Archive through March 22, 2007
| Author |
Message |
     ody
Member
Username: ody
Post Number: 782
Registered: 10-2006Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 01:56 am: | 
|
wadda:
The definition which "holy cow" offered concerning bears and corrections in his latest post is quite in tune with what most people would think of, and workable. At the furthest removes, noone would talk about anything more than a correction if, say, a market went as far down as 8-10% for a month or so, and noone would call the bear market of 1987 a correction. All this is really a matter of common sense, not of pedantry. You need SOME general consensus on what words mean, even if, as I said in a previous post, "Some of the very worst corrections are somewhat similar to the mildest of bear markets." Clearly it would at some point indeed become pedantic to try and differentiate between such instances, and useless. But it is NOT AT ALL useless - indeed quite vital - to distinguish between a short and mild affair or a very serious one. For example, you could last through the first with ease and little harm (only a temporary decline), while the second could lose you a large amount of money if you tried to sell your portfolio at such a time. Therefore, many people's market actions are, very understandably, influenced by making some basic distinctions in their concepts.
|
wadda
Member
Username: wadda
Post Number: 481
Registered: 10-2002
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 02:16 am: |
|
ody,
couldn't agree more and in particular the HC post you refer to.
That's what I was trying to get at I suppose - some texts seem to be quite liberal on their definitions (I hadn't heard an author referring to a sideways market as a bear market before I read Tate) whereas others will go to the nth degree to set parameters. I think we all agree it's more the former.
Cheers,
wadda
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
|
holycow
Member
Username: holycow
Post Number: 2871
Registered: 08-2004
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 08:22 am: |
|
Markets to Fed: Help, before it's too late
Do we want to know if Greenspan was wrong?
When the hedge fund Long-Term Capital Management collapsed, investors sought the shelter of lower risk assets, like Treasurys. The yields of longer-term bonds fell as a result, but not relative to shorter-term yields.
Money flowing in and already parked in the fixed-income markets favored the less risky 2-year Treasurys over the more price-sensitive 30-year bonds.
What followed was that while the yield curve steepened: Longer-term yields rose further above shorter-term yields. From 2-years to 30-years, the entire curve shifted below the overnight rate. (The 30-year yield was above the 2-year yield, below fed funds.)
Greenspan was more worried about the worst-case Fed scenario of doing nothing. He reacted quickly to the markets' pursuit of liquidity by cutting rates three times in successive months. That helped loosen credit a bit, or at least gave the impression that it did, at a time when it looked like purse strings were being tightened quickly.
At last check, the 10-year yield (the current benchmark) was still slightly below the 2-year yield, but the gap has narrowed to the point that the two yields met briefly last week. And yes, both yields are well below the Fed's target for overnight rates.
Whether Greenspan did the right thing by cutting rates, or if he flooded us with too much liquidity after the dot-com bubble popped, is debatable. He might have very well contributed to the real-estate bubble that has been deflating at an ever quicker pace. But do we really want to find out now?
Bernanke has a similar problem on his hands. "Subprime is today's dot-com -- the pin that pricks a much-larger bubble," Morgan Stanley's Roach said.
HC
"... I believe in Santa!"
|
holycow
Member
Username: holycow
Post Number: 2872
Registered: 08-2004
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 08:28 am: |
|
More FOMC talks...
A hint is not a cut
Some economists said the Fed may issue a friendly statement but warned that it will not set the stage for an easing in the near future.
The Fed will be in no hurry to cut rates because it currently expects the drag from housing to diminish and economic growth to pick up as the year goes on.
"Unless the economy were to nosedive, and this seems highly unlikely given the low level of long-term interest rates, still-tight credit spreads and reasonably high consumer confidence, we think the economy is likely to trudge along at a below-trend rate," said Joseph LaVorgna, economist at Deutsche Bank.
The Fed will welcome this low growth trend because "this is what it would take to bring inflation down," he said.
HC
"... I believe in Santa!"
|
holycow
Member
Username: holycow
Post Number: 2874
Registered: 08-2004
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 08:41 am: |
|
... this just crossed my mind, if you frequent this forum, use the search function to check what you want to read, like this.
Bookmark the link if you like what you see.
HC
"... I believe in Santa!"
|
rdumas
Member
Username: rdumas
Post Number: 390
Registered: 11-2006
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 08:48 am: |
|
Hi Folks and Peter Loh in particular,
It's been a very interesting round of discussion on this thread. HC, good on you for getting the thread started. What our market is going to do is of great interest to every one and we've had great discussion points brought out on both sides which is absolutely terrific for someone like me who is here to learn.
I have said many times that I am a 'frustrated bull' waiting for a safer entry point. I personally don't like entering a trade in the upper half of a channel. That may mean that I miss out on a lot of opportunities but it is in keeping with my style of 'safety first' investing. I'm not here to be right or wrong. I'm here to learn and I thank you all for the opportunity to do this.
For me I needed the S&P500 to break through the 1406.6 level and hold as it was a crucial level to get through. This is definitely a win for the bulls. Now all they have to do is keep above that level in the coming weeks. The unfortunate thing is that there are several other levels above that one that are equally strong which is why I don't see this market screaming away in the next few months.
One big lesson to learn from all of this is that we have to work within our own risk profiles. I think Peter's last post was a very good one in showing how people who are less risk averse can move ahead of those that are risk averse. Whilst I am not as risk averse as your brother Peter I certainly am not at your end of the scale. Perhaps that's why I never complain about not being able to buy things because I'm fortunate enough that I can.
Whilst I am totally out of the market now I believe that where I sit more comfortably is in the approach taken by Ody. I can see the very good reasons for doing what he has done. It's much more difficult than what I did however it would be more rewarding. I commend your approach Ody.
Peter because your approach is probably the most rewarding I have asked you on one occasion how you determine when you get out of the market. You have so far carefully avoided answering the question. Do you make the decision on an individual stock basis or on what the All Ords is doing? For example when the market dropped 12% last year did you get out or did you stay in? I am extremely interested in what you do in that circumstance.
My latest experience this year has shown me that there is no doubt that staying in the market during a bull market is more rewarding than getting out during down turns because not only does the market eventually go up but you get the benefit of the dividends also. I have kept track of the stocks that I had prior to getting out of the market and so far they are ahead especially when including the dividends. That is the case in spite of there being some real losers in the portfolio because there were also some real winners.
My problem with your approach Peter is how do you decide when to get out. If a 12% drop isn't enough to shake you what is?? Is it 15%, 20% or what? The only approach that I can see that would work in your case would be to get out on a stock by stock basis but even with those you would have to wait for Weinstein type signal which would also cause you to lose a significant portion of your profits. Will you share your exit approach with us?
(Message edited by rdumas on March 21, 2007)
|
holycow
Member
Username: holycow
Post Number: 2875
Registered: 08-2004
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 09:35 am: |
|
Rudy,
You have asked an interesting question here. Let's hope you get your answer.
I'd found as I continue down this path, my stance as a "bear" has slowly "evolved" and hardened to my current status as a full fledged bear. Fact is, I don't want a bear market. I just want a correction. A sizeable one that is.
I was asking myself last night...how did I manage to paint myself into a hardcore bear? I reckon one contributing factor is my way of writing, another is my way of responding to others who for some reason see me as a big bad bear and must be pinned down and "killed off" (my colourful words again); and in typical fashion my response and my position slowly got stronger and hardened following each exchange...
Fact is I still cannot fathom what's the "problem" here. The bulls have their thread and they sing and dance and rejoice each day when the market had a good day. Just why can't the bears have a thread so they can sing and dance and celebrate when the market took a beating? 
I really can't see why the long term investors have to be so troubled by a short to mid term view of some "teddy bears". And I don't see either why do they go ra ra from day to day when they are investing long term and "forever"... in the whole scheme of thing, in terms of time, I think a week, a month is nothing but just a "blip". Why the angst?
Blime me. I still got no idea... unless they got cold feet along the way and find it hard to deal with their own conviction...
There's a market saying that goes like this the bulls get rich, the bears get rich, the pigs... get slaughtered. May be we should find out what it means?
HC
"... I believe in Santa!"
|
msparks
Member
Username: msparks
Post Number: 824
Registered: 10-2004
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 09:58 am: |
|
hee, hee, wot a question Rudy.
PL and ODY are "the market" mate, if they get out, it is all over red rover 
They are there to buy from us on the dips and they always sell some back to us in the peaks.
If you really want to see a bear market, pull the plug on the US $ printing machine, cos whenever they (US) control the machine, they can even make bad loans look good.
|
rdumas
Member
Username: rdumas
Post Number: 391
Registered: 11-2006
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 10:39 am: |
|
Hi HC,
I also hope that I get an answer to my question. It is not trying to be a smart a..e but rather trying to understand a methodology fully. A trading methodology does not involve entry alone. Just as important is exit.
I can see how one can evolve into a bear. I'm pretty sure that in spite of what I continually say about myself being a frustrated bull waiting for a safe level to enter the market that there will be those that would still label me a bear. The reason is fairly simple because at this stage I am looking at risk/reward ratios, and at this level in my bull channel, there is greater downward risk than upward reward probability. I am talking about a new entry here, not an entry that happened further down the channel. That is an entirely different proposition. If people want to label me a bear (which I undoubtedly are at this point in time) that's their prerogative. I personally think that I'm actually a  .
I think that as Peter so eloquently wrote, there are risk averse people and their opposites. Many studies have been undertaken which have shown that the average person is risk averse. These people very quickly say that people who undertake risky activities involving money are gambling.
I remember when I was a professional punter people would say that I was gambling. Now that was at a time when I was tendering large projects for a multinational some worth many millions of dollars. I used to say to those accusing me of gambling that in my tendering activities I used to invest thousands of dollars of our company's money in putting together tenders. In my industry if you won 30% of the tenders you submitted you were classified as a successful company. The reality of life was that you won a proportion of tenders submitted that gave your company an income to feed the company employees and share holders.
In my punting I had a win strike rate of 40% and I knew that my average dividend gave me a profit on turnover of around 15~20% per year. Now who was gambling? The legitimate multinational company tendering on projects with a 30% strike rate which made 15% EBIT or me the punter with a 40% strike rate who made 15~20% profit on turnover and paid nil tax??
The answer is that neither activities are 'gambling' if you fully understand the risk/reward parameters. All of life's activities involve risk. When it really becomes gambling is when the risks outway the rewards.
My point again is that there are risk takers and risk averse people. There have been many risk takers who have gone to the wall and there are those that have made good money from taking risks. Not as many risk averse people go to the wall but then again they usually don't get the rewards associated with taking risks. Neither is right or wrong........they just are what they are. We must, in order to live our lives in harmony with our true selves, do things within our own (not someone elses) risk profile.
Don't worry about labels HC. They are only boxes that people try to put you in so that they can better understand you. One label cannot completely define anyone. Other labels are 'loving', 'caring', 'generous', etc. They are the labels that are important. Being 'risk averse' or a 'bear' is not a sin. 
|
kate
Member
Username: kate
Post Number: 640
Registered: 04-2005Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 10:41 am: |
|
Going off at a bit of a tangent here.
I think you will find people are more influenced by negative sentiment than by positive, its all part of the way we are wired to learn. In the past it was all about survival and while it might not be the case now the wiring is still there.
Regarding bulls vs bears, markets go up and markets go down, its just a cycle. Everyone has their own opinion and the need to be right, again basic human nature. Other people agreeing with you means acceptance and justification for the person you are(and for the beliefs you hold).
Eric would be a good person to contribute to this type of discussion.
msparks, does any trader ever finish learning or improving their trading technique?
|
rdumas
Member
Username: rdumas
Post Number: 392
Registered: 11-2006
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 10:42 am: |
|
Hi MSparks,
Actually we are all the market. That's what makes it such fun to be alive 
|
rdumas
Member
Username: rdumas
Post Number: 393
Registered: 11-2006
Rating: N/A
Votes: 0
|
| | Wednesday, March 21, 2007 - 10:51 am: |
|
Hi Kate,
Absolutely spot on.
|
holycow
Member
Username: holycow
Post Number: 2881
Registered: 08-2004
Rating: N/A
Votes: 0
| | |
