[Rickson9]

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 .

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 climb 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.

 

[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.

 

[dogcom]

I also think like spidey that after the run we have had that sell in May and go away sounds good.

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.

 

[FinancialJungle]

BTW, your link is broken.

It's back online now. One suggestion I'd make is to add dividends to the S&P 500 benchmark. Not enough to tilt the scale, but it'd be more apple-to-apple.

 

[Rickson9]

I don't consider myself genetically gifted...

Genetically "determined". Not "gifted". I am far far from gifted!

 

[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...

 

[frdsmth9]

I can't recall a world with so many disparate geopolitical dangers: North Korea, Latin America, the Middle East -- the list is daunting. And oil prices are a drag on the world economy.