After 28 years of following the US equity markets, and 15 months after the high, we are coming out of the closet. The high was October 9, 2007 from which according to CNBC the DJIA has taken a close to a 39% drop. Not October and November 2008, but 2007. October and November 2008 may prove to be bottoms, but that is just a guess.
Every conversation out there starts with the rant about the surprise massive downturn of the stock markets all over the world. This comes as a surprise to all but the few insider professionals in the marketplace, who sold out in 2007 and early 2008 to protect their gains. This club went into the last quarter of 2008 with 50 to 100% in Cash. The smarter, aggressive money actually went in with "short" bets into this period. Look at hedge fund results that are public in many places.
It is fair to note here that the information and decision making by the 'retail' investor is quite different from the opinions and actions of 'professionals'. I guess this is but fair and similar to all the other trades where 'insider secrets' are commonplace. It is also important to understand the definition of professionals. An important distinguishing factor is whether the decision makers have a 'stake' and 'sweat equity' in their decisions and results from the 'pot' of assets under management. Does the average mutual fund manager, 401K separate account manager, and the Madoff Fund of Funds Manager have anything at stake in the process?
The market indexes such as the Dow Jones and S&P 500, show negligible returns over the past 10 years. It is tough to figure out if this is the first US decade out of the two or three similar decades of downturn that Japan has already gone through. This is anybody's guess and the influencing factors are too many to discuss here. What makes sense is to collectively gather and find valuable lessons that can enable people to achieve reasonable returns to meet their financial goals. Achieving goals, requires time, attention and dedication to working at investing. I invite good investing insights here and welcome your response. The goal at this 'water cooler' is to figure out if there is a strategy that can achieve reasonable returns without the need to find and correctly call 'bottoms' or 'tops'. Achieving good returns whatever the climate is what 'true alpha' is about after all.
The marketplace forces us to continually evaluate the risk spectrum and place our investments accordingly. The collective wisdom of many can help all of us in the short and long term and hence my invitation to all.
The rewards of having "CASH" to invest when "CASH is KING", are many fold. Lower prices from which large gains can be realized are just two important ones.
HAPPY NEW YEAR and HAPPY INVESTING!
Visit again for more, as we have after all come out of the closet and are finally willing to speak out and also listen to your wisdom.
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