Latest Post | Last 10 Posts | Archives
Previous Post: Big mistake by Seals? Plus: Money woes dog candidates
Next Post: SUBSCRIBERS ONLY - Wait; Forby; Holmes; Munson; Froehlich; Kotowski; Black; Voters; DNC (Use all caps in password)
Posted in:
* It’s Friday, so let’s change the subject a bit. Our setup is from Warren Buffett…
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
* The Question: What’s your current investment strategy? Explain.
posted by Rich Miller
Friday, Oct 17, 08 @ 11:11 am
Sorry, comments are closed at this time.
Previous Post: Big mistake by Seals? Plus: Money woes dog candidates
Next Post: SUBSCRIBERS ONLY - Wait; Forby; Holmes; Munson; Froehlich; Kotowski; Black; Voters; DNC (Use all caps in password)
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Ride it out with stocks (and bonds, to a lesser extent) to the extent that you can. The fact that the market is so volatile only reinforces the notion that most are looking to make a quick buck right now rather than investing long-term. It’s always wise to have cash on hand, of course, but only as a small percentage of your portfolio.
Comment by The Doc Friday, Oct 17, 08 @ 11:20 am
Ride the storm out. This type of economic activity has happened before and it will happen again. Cool heads must prevail for this to turn around. My investment goals are long term, I’m only 51, keep saving, deversify and ride it out.
Comment by Dan S. a Voter and Cubs Fan Friday, Oct 17, 08 @ 11:21 am
Ride it out with my current mix of stocks and securities. The long-term history is tried and true. And if it doesn’t work, we’re all going back to barter system, anyway.
Comment by wordslinger Friday, Oct 17, 08 @ 11:23 am
My wife controls the money and has a policy of diversified retail investments, at least that what she says. Some economists would call it “consumerism.”
Comment by Blogger2 Friday, Oct 17, 08 @ 11:27 am
Maintain current portfolio, recently bought POT, ADM and MTW
Comment by Silverback Friday, Oct 17, 08 @ 11:35 am
I am going to keep doing what I have always been doing. Wishing I had money to invest.
Comment by Been There Friday, Oct 17, 08 @ 11:36 am
I actually bought last week, got it in on Friday
I only buy mutual funds. 90% US, 10% international. All no load, low cost. Wish I had more free cash to buy.
Comment by Pat Collins Friday, Oct 17, 08 @ 11:39 am
Heh, I don’t have anything to invest with.
Comment by Levois Friday, Oct 17, 08 @ 11:46 am
I’m putting all of my assets into bread. Also considering investing in a shovel company for all those getting ready to relocate their assets to their backyards.
Comment by Baines for Prez Friday, Oct 17, 08 @ 11:50 am
All of my investments are college savings for the kids and retirement funds, so they’re all some type of mutual fund.
I’ve been trying to budget so I could max out the 401k for the next term and, because retirement is a long way away, I’m sticking with 80% in riskier small cap growth.
I would like to have the money to invest on my own, but that’s not realistic for me right now.
Comment by doubtful Friday, Oct 17, 08 @ 11:51 am
Staying the course while avoiding the financials. Relative youth allows me to not panic. All this freaking my wife out, though.
Comment by Lefty Lefty Friday, Oct 17, 08 @ 11:58 am
I bailed this week. I rode it out until I lost five years worth of growth. I do not foresee the Market returning to it’s January 2008 level for a few years.
The reason is because regardless of whom is elected in November, the instability of the economy will continue until the new administration sets a stable course and direction. This will probably not happen for another six months, at the earliest. Until then, expect instability without growth.
The market will not grow if the next president feels forced to implement another New Deal or similar social programs and taxation. It will not grow if the next president takes a wrong step, ends up looking compromised or misinformed.
So there are more reasons today to be unwilling to “ride it out” if you plan to use your portfolio within the next four years. While I recognize we have suffered an economic turndown, we do not yet know if this is a bubble, or an actual systemic challenge. We cannot know while we await a new administration and new policies.
Comment by VanillaMan Friday, Oct 17, 08 @ 11:58 am
Steady as she goes. Anyone not looking to retire in the next year or two will lose more by jumping now that by just riding it out as long as your pretty-well diversified. It’s not that complicated.
Comment by Amuzing Myself Friday, Oct 17, 08 @ 12:03 pm
Keep my checking account balance above $2000
Comment by Speaking At Will Friday, Oct 17, 08 @ 12:07 pm
I’m taking a page from the physicians’ oath…”First, do no harm”. Since I have at least 10 years to retirement, I can pretty much ride this out, but some minor adjustments to more stable investments are the way to go for me.
Comment by Commonsense in Illinois Friday, Oct 17, 08 @ 12:08 pm
Also investing in ammunition, and protecting my garden.
Comment by Speaking At Will Friday, Oct 17, 08 @ 12:08 pm
I recommend taking a look at high yield and municipal bonds. You’d be buying credit at very low levels–it’s pretty ridiculous what you can earn, especially tax-adjusted, on lots of munis.
There are also banks out there trading at less than half of book value, when book shouldn’t be written down nearly that much. The “financial” sector is comprised of very different kinds of assets. Some of the better stuff has taken undue hits.
Remember that a lot of the recent selling has been funds bannging out of all asset classes for non-fundamental reasons. When your redemptions hit, you don’t have a choice about selling. So the sellers are more than fearful; it’s involuntary selling.
Buffet’s best line is about cash. That’s just locking in a slight negative real return.
Finally, for those of you public employees whose assets are mostly pensions or similar instruments, you should be scooping up inflation hedges left and right. That’s your #1 risk.
Comment by Greg Friday, Oct 17, 08 @ 12:12 pm
Small cap funds. I have been through 1987 and 9/11 crashes with the same scenario, so no big deal - I am still way ahead on initial investments vs. present value. They will all bounce back. It may affect my withdrawal scheme - I am more apt to hold them longer than I would have.
Comment by Six Degrees of Separation Friday, Oct 17, 08 @ 12:22 pm
Shorting Blago futures. (According to the polls, it may be too late for you to get in on this one.)
Comment by Anon Friday, Oct 17, 08 @ 12:24 pm
I’ve cut a few losses in the last few weeks and shifted to Stable Return Fund (State of Illinois Deferred Compensation program). Then I learned Blagoyocrook was trying to horn in and move the administration of the funds to another crooked outfit….hopefully our legislators will be viginlant and keep that *%&$$(&’s fingers out of the till.
Comment by You Go Boy Friday, Oct 17, 08 @ 12:26 pm
I actually moved my kids’ Bright Start bucks from asset protection into stocks on Tuesday. I thought about it a few months ago, but had some problems doing it online (Thanks, Alexi!). WHEW! Glad I did wait/procrastinate but then after the latest drop I feel the time is right. I think we’re hitting the bottom, and since I have 10 years to wait for the kids in college it was a good time.
Comment by Vote Quimby! Friday, Oct 17, 08 @ 12:29 pm
Steady as she goes.
I have kept my investments in stocks, bonds, and to a lesser extent real estate. I continue to add to those investments. It’s a good time to buy!
Comment by Fan of the Game Friday, Oct 17, 08 @ 12:39 pm
Keeping my checking account from being overdrawn. Sad but true.
Comment by My Opinion Friday, Oct 17, 08 @ 12:48 pm
Looking for state government job for the pension, voting no on Con-Con to protect it, and beginning to donate to local lawmaker so my kids can get legislative scholarships.
You got a less risky strategy?
Comment by Michelle Flaherty Friday, Oct 17, 08 @ 1:02 pm
As presumptuous as it may be for me to say so, I believe Buffet’s optimism is mistaken, at least in any time frame less than several years. This financial downturn is the most severe in any of our lifetimes-worse even than the Great Depression. For example, by the end of last week, the Dow had closed down by more than 1% during each of the last seven sessions. This is unprecedented. The longest previous string of 1% declines was six (in 1931). In this environment, all previous investment models, even Buffet’s highly successful value-based one, are suspect. What we are seeing now is nothing less than the unraveling of the debt-based economic structure (supported by information technology) that began to emerge in the 1960s and 70s, and has grown, largely unregulated, ever since. The implications of this unraveling for State finances are obviously immense. For now, I will stick with cash.
Comment by State Worker Friday, Oct 17, 08 @ 1:04 pm
Invest in the Pumpkins market until 11/2/08. Wait it out, put a little more in Bonds.
Comment by Wumpus Friday, Oct 17, 08 @ 1:08 pm
Keep plodding along. Do NOT check my 401(K) balances any more frequently than quarterly. Put aside for kids’ college. Try to pay off the credit card balances over the next few years if possible. Thankfully I am relatively young and the compounding of interest will renew itself in time.
Comment by Jake from Elwood Friday, Oct 17, 08 @ 1:15 pm
Actively buying individual equities with tax deferred money incrementally on dips (or spikes)due to the continued volatility. Taking advantage of the buying opportunity that has been created by the irrational fear permeating the market and enflamed by the media.
Investing across a broad spectrum of industry sectors for diversification as well, and working to identify and purchase shares of the best in class companies in each sector which appear to be the most oversold and undervalued by the marketplace right now.
Individual buying decisions are predicated on a number of factors including vulnerability to current economic sensitivity and volatility, as well as cash on hand, current and long term debt, and debt to equity ratios and liquidity.
Other important considerations include current management, competitive position, and historical operating performance.
On this basis tere are some great buying opportunities in the market now, and there is good money to be made both in the short term; when capital gains are not of concern to me now, and in the medium to longer term because the point from which some share prices have been beaten down will allow for some exponential returns during more normal economic conditions several years down the road.
Comment by Value Investor Friday, Oct 17, 08 @ 1:18 pm
I use the allotment suggested by David Swenson, the
ultra successful manager of Yale’s fund, who has also written a book. It’s quite diversified. The book is worth reading.
Comment by Cassandra Friday, Oct 17, 08 @ 1:32 pm
Frank Sinatra and Count Basie invested a bundle of money in a pumpkin farm - “and then they called off Halloween!”
Comment by My Knd of Town Friday, Oct 17, 08 @ 1:38 pm
Hard to invest when you don’t have any money.
Comment by Jessica Friday, Oct 17, 08 @ 1:54 pm
Closed out my short ETF positions and have been buying high dividend-paying utilities, financials and energies [oil, exploration] aggressively. Also adding tech, solar & nuke with both hands. Stocks are having a fire sale; CNN is scaring everyone of a depression, soup lines and panic…. perfect. Blood in the streets. Too bad they scare so many people to sell their investments right at the bottom, after 40% loss. Under 5% cash; 0 bonds; 0 gold; 0 options; 5% currencies, rest stocks.
Comment by North of I-80 Friday, Oct 17, 08 @ 2:07 pm
The “experts” say don’t panic, stay with the course, you’ll be fine. So I haven’t panicked and I’m staying the course. But I find it funny that the “experts” are the ones who are now panicking. It was quite evident last week and to a certain extent this week. Of course, the media have bought into the panic and are causing other, run of the mill investors to do the same. I just can’t believe some of the stuff that comes out of the mouths of some media people.
Comment by Deep South Friday, Oct 17, 08 @ 2:26 pm
My investments are limited to the mutual funds in my 401K - and I haven’t stopped contributing, BUT by the time I retire in 25-30 years (God willing) I have no faith that any of that money will be mine. Regardless of the performance of my funds between now and then, the Government will tax my 401 payouts at such a high level to pay for the countless bailouts and pork, that I won’t have enough money to retire anyway. You think taxes are bad now, just wait until we have another 30 years of “spreading the wealth around.” Disgraceful…
Comment by steal your face Friday, Oct 17, 08 @ 3:03 pm
I’m young. My fiancee has retirement investments, I don’t. “Riding out the storm” and “staying the course” seems like a fine plan of inaction since who knows what the economy will look like in 30 to 40 years when we retire.
But I really worry about my parents who are 5-10 years away from retirement. I personally think the entire idea of the middle class investing in the stock market, retirement or otherwise, has been one of the biggest scams of the last 30 years. One of my grandfathers is doing great because he has this bizarre thing called a “pension.” It doesn’t fluctuate with the stock market, and combined with social security, he’s living a comfortable retirement.
My understanding of the stock market is that it’s supposed to be for rich investors who are willing, and able to afford, to risk their money supporting a business. If the business did well, they got dividends. It wasn’t supposed to be a game of “buy low, and sell high” or “selling short.” It was not designed for hundreds of thousands of people to gamble their retirements, but the wealthy sure are happy to have the extra revenue floating through their financial system. That is, until all the baby boomers start naturally cashing out their stocks on a monthly basis in their retirement. Then stock prices will plummet even more, completely screwing the retiring baby boomers even more, plus the new generations that have started investing in the market.
So I didn’t really answer the QOTD. My response makes me sound like I’m recommending the portfolio option that includes the tin box under the mattress. My savings (not investment) strategy to date, has been CD’s and government bonds; no risk, low growth. I need to start saving for retirement soon, but I’m even wary of mutual bonds. I’ve seen my parents and other family members lose too much.
Comment by Sacks Romana Friday, Oct 17, 08 @ 3:08 pm
#2 “Buy low, sell high”
Stocks are low right here… some 40 to 60% off their regular prices. If you sell HERE, you are selling low… you’ll then buy after you feel safe & good, paying 20 - 40% more than today.
For those investing in mutual funds, check out comparisons with ETFs… costs are usually much lower, traded all day instead of getting mut fund end-of-day price.
Comment by North of I-80 Friday, Oct 17, 08 @ 4:01 pm
VM, yeah, you are so right, god forbid another New Deal. I mean we wouldn’t want to head off something like the Great Depression. BTW what was it again that overturned Glass Steagal? Oh yeah, GRAHAM- LEACH-BLILEY, sure would have been horrible not to see the financials crumble. And yes WJC signed it. He also signed welfare reform, I don’t know why republicans don’t appreciate him more, he was your greatest president.
Comment by Ken Friday, Oct 17, 08 @ 4:19 pm
That darn New Deal.
Rural electrification. Public works. Farm price supports. Unemployment insurance. Rights of Labor. Clean water. Decent housing. SEC. FDIC. Social Security. Four Freedoms. Savior of capitalism. American answer to the worldwide fascist and communist movements. Engine of the great postwar boom.
Read the Pride of Dixon, Ronald Reagan, on the New Deal — and I mean his later writings. Like the GIpper said, he voted for FDR four times. His issues were with the Great Society.
Comment by wordslinger Friday, Oct 17, 08 @ 4:35 pm
My financial game plan is to keep my wife working, not to throw money away on anything that doesn’t give me a 5% return (my wife yields better than 5%), and to pray that Obama isn’t serious when he infers that he wants the role of playing “Robin from the Hood”. Barack’s idea that Sherwood Forest is pretty close to Chicago and robbing from the rich ( and pretty much anybody else that he feels has too much money) to give to the poor (or anybody else that he he feels needs more like Chicago & Cook County) makes for many a sleepless night. The miserable economy was enough to have to contend with and now I have to worry about Robin as well the Sheriff Dick Daley of Nottingham. What’s a poor serf to do?
Comment by Beowulf Saturday, Oct 18, 08 @ 6:26 am
Dollar cost average in to index funds (mixed stocks, bonds)–a certain amount of $$ each month, so that I buy more shares when things are cheap, fewer when they are expensive–let it stay there until I need it, which is probably when the grandkids need help to go to college. (I am in a good pension plan, so probably will not need it for myself)
Comment by jake Saturday, Oct 18, 08 @ 9:31 am