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

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

#21

Post by mixmax »

davidw wrote: post #19
mixmax wrote: post #16

Earlier quoted context omitted.

What hope does an individual have? More than you think. Especially if you change your attitude towards the problem a bit ;-)

My attitude is that it's pretty clear how I can take on (or rather, simply run around) even big players as a small startup. It's less clear how I can come out ahead stock picking as an individual. So it's better to not dick around with stock picking, put my money in cash (like it has been for a while), or an index fund, and just concentrate on the startup stuff.

Couldn't agree more - sorry if I sounded a bit harsh or judging in the OP. I didn't mean it that way. And good luck with the startup :-)

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

#22

Post by sabat »

kingkongrevenge wrote: post #7
DanielBMarkham wrote: post #4

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.

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 t…

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.

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

#23

Post by nostrademons »

davidw wrote: post #12
DanielBMarkham wrote: post #8

Earlier quoted context omitted.

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.

Here's a question for the quant-minded: > So I'd be looking for value stocks that have a P/E ratio that's overly low The thing that makes me nervous about that kind of thing is that there are people who have written code that knows a lot more than my sum total knowledge of the stock market to look for those sorts of factors. Given actors like that, is there any reason to invest in anything but broad index funds?

I worked for a financial software startup from 05-07, and in my spare time there, wrote one of those programs that scans the whole market for stocks with low P/Es and consistent earnings.

I found that nearly everything was fairly valued. When a stock had a low P/E, it was nearly always for a reason, like it being a homebuilder or financial or having a shaky economic position. No way was I going to invest in those. When I did invest in one that looked like it didn't fit in those categories, they missed earnings the next quarter, reported a loss, and haven't gotten back to profitability yet. Again, the market was smarter than me.

The trick to making money in the stock market seems to be to invest when the big boys are constrained not to. They realize that they should be putting money in, but can't, for whatever reason. The best example is if they're a mutual fund and their clients are all pulling their money out. Doesn't matter how many bargains are out there, they still have to sell to honor redemptions.

As I tell one of my hedge-fund-employee friends, "You're only as smart as your dumbest creditor."

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

#24

Post by newaccountname »

davidw wrote: post #15
mixmax wrote: post #14

Earlier quoted context omitted.

A friend of mine works for a small company that develops the models that many automated tradings are based on. It's so secret that he won't even tell me which companies use the software, only that it's some of the major global players. He does tell me about the software in broad terms though, and it is obvious there is a market for a new player in there. Basically almost everyone is using the same models and algorith…

> The effect of the sun seems to have been quite big. For shares traded in New York, for instance, annualised returns on perfectly sunny days averaged 24.8%, compared with 8.7% on perfectly cloudy days. Moreover, unlike some stockmarket “anomalies” discovered by economists, investing by the sun would have been more profitable than simply investing in the market index, even after subtracting trading costs. Alas, this…

Knowing even the slightest basics about Einstein's random walk, I would be somewhat surprised if the percentage difference between any arbitrarily categorized sets of days weren't that large.

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

#25

Post by astine »

davidw wrote: post #5

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…

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.

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

#27

Post by njharman »

timcederman wrote: post #10
steveplace wrote: post #3

Earlier quoted context omitted.

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...

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...

Balls?

I don't understand. The simplest tenant is "buy low, sell high". Most stocks are low, way low now. No need to time the bottom. Buy and hold. Buy quality companies whose business/products you personally understand.

If you already have stock, it's a nobrainer perfect time to buy more of the same. Dollar cost averaging.

Bought a stock at $20, now it's at $15? buy another. Your cost is now $17.50. Stock has to go up half as far for you to be making return.

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

#28

Post by timcederman »

njharman wrote: post #27
timcederman wrote: post #10

Earlier quoted context omitted.

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...

Balls? I don't understand. The simplest tenant is "buy low, sell high". Most stocks are low, way low now. No need to time the bottom. Buy and hold. Buy quality companies whose business/products you personally understand. If you already have stock, it's a nobrainer perfect time to buy more of the same. Dollar cost averaging. Bought a stock at $20, now it's at $15? buy another. Your cost is now $17.50. Stock has to go…

Yes yes, buy and hold, blah blah. But you're missing the sell part. Monday was when I should've sold high, but I don't want to mistime the bottom, so I do the lazy investor's approach and leave my stocks alone until a bottom has been established and I start buying back in.

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

#29

Post by alecco »

astine wrote: post #25
davidw wrote: post #5

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…

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.

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

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

#30

Post by alecco »

kingkongrevenge wrote: post #7
DanielBMarkham wrote: post #4

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.

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 t…

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