is worth something also.
I am still up for the year but it looks like I am trying to fix that :)
seg
seg,
for some (if anyone even cares) I was wrong at 1094, point conceded.
Right here right now the SPX is down 36% from the peak.
if you think that is beyond the realm of normal (which is fair) then yes I am wrong.
Show me the money! A lot of finger pointing here but no substance. What do we do now! What mistakes did we make and how can we prevent them in the future. Roger talks about having a defensive strategy. I didn't. How do you salvage your portfolio?
After a 36% drop, you need to come back over 50% to break even!
Whiners. Everyone wants equity like returns, without equity like risk. A home with nothing down. On and on. Grow up, guys. There is no way to make real money in the markets unless there is risk. Manage it, as Roger has taught you, and ride the thing. Relax a bit. Take a deep breath. Reread Rogers posts. Get ready for the next bull.
A really good explanation (i think anyway) of what is going on with Freddie Mae and Fannie Mac is on the podcast from Econ Talk, on Freddie Mae, Fannie Mac and the mortgage crises on Econ Talk. http://www.econtalk.org/archives/2008/09/kling_on_freddi.html Kling on Freddie and Fannie.
Lorraine Johnson, JD, MBA
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