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Discussion Starter #1
I believe those who are fooled into buy and hold here will see a classic beating as the next phase of this secular bear market really gets going later this year. The only thing that could change my mind is if they can print enough money to bring the rally I see coming after this latest decline ends to break through the May high. Otherwise we will probably start a large decline in the fall a bounce and then down again as we head to the March 09 low and below. I will probably play gold shares in and out through this time frame.

Or according to Richard Russell and the Dow theory we could be already on our way to that hard beating.http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/18/bloomberg1376-L2MW2B1A74E9-10.DTL
 

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LOL, yeah, so it begins.
I believe most folks were expecting some sort of a pullback at some point this year since the rally of post March 2009.
Most of my equity holdings were bought between Oct 2008 and March 2009 so I'm still in the green, but probably not much longer if triple digit declines continue beyond next week.
The other half of the moolah is in cash, GIC and bonds so hopefully I have cushion.
A double whammy would be if we go into a sustained bear market for the rest of this year and followed by inflation/stagflation into 2011 and 2012.
Then even the cash and bonds wouldn't hold value.

Personal situation aside, I believe the European debt situation is well deserved by the countries that have been printing currency to get out of the 2007 - 2009 mess.
The weakest fall first (Greece, Spain, Portugal), maybe followed by the Brits and at some point the US of A.
The 2007 - 2009 mess was bad enough, but the G8 countries made it worse by trying to print their way out of it, ignoring basic classical laws of economics.
Maybe future generations (assuming we don't blow ourselves up first) will look back at this and say what the heck were they thinking.
And they will say this on their dinner tables, eating out of gold plates, gold spoons/forks and eating a well cooked medley of gold coins, bullion and gold ETF paper :D
 

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I sold up my small amount of stock a while back. I want the market to bottom out so I can start my investment portfolio. Full steam ahead!
 

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Quick question regarding a realistic bottom - what do you think the bottom would be? I think the one in the great depression went down loads, went up loads and suckered people in then bottomed out big time.
 

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Discussion Starter #5 (Edited)
Haroldcrump everyone will have to much gold at some point and will be have to line up to sell it for whatever they can get for it. But at this time most currencies are are full of debt attached to them unlike gold which has none. We need to resolve the debt issues and when we do then the next secular bull market will begin and gold will go back to being the insurance only part of a portfolio with little else going for it. Most likely we will see a flight to the penny mining shares like the internet penny shares in 1999-2000 before this gold bull comes to an end.

Underworld a bottom usually comes from a spike up from very oversold conditions under huge volume and then a test of that bottom. You can look at the RSI dropping to near 20 and a very high VIX like 40 or higher as clues that the market is very oversold. A secular bear market bottom will see PE ratios roughly equal to dividend yields.

Looking at a chart of the S&P 500 we could have a bottom for now if 1044 level can hold and we have a VIX at 45 right now so it will be interesting if it can hold here. If 1044 is broken it could go a lot lower so we will see.
 

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I believe those who are fooled into buy and hold here will see a classic beating
Wait, so are you saying that stock markets have hit their all-time high and they will never recover? Wow, that sucks. I guess it's time to buy some guns, water, & canned food, and go lock myself in my bunker. :cool:


(More seriously, I don't disagree that markets are in for a rocky short-term. But long-term investors, who buy strong, well-priced dividend-paying companies with 10+ year investment horizons are unlikely to be in trouble.)


K.
 

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Discussion Starter #8
Dr V you are right the market will recover and some day make much higher highs and that could even happen sooner if money is printed to the extreme and put into every market. In this case gold and oil would be the easiest play I would think. But without extreme manipulation you will have to hold through some terrible times and that is very hard to do for most people. And you have to remember a secular bear market can go on for longer then a decade which is again hard to take in terms of the human life span.

So if short term can be longer then a decade then I would hate to see what is the long term. If however you wait for the good strong companies with solid dividends to come to some extreme low and you know these companies will easily survive then that is a good time to buy.
 

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I think the hardest thing to do in times like these is to stay on track with your investing approach.

It seems to be very tempting to go to cash.

I am leaning towards another short term increase then a dip in the market. Long term sideways at best.

I think it is best to be in dividend paying stocks in a sideways market. So for now that is all I own, and will work more on accumulating shares and units via drips rather than the value of them for now. Plus some accumulating cash to buy in at price targets.
 

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Dr V you are right the market will recover and some day make much higher highs and that could even happen sooner if money is printed to the extreme and put into every market. In this case gold and oil would be the easiest play I would think. But without extreme manipulation you will have to hold through some terrible times and that is very hard to do for most people. And you have to remember a secular bear market can go on for longer then a decade which is again hard to take in terms of the human life span.

So if short term can be longer then a decade then I would hate to see what is the long term. If however you wait for the good strong companies with solid dividends to come to some extreme low and you know these companies will easily survive then that is a good time to buy.
I beg to differ. The biggest support for gold prices comes from investors, not actual users of the metal such as jewelers. Investors are fickle -- they could just as easily decide to dump gold and chase something else.

In any case, if you are invested in Canadian stock markets, you already have a lot of exposure to gold and oil. IMO, an all-or-nothing bet on gold or oil would either succeed spectacularly or fail miserably (a la the period between 1980 to 2000). Do investors really want to make bets like that?
 

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Discussion Starter #11
CanadianCapitalist you are right about gold as also being hard to own so I have a core 10% holding and play in and out of HGU when the seasons and the conditions are right. I recently sold out of HGU at $14.99 and may try to play a bounce but realistically I am looking at the late July to August period to play the seasonal pattern if the technicals look right. You have to be careful of everything here because of the systemic risks out there and gold should only be held as insurance for most people otherwise hold cash and short term bonds.

Looking at the stock market it was way overbought going into the unfavorable season so it was easy to sidestep that and go into cash. Right now it is oversold and we will see how the bounce plays out here.
 

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I do agree that the past few months have been an ideal time to rebalance but there is a certain amout of risk to being completely out of the market, as well. We've all heard the stats regarding missing the few best days in the market. If you're all in cash now, when do you jump back in? Perhaps after another major crash -- but what if things turn around from this point? Then when do you get back in?
 

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We were do for a pull back......I think 10k on the Dow is an important level (I know i'm stated the obvious here) if that psychological barrier gets breached it could be look out below.
 

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I think the hardest thing to do in times like these is to stay on track with your investing approach.

It seems to be very tempting to go to cash.

I am leaning towards another short term increase then a dip in the market. Long term sideways at best.

I think it is best to be in dividend paying stocks in a sideways market. So for now that is all I own, and will work more on accumulating shares and units via drips rather than the value of them for now. Plus some accumulating cash to buy in at price targets.
Well, I have succumbed to temptation...to a point. Today I have switched most of my mutual funds from equities to bonds, and have sold a few stocks (some of them at a small loss) so that I have now some cash parked in my investment accounts. I intend to keep the mutual funds section of my investments mostly in bonds until such time that the market shows a clear direction. I got caught off-guard in 2008 and I (like many others) have not fully recovered from disaster. Therefore, capital preservation has become my highest priority at this time.

If the markets drop, there will be buying opportunities that I can take advantage of. And if the markets recover, I can always jump back in even if I miss the inital part of the recovery.

There is no perfect solution, so time will tell if I did the righ thing or not.
 

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While the sky is falling, the world's greatest investor is doing the following:

“He’s not interested in the macroeconomic scenario, we hardly would talk about what the euro will be doing,” said Moratti. “He’s looking for a business that is of considerable size, that has long-term prospects, good management and comes out for a fair price.”

source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aESA252KpMBg&pos=5

another good quote:

“Emotion and political circumstances are dictating the short-term move, and understandably,” Birinyi said. “But ultimately it comes down to good companies and proper valuations, and I don’t think there’s a big issue.”
 

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To those who claim that the stock market will always recover and make new highs, please use Japan as a reference. Still down >50% from its all-time high, decades later. They went into deflation, and there is a good risk the US is headed there as well.
 

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To those who claim that the stock market will always recover and make new highs, please use Japan as a reference. Still down >50% from its all-time high, decades later. They went into deflation, and there is a good risk the US is headed there as well.
Main problem with that comparison is that the Dow never topped or even approached 20,000. You have to get spectacularly overinflated before you can spectacularly crash... ala the tech crash circa 2000. You can't have the second without the first.
 

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To those who claim that the stock market will always recover and make new highs, please use Japan as a reference. Still down >50% from its all-time high, decades later. They went into deflation, and there is a good risk the US is headed there as well.
Japan is a good example of what happens when the line between the management of govt. and the management of large corporations begins to fade.
When bailouts and protection using public money becomes a matter or norm, rather than an exception.
When the govt. keeps free money flowing in order to keep conspicous consumption going.

But there are key differences between Japan and the US and they may not necessarily follow what has been happening in Japan since the 80s.
One of the differences is a large population and a strong domestic market.
 
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