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11 comments:
Good video today, Roger. Thanks.
Truthfully, I hope the market retests its lows because it helps me feel that I'm getting the best prices that are going to be available for the stocks I want. I'm always reluctant to buy on the first puke down or even the second, but bouncing along the bottom--assuming that's what happens--is like buying at the after Christmas sales.
As for Madoff, I think there's another aspect to the story. Its still another example of investors getting fleeced by unsavory characters in positions of responsibility. None of us probably had any skin in the game, but we had trust in the system and that's been shaken, yet again.
Madoff ripple effect will be interesting to watch. Hedge funds already strained may have even more redemptions, plus DC will have a new diversion to hold hearings on, entertain the hoi polli and give themselves new powers.
Over the past ten years alternative investments such as hedge funds have been pushed very hard on investors as a way to diversify. The legal aspects may be something to watch as well.
Along with the theme at the end of the video, I have been sitting on $500K in cash. Is this the time to invest? Also, can you recommend reading material on what to invest in or give me specifics. I am leaning toward a pure fund that tracks the S&P 500? Thoughts?
no specific advice like that for several reasons. additionally it makes no sense to seek advice from a stranger who knows nothing about you.
What to do with 500k?
There are may answers and they're are relative. What's your time frame? your tolerance for risk? your investment style? what do you want or need for a return? Etc...
Find an investment planner.
Roger,
Madoff is not the biggest Ponzi scheme ever.
The biggest Ponzi scheme ever would be the Social Security Administration
No kidding about social security!
What Madoff did was clearly wrong and I would not condone it at all. But on the other hand is it really useful to the economy to have billionaire's money sloshing around with no oversight or due-diligence? I would argue that these people and their money would soon be parted in any case.
Roger, thanks for the video and for all the informative posts. This is my first comment although I have been a reader for more than a year.
I have a question about the feel-good rally (that may or may not come) before another big drop (that also may or may not come).
It seems to me, we are already in this feel-good rally or most likely towards the end of it. As of Friday Dec 12, the S&P500 (SPY) is 19.71% above its Nov 21 low. Some sectors like REITs (Vanguard VNQ) are 51.47% and Financials (Vanguard VFH) above. Emerging markets (Vangard VWO) are 32.81% above.
So if someone is to give up on stocks, shouldn't it be NOW?
When Roubini says stocks have (only) another 20 percent to fall, and the market reacts as it did on Friday to some pretty awful news, only those who truly doubt their own feeble ability to value stocks would refuse the long term treasure trove of mouthwatering valuations on offer today...
The problem is that no one understands how to value assets or believes that anyone else can either... that lack of ability to perform basic rudimentary value analysis is what got us into this mess and what will prevent many people from enhancing their own long term situations...
When in doubt, keep it simple and stick the the basics... and is there anything more basic than valuation? If you cant do it, get someone to do it for you and pay them fairly... and act accordingly... at this point if you do that and have a reasonably long time horizon, its game over
Ajw
I agree with Jay. The extent of our collective greed is still greater than our fear.
To think that ANOTHER "massive rally" is around the corner (in the form of a "feel good" rally from here) terribly discounts the 20% rise in the last 21 days.
But what has changed fundamentally in the last 21 days? What has changed fundamentally since mid-September (Paulson Plan #1 rejection)?
Has it changed for the BETTER?
The market has gotten ahead of itself in terms of recovery (cf. Yves post today re: investor expectations), and with the short-term memory of gnats, we are reaching for more when we ought seriously to be grateful to be here now, and hoping above all else that the market would just hold still for a few weeks/months.
I say, let some of the news catch up to the price levels before taking on any more exposure. And if it doesn't, then stop running to catch that trolley car... the bridge is out.
R in NY
One can hedge against stocks and bonds but how does one hedge against fraud? Why not bail out Madoff? Is his crime any less than AIG, FNM, MU, or MN? There was fiduciary fraud too. Advice to anonymous: You have accomplished what Wall Street has not. Ask yourself why and stay with it. You want advice from a bunch of lossers? Now we know their wisdom was nothing more than hype and when in fact they gained their wealth by stealing it! Don't be a fool. Securities are nothing more than paper slips. Once you play the investment game you lose control of it. Those who now control it have one goal in common: keep you wealth for themselves.
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