I’m Still Going Long and Hoping the Markets Go Down

http://blogmaverick.com/2008/10/10/im-still-going-long-and-hoping-the-markets-go-down/

by Anon84 • 18 years ago

46 68 18 years ago

timcederman3• 18 years ago

I hate being such a sook about the markets. I want to sell now and buy when it's lower, but I'm worried we're at bottom.

That said, I thought we'd hit bottom yesterday. And the day before that. And the day before that.

steveplace3• 18 years ago

If you didn't have a risk management plan in place, for shame.

Anyways, here's some stuff that will take the fear out of you.

http://bigpicture.typepad.com/comments/2008/10/10-bullish-si...

timcederman3• 18 years ago

I have risk management in place, of course. I'm not concerned about my losses, just wish I had the balls to capitalize on the falling market.

Good link, thanks. So perhaps time to start buying soon...

alecco5• 18 years ago

What? That is hocus pocus. And based on what? Zero analysis of what were the measures taken. And many other things unaccounted like shadow finances, global trade block, insurance chaos, etc.

Their anecdotal analysis is bad. They didn't check recent crisis in other countries, for example. The Asian crisis and the Japanese stagflation are certainly more similar to the current situation than US 1929, 1973 or even 2002.

It all depends on the next steps. Bailouts failed, inter-bank credit is still dead. There wasn't yet deleveraging.

I can do many [better] things with my cash than put in stupidly risky stocks at the moment.

fauigerzigerk2• 18 years ago

The problem is that the credit fueled series of booms and busts that started in the 1980s might end here. At the end of the day growth of credit and money supply must be backed by productivity growth. I don't have the numbers right now, but be assured that credit and money supply growth hugely outpaced productivity growth since the 80s.

So basically that means we've been financing bubbles. In my view, it's up for debate whether a succession of booms and busts is necessarily worse than a more steady development. But since this latest bust turns out to be rather violent there will be a political reaction. If that reaction is to end the boom and bust economy then stock markets might not rise much for the next 10 or 20 years.

I'm not saying they won't snap back some from the current very low levels, but after that I wouldn't bet on the next huge upswing.

DanielBMarkham3• 18 years ago

It's a great time to buy.

I haven't been in the market for a couple years, but I'm salivating over this downturn. Sorry for all those losing money, but in my opinion this is a buying opportunity like there never was before.

Prrometheus• 18 years ago

I remember seeing this graph not too long ago that showed the P/E ratio of the stock market took off in the '90s and it never came back to its historical average range. The graph predicted that the "real" value of the Dow was in the 7,000 - 8,000 range. The people passing around these graphs would have looked like cranky perma-bears a few years ago. Now they look down-right reasonable.

It's not a crash, it's a readjustment to prudent pricing.

DanielBMarkham3• 18 years ago

Usually during a re-adjustment the market swings too far the other way by a few points. So I'd be looking for value stocks that have a P/E ratio that's overly low. Find some stock that's getting beaten up beyond the normal recovery by panicked sellers.

fallentimes• 18 years ago

Do you happen to recall the historical P/E averages?

kingkongrevenge3• 18 years ago

The markets will probably bounce in the next week or two, so there's a trading opportunity, but the historical record says you're a fool if you buy to hold now. Ignoring that stocks probably have more to fall, the behavior of falling markets is that they bottom and then stay at the bottom for a long time. Things trade sideways for a long time before any secular bull kicks off. You do not have to worry about missing the boat.

sabat• 18 years ago

That's exactly why you buy to hold, now. It could go lower, but if you're long, you don't really care. You don't know how much longer this will go, and if you miss the boat, you lose.

All the more reason to go long.

alecco5• 18 years ago

How are you so sure it will all come back? So far every week many people say so and then are proven wrong.

nandemo2• 18 years ago

You do have to worry about missing the boat. Historically, there are a few days in the year for which the daily return is huge, say 4 or 5%. You cannot guess in advance. If you miss a couple of very good days, your return might be much lower than the market's.

davidw5• 18 years ago

http://economix.blogs.nytimes.com/2008/10/10/how-long-before...

> Some may also wonder how long it will take the market to “recover.” It depends exactly what is meant by “recover,” of course, but one measure might be when the market returns to its pre-crash peak. The historical data is somewhat more distressing in this context.

> After the Great Depression, it took 29 years — until 1958 — for the market to reach its pre-Depression, inflation-adjusted peak. After the 1970s recession, it took 24 years — until 1992 — for the market to make a full “recovery” by the same measure. So no matter whether you start from the recent 2007 peak, or from the market’s absolute inflation-adjusted peak during the tech bubble in 2000, we may still have at least a decade to go before full “recovery.”

Although of course some of that time will be 'going back up', so won't be so bad. it's not like 74-92 were all bleak and tough, difficult years.

josefresco• 18 years ago

The 'going back up' part is where all the money is made.

rtf• 18 years ago

Exactly.

If you invested in the index, you break even over that period.

But if you invest in big winners(taking Apple and Microsoft for known examples in tech) you come out way ahead.

astine2• 18 years ago

Well, the Great Depression had both the New Deal and the WWII to suffer through. Even if you support the former, you still have to admit that the later was a downer.

Hopefully, we won't have to worry about either of those for time being.

alecco5• 18 years ago

...Now that there's no "world police" around?

mattmaroon7• 18 years ago

I think you've got your history wrong. WWII was what ended the Great Depression. From Wikipedia:

"The end of the depression in the U.S. is associated with the onset of the war economy of World War II, beginning around 1939."

Also from War Economy entry:

"On the supply side, it has been observed that wars sometimes have the effect of accelerating progress of technology to such an extent that an economy is greatly strengthened after the war, especially if it has avoided the war-related destruction. This was the case, for example, with the United States in World War I and World War II."

It didn't suffer through it at all, it got fixed by it.

petercooper• 18 years ago

You say that after the 1970s recession it took until 1992 for the market to make a full recovery to its inflation-adjusted peak. However, the average quality of life in 1987 was far ahead of that in 1971!

Stock index levels are not indicative of quality of life, job levels, or even the financial health of a nation. Just because the Dow has fallen 40% does not mean that as a nation we are 40% worse off, unless we happened to have all of our money in the stock market.

maurycy• 18 years ago

Good entrepreneur does not necessarily means a good investor.

alecco5• 18 years ago

Indeed!

And even good investors can miss the mark bad in volatile times. Like Buffett with Goldman Sachs if they don't pick up and if more and more of the bailout money goes to recapitalization, covering a bit on swaps (directly or indirectly), and bailing out real companies (like GE, GM, and Ford.)

mattmaroon7• 18 years ago

He did run and sell a successful hedge fund.

mynameishere2• 18 years ago

http://en.wikipedia.org/wiki/William_C._Durant#Wall_Street

That said, Cuban will probably do okay here. There is a degree of panic selling going on.

furiouslol5• 18 years ago

Long agricultural commodities Short equities

known• 18 years ago

Current Share Price of the Company = 5 x Book value Per Share of the Company.

Current Market Capitalization of the Company = 10 x Quarterly Revenue/Sales of the Company.

Anything beyond is either irrational or manipulation.

Eliezer• 18 years ago

You are all missing the key point of Mark's whole reasoning. DON'T BUY STOCKS BECAUSE SOMEONE ELSE WILL BUY THEM. BUY STOCKS YOU WANT TO OWN, forever if need be. Why? Because they pay dividends! Mark doesn't care if the Dow goes to zero or infinity, he's got an acceptable yield on his stocks and that's all that matters.

mleonhard• 18 years ago

There are some stocks that don't pay any dividends. :(

I’m Still Going Long and Hoping the Markets Go Down

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