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Thanks for asking. It is my opinion that to attempt to pick future winners in this market is not for the casual buy and hold (BaH) investor. There are too many unknowns and the volitility is excessively high. Can you guarantee which stock, ETF or mutual fund will exist next year? I can't. Van Kampen has closed a number of their MFs as have other firms. A number of ETFs have been dissolved over the past year and stocks, well, even the giants are declaring bankruptcy. As of mid-Mar 2009, there are no long equity positions except for gold, that has outperformed the annualized geometric average return of a T-bill. A good BaH strategy may be to sit on the money and wait to see what shakes out. This approach may cause a BaH investor to miss out on some early gains should the market suddenly sky rocket over a short period of time. But it will also ensure they don't lose half or more of their money should the market take a flyer and drop into the 4-5k range next week where the BaH panics and cashes out.
That being said. This is an excellent traders market and I would guess the thebigr did well today! His FAS jumped about 38% today which he probably brought this AM and sold before the closing bell. This is a high risk ETF, but with high risks come high rewards IF you are on the right side of the trade.
You are right in that America is on sale right now. But with these sale prices come with high risks. Most BaHs do not have the stomach for the downside so I recommend they wait. For BaHs who understand market forces, I would say go for it.
I agree with everything you said, except for your definition of a Buy and Hold (BaH) investor. By my definition, a BaH investor isn't an investor who NEVER pulls their money out of the market....once you do that you've become an investor who tries to time the market. BaH investor need to ride out the bear markets (and maybe buy more when the market is undervalued) in order to be there when the market rebounds.
This is how I was originally pulled into this thread actually....the OP mentioned they were conservative, BaH investor but pulled there money out in 2007 and looking to get back in.
Well, the problem with that is you are now an investor trying to time the market and are no longer a BaH investor! The strength of BaH is that time is on your side and you remove all of this emotional baggage/sleepless nights of guessing when to get back in and how much to get back in with. With BaH (as I define it), those things are moot points.
Yeah, you are right that stock picking, even for BaH is tricky at this point, but I'm reasonably assured that most S&P500 index funds will continue to be around in the future.
Keep in mind this is coming from a relatively young person who expects the market/economy will bounce back at some point. I don't begrudge the older person, closer to retirement pulling out of the market in order to preserve their capital. The question is: why were those types of people still invested in the stock market at their stage of life in the first place???
ThebigR. How did you do with FAS today? I was watching it like a hawk pre-opening where it was up/down, up/down. I figured the market would try to rebound off Friday's close. So shortly after opening, I go in at 4.87. It went to 5.00 pretty quick so I put in a .20 stop. Wouldn't you know it. Within 10 minutes I got stopped out and FAS fell to 4.61 before climbing to 5.60 +/-! Wanted to jump back in at 4.65+/- but my "emotional" rules require me to sit out the rest of the day on FAS. O well.
I am still suspicious of this rally. Statistically, the previous lows should be tested before any serious rally can began. And I still believe the fundamentials of why the market is trading at this level haven't changed. Nothing has changed over the past two weeks to justifiy the upswing. Your thoughts?
dsnellen, You are correct about FAS. But actually I did something I don't like to do and I bought FAS Monday, 2500 at 2.67. Held it overnight because of this mark to market situation they will be discussing on Thursday. Waited until around 3:55 and sold it all at 3.72. Did not want it another night, there is always tomorrow. I figure $2625.00 was enough. Just looked and it is 3.91 after hours. Will probably get back in it in the morning.
Sure wish I knew what they were going to do with mark to market. Do you have any inside info on that? Would be buying alot of financials. Already have some BAC I bought last week, just not sure when I will sell it. Almost did 10 or 20 times today. Yes today was a very good day, hope tomorrow is even better!!
I bought 5000 FAS at $2.39 on March 6th. Sold a March $2.50 call for 50 cents. Will get called out but still looking at a pretty decent profit in just two weeks.
I am quite risk averse in this market hence the covered call. However, risk is limited with FAS because it is a fund. So, although it can go down, it ain't going to go belly-up.
I am still suspicious of this rally. Statistically, the previous lows should be tested before any serious rally can began. And I still believe the fundamentials of why the market is trading at this level haven't changed. Nothing has changed over the past two weeks to justifiy the upswing. Your thoughts?
I agree with your suspicion. Nevertheless, there are opportunities for the brave as we saw with FAS. But you have to be nimble and not too greedy (i.e. don't keep holding in the hopes of even more profit .... sometimes it is good to take the money and run).
I am staying in for another few points tomorrow and then I am selling fast. From what I am hearing from my friends and others this is a bear bounce only. I am up so am happy to sell tomorrow. Obama is a ******* . OP
Last edited by texan2yankee; 03-18-2009 at 05:53 PM..
Most stockbrokers that i spoke with today said " The Market is Back "! They basically said those who jumped in on the low are the lucky ones. Buy low, sell high! But I agree with some of the posts above. It just seems odd to have such a bounce in times like this. I see another drop coming soon, but after all we are talking stocks! Who knows for sure?
I am staying in for another few points tomorrow and then I am selling fast. From what I am hearing from my friends and others this is a bear bounce only. I am up so am happy to sell tomorrow. Obama is a ******* . OP
Most stockbrokers that i spoke with today said " The Market is Back "! They basically said those who jumped in on the low are the lucky ones. Buy low, sell high! But I agree with some of the posts above. It just seems odd to have such a bounce in times like this. I see another drop coming soon, but after all we are talking stocks! Who knows for sure?
I don't think anyone really knows where the market will be next week. I have done quite well so far this year but remain extremely conservative with my assets and extremely tactical with my forays into the market.
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Would be buying alot of financials. Already have some BAC I bought last week, just not sure when I will sell it. Almost did 10 or 20 times today. Yes today was a very good day, hope tomorrow is even better!!
who really knows?
