Mike D Posted October 17, 2008 Share Posted October 17, 2008 Maybe I have just been too busy to pay attention, but has economy in the US fallen off the deep end in the last few weeks? Don't get me wrong, the economy has obviously been bad for months, but in the last few weeks it seems like the number of people talking doom and gloom has gone to a whole new level. Even Jim Cramer who is normally at least a little bit optimistic said he regrets buying a house and now thinks it was a huge mistake (I think he bought one about 6 months ago). Is everything going down the shitter so fast I am completely missing it? Link to comment Share on other sites More sharing options...
gypsy79 Posted October 17, 2008 Share Posted October 17, 2008 Personally, I don't understand why everyone gets worked up about the economy. I can see why some people do if they can't find a job or if they're close to retirement or if they're having trouble paying bills or something, but it seems that everyone gets worked up even when they are not experiencing problems. People are asking me if I'm worried since my retirement accounts have dropped about 18% in the last month and, honestly, I don't give a K-R-A-P in Cincinnati as my father loves to say. :-) I still own the damn shares. It'll pick back up and if it doesn't, what the hell does it matter anyway? Keeping it in savings or under my mattress wouldn't have helped if the entire economy collapses. And the house. I love that one. I just bought a big new house about a year and a half ago. The market value has gone a little below what I paid for the house. Who cares? I still own the house. It will pick back up, and if it doesn't, what do I care? I'll just keep living here. You don't lose money in a bad market unless you sell. Maybe I'm weird, but I certainly don't stress about it. You don't seem to be stressing about it either, and I think that's a good thing. Keep it up! :sunny: Link to comment Share on other sites More sharing options...
Mike D Posted October 17, 2008 Author Share Posted October 17, 2008 Well gypsy you are definitely thinking with a much cooler had than a lot of people i've spoken with recently I am not stressing about it really, but my life started getting messed up over a year ago so I am already used to it Really I guess I am not in that bad of a position - I have no debt (I don't use credit cards), and I sold my house two years ago so I don't have to worry about that. If things get as bad as some people seem to think it might, I could actually come out ahead. Stranger things have happened I guess.... Link to comment Share on other sites More sharing options...
Vigile Posted October 17, 2008 Share Posted October 17, 2008 Well Mike, things are bad, but I doubt it's the end of the world. Cramer is a drama queen. When he starts spazzing it makes me think we might be nearing a bottom. Here's an interesting article that I think explains where we are at and what challenges face the economy. It's by far the most detailed and well presented explanation I've been able to find. http://www.2000wave.com/article.asp?id=mwo101008 Link to comment Share on other sites More sharing options...
Mike D Posted October 17, 2008 Author Share Posted October 17, 2008 Ha that's what I was thinking too... if Cramer's negative maybe that's time to be contrarian. Do you think this will just be a garden variety recession or will it be something more because of the underlying credit issues? I'll check out that article and see what it has to say... Link to comment Share on other sites More sharing options...
babysealclubber Posted October 17, 2008 Share Posted October 17, 2008 I was worried about being able to afford owning a home for a while, so seeing the housing market collapse is a good thing for me, from a purely selfish perspective. I also am glad that I didn't invest in the stock market a few weeks ago. I was planning on doing it, just didn't get around to it. Now I can get the same stocks for a lot cheaper. My sympathies to those who lost a lot of money, I have a friend who had most of his money in Freddie Mac and Fannie Mae. (not sure what he was thinking) Link to comment Share on other sites More sharing options...
Vigile Posted October 17, 2008 Share Posted October 17, 2008 Ha that's what I was thinking too... if Cramer's negative maybe that's time to be contrarian. Do you think this will just be a garden variety recession or will it be something more because of the underlying credit issues? I'll check out that article and see what it has to say... My gut feeling is that the recession will be fast and deep and then will quickly recover. World governments are moving heaven and earth to avoid a depression. My guess is they will overshoot their goal and create another bubble; perhaps a monsterous one this time. It's the next bubble pop that we have to worry about because the governments will essentially be out of bullets by then. All this is pure speculation of course. Link to comment Share on other sites More sharing options...
Ouroboros Posted October 17, 2008 Share Posted October 17, 2008 So maybe we just have to figure out exactly what will be the bubble next time, and short it before it happens. Link to comment Share on other sites More sharing options...
Vigile Posted October 17, 2008 Share Posted October 17, 2008 So maybe we just have to figure out exactly what will be the bubble next time, and short it before it happens. Just don't short it too early. Link to comment Share on other sites More sharing options...
Ouroboros Posted October 17, 2008 Share Posted October 17, 2008 So maybe we just have to figure out exactly what will be the bubble next time, and short it before it happens. Just don't short it too early. Exactly. My problem has always been that I buy the right things, in the right time, but I always stay too long. If I short, I tend to short too early. It's tricky to know when things turn over and start to go down. At least for me. I'm sure you have a better feel for that than me. Link to comment Share on other sites More sharing options...
Vigile Posted October 17, 2008 Share Posted October 17, 2008 what is your timeframe? Are you a long term investor? Swing trader? Something in between? Link to comment Share on other sites More sharing options...
Ouroboros Posted October 17, 2008 Share Posted October 17, 2008 what is your timeframe? Are you a long term investor? Swing trader? Something in between? Long term. But I've been trying couple of different kinds over the years. Right now, I'm pretty much in cash, waiting for the turbulence to blow over. Link to comment Share on other sites More sharing options...
Vigile Posted October 17, 2008 Share Posted October 17, 2008 For a long term investor I would strongly suggest exiting positions when both of the following occur - and this goes for 401k plans and IRAs (just move to a money market or something stable inside your plan during these times to avoid taxes - or go short if that's to your liking and your risk tollerance). First, when the 200-day average flattens out and then starts to trend lower. And second, wait for confirmation in the form of a lower high. As you can see in the 2-year SPY chart I've posted a lower high occured last December. A second lower high occured in May after the 200-day average was already trending lower. If you were unsure on the first lower high in December you had a second chance to get out in May. Following this simple strategy will keep you out of almost every single bear market - probably all bear markets. As for buying back in, I think it's early still. There is still forced selling amongst the hedge funds taking place. We had something of a capitulation last week that may or may not lead to a rally. If it does I'm betting that rally still compliments the series of lower highs that have been taking place since December. I think that the SPY needs to come back to 750 before a more serious rally takes place. Even then, that is not a reason to buy long term. For long term there is no need to try and catch the exact bottom. Wait for the 200-day average to flatten out again and start to turn up. Then make sure it confirms by putting in a higher low. The high for the SPY was 154. The second higher low was 140, less than 10% from the top. If you miss the first 10% from the bottom, big deal. Heck, if you miss the first 20% from the bottom big deal. The next bull market is likely to climb 100-200%, who cares if you miss the first little bump? The risk management advantages of this strategy are worth far more than 20%. The alternative is to buy when you think a low is in place and then end up losing another 50%. Regaining that 50% requires a 100% move. Hope this makes sense and hope it helps everyone. Link to comment Share on other sites More sharing options...
Ouroboros Posted October 17, 2008 Share Posted October 17, 2008 Made a lot of sense Vig. Thanks. Link to comment Share on other sites More sharing options...
gypsy79 Posted October 17, 2008 Share Posted October 17, 2008 Really I guess I am not in that bad of a position - I have no debt (I don't use credit cards) Good for you! I don't either, and that is certainly a de-stressor! Link to comment Share on other sites More sharing options...
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