[tojo]

Given that the TSX is currently up around the 10K mark, which is up about 1/3 from its levels in March (it was around 7.5K), do you think now is a good time to invest, or are things headed for a correction.

Any thoughts?

I believe that we will not see those lows again back in early March....the unprecedented fear of a total world-wide banking collapse has subsided for now. Recall back in early March, US banks like Citigroup declared that they will actually turn in profits moving forward was like music to investor’s ears ... this has alleviated some of the fear for the time being. We are certainly not out of this mess by any means. As they say, the market pendulum swings from fear to greed and back again...it was no wonder that financial stocks, which were the first ones to drop in the midst of the crisis were also the first to rebound – and sharply.

I’m generally not a market timer as well, but by looking at this crisis with a bit of common sense, I was able to make up for most of my losses by aggressively loading up during the rebound. However, I don’t believe now is the time to stay aggressive. I would certainly not add to anymore financial stocks. In fact, I’ve unloaded most of my Lifecos commons and swapped them for an equivalent amount of debt (i.e. prefs.). Defensive stocks would be my pick for the next little while – utilities, energy (midstream players instead of upstream and certainly not downstream energy) and debt would be my “3 picks”. I guess the short answer to your question is yes, now is still a good time to invest, but be careful and stay defensive. Good luck and proceed with cautious optimism!

 

[tojo]

Having heard a number of guests on Market Call and Market Call tonight advise taking money off the table, my question to other members is whether you would take the loss of between $20 and in one case about $200, or hold on.

Don't make any investment decisions based solely on what these Market Call analysts proclaim... although many have interesting and informative info, do your own research before investing.

I was watching Ross Healey on Market Call tonight. This guy is the eternal cynic when things are bad. He was on the show back in early March, just before the huge run-up, declaring that the TSX had another major downturn and that he was minimum 50% cash for his clients. Well, tonight he let everyone know that did well in the rally and had "switched views on the financials". Well, I don't know how you can be bearish, in cash, and still made money on the rally. No one gets it right everytime, but at least own up to it and admit you wrong on that call.

 

[tojo]

Not sure where the "makets" are headed and equally not sure where the stock "markets" are headed. Is there not a consensus that these things are unpredictable in the short term but over the long haul -- shown by the Andex charts -- equities tend to rise? In the short term, I like the phrase used by American personal finance writer Jason Zweig: "I don't know and I don't care."

www.wealthyboomer.ca

I've been investing longer than I care to admit...in the last ten years, the S&P has gone sideways to the point that you can almost do better with money under your mattress. Many may not consider this a "long haul", but it has been long enough for me. I can't see things getting better with the unbelievable amount of debt the United States is carrying. In my mind, the States is going down the toilet fast...I just hope that Canada and other countries can somehow detach themselves from them and prosper despite what is happening there.

My point is that we should care, and understand what is happening around us, and adjust your finances accordingly...

 

[tojo]

In this economic environment we are buying buying buying. No dividend. No GICs. No bonds. No short-term savings. Stocks. There is absolutely no way we are going to let an opportunity of a lifetime just pass.

Hey, if this strategy works for you, my hats off to you. Definitely not for the faint-of-heart. Did you use the same strategy going into the crash? If so, you must have taken a massive haircut, if not then let me borrow some of your horseshoes .

 

[tojo]

During the last stock market run-up during the late 90s we piled up cash as there was very few inexpensive stocks. When the bottom fell out we bought. We never sold those stocks.

As the stock market recovered and started climbinb again, cash piled up as there was nothing inexpensive to buy. Now that the bottom has fallen out (again) we are buying (again). We don't plan to sell these stocks either.

You can view our performance at the link in my sig.

The cycle of boom and bust is well-documented but most people can't seem to build wealth because only 1% believe in value investing and portfolio concentration; and those 1% are genetically determined (since the belief can't be taught). In other words, 99% of the population creates opportunities for the 1% on a fairly predictable schedule. There are no horseshoes involved. Investors like myself depend on the population as a whole to create wealth for ourselves.

Well to each their own I suppose...I'm in a similar financial situation as you, but arrived at it using plain old discipline, dividends and compounding. I don't consider myself genetically gifted and was never comfortable with the term "millionaire". These are values that I make sure my children understand and live with.

Anyways, I agree with you that there are no horseshoes involved...to get to this stage takes alot of will-power, restraint and self- confidence to stay on course....

BTW, your link is broken.

 

[tojo]

Having said that we have to ask ourselves if the world can seperate from what is going on in the US. The US is going down like Japan at this time, so can the world ignore it as easily as Japan.

Another thought is we have never seen such a situation and decline in the markets like this since the depression. If this is true then even a rally of 50 percent off the low could still be a bear market rally.

The analogy to Japan is accurate, and scary. If any of you subscribe to Canadian MoneySaver, have a look at the May 2009 issue, page 16, Wynn Quon's column. He spins an analogy between the US and Japan and present a somewhat doomsday but plausible argument that what happened in Japan (and still happening there for that matter), is a very possible scenario for the States. Japan experienced a bubble economy crash from the 80's built on unsustainable debt that took the Nikkei from 39,000 in 1989 all the way to 7088 in March of this year. An 80% drop. The similarities are downright scary - The Nikkei peaked on Dec. 29, 1989, then the crash of Japan’s commercial real estate market, followed by banking system collapse and then massive government borrowing to build the economy back to shape. As Quon explains, common sense says that the economy will eventually turn around after the bust, ie. the stock market should have risen with the recovering economy. Well, Japan's economy is actually 35% bigger now than in was in 1989, but the Japanese are so busy paying off their debts that 20 years have passed and they are still rebuilding.

The US component of my portfolio has been decimated...I haven't made one red cent from the US index funds, dividend funds and stocks I own. I've sold all my Japan index funds long ago, and will do the same with my US holdings. Luckily I was no more than 15% in the US and all my gains have been made in Canadian securities and bonds. However, if the States goes down like Japan, I can't see how we can be completely insulated.

Again, you are advised to do your own research and draw your own conclusions. My point is to pay attention to what is happening out there...