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trioderob

I think the stock market is about to crash....

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Kim

Knowing what you know, and knowing what you can't know are all you need to know when it comes to investing. While I can agree that "buy and hope" is not the best strategy, if market timing were a viable investment tool, I'd be sitting on my private yacht somewhere off the coast of Mexico with my greatest worry being whether to jump in the water for a surf session or have another margarita. Greater minds than mine or yours have been down this path before, and here's a sample of their wisdom:

By

LARRY SWEDROE

/

MONEYWATCH

/December 25, 2009, 7:00 AM

The Smartest Things Ever Said About Market Timing

The evidence has shown that http://moneywatch.bn...ng/227/"]market timing doesn't yield superior results%5B/url%5D. With that in mind, here are some quotes on market timing from some of the most astute minds in the industry.

Warren Buffett

  • "Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.?"
  • "We continue to make more money when snoring than when active."
  • "The only value of stock forecasters is to make fortune-tellers look good."
  • "My favorite time frame is forever."

Peter Lynch

  • "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."
  • "I can't recall ever once having seen the name of a market timer on Forbes' annual list of the richest people in the world. If it were truly possible to predict corrections, you'd think somebody would have made billions by doing it."

Jason Zweig

  • "Whenever some analyst seems to know what he's talking about, remember that pigs will fly before he'll ever release a full list of his past forecasts, including the bloopers."

Charles Ellis

  • "'Market timing' is unappealing to long-term investors. As in hunting deer or fishing for rainbow trout, investors have learned the importance of 'being there' and using patient persistence -- so they are there when opportunity knocks."

Jonathan Clements

  • "What to do when the market goes down? Read the opinions of the investment gurus who are quoted in the WSJ. And, as you read, laugh. We all know that the pundits can't predict short-term market movements. Yet there they are, desperately trying to sound intelligent when they really haven't got a clue."

Alan Abelson

  • "Do you know what investing for the long run but listening to market news everyday is like? It's like a man walking up a big hill with a yo-yo and keeping his eyes fixed on the yo-yo instead of the hill."

Bernard Baruch

  • "Only liars manage to always be out during bad times and in during good times."

Mark Rieppe

  • "Market timing is impossible to perfect."

David L. Babson & Company

  • "It must be apparent to intelligent investors that if anyone possessed the ability to do so [forecast the immediate trend of stock prices] consistently and accurately he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public."

Financial Publications

  • "Let's say it clearly: No one knows where the market is going-experts or novices, soothsayers or astrologers. That's the simple truth." -- ?Fortune
  • "A decade of results throws cold water on the notion that strategists exhibit any special ability to time the markets." --? The Wall Street Journal

What are some of your favorite quotes about market timing?

© 2009 CBS Interactive Inc.. All Rights Reserved.

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trioderob

Kim-

i am here to tell you that you can do better than "buy and hold".

look at the folks that rode the maket from the SPX 1500;s all the way down to the low of 666

What % must the market now come back - for them to just break even ?

take a dime and lose 50% now you have 5 cent

take a nickel - what percent to get back to your dime 100%

having money in stocks during a bear market is a VERY risky investment !

Edited by trioderob

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Kim

At the risk of sounding like a broken record, above I wrote, "While I can agree that 'buy and hope' is not the best strategy,...etc." If that was too oblique for you, "buy and hope" is a humorous reference to "buy and hold". Buying and selling when real opportunity presents itself is a judgement call that doesn't flip and flop every day. An investor will never make 1200% on a stock by jumping in and out every time the market wobbles. Serious returns require expertise and time.

Having a percentage of money in stocks in a bear market is part of the reality of investing. Missing major moves in the stock market by being 100% out of stocks on key days is just as risky.

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trioderob

nothing is more important than missing the big down move.

its MUCH more important than getting the up move.

take this example:

1997-2006 time frame

$1 invested for 10 years turned into $2.24 if left untouched. If the best 10 days had been missed it would grow to only $1.40, barely beating inflation. If the worst 10 days had been avoided it would become $3.67, a huge jump.

Edited by trioderob

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redant

I find it really interesting the optimism bias all you American's have! It's quite tragic. But I think that goes for pretty much everyone really... story of the world!

So the S&P500 was up last night... almost 2% putting it just above its 200 day trading average again... but it did this in June too, and then rallied - will it again?! :hmm:

The currently market action is totally misleading. And besides, it isn't really a market anymore - it's been corrupted by you know who (fund manager of the world)! <_<

The proof will be in the pudding!

Did someone say pudding, I love pudding, oh back to the market, While things do seem to be rather gloomy and the world rather manipulated, nobody is manipulating the markets more then the government. The artificially low interest rate environment causes other asset classes to become more desirable. The government is forcing people into risker assets in order to get any return at all on there money. In essence the government is trying to inflate the stock market and housing market (again) to create wealth. It usually is a bad idea to fight the fed, better to just go for the ride.

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Dypsisdean

Kim,

Even after hearing all the great quotes regarding the difficulties (or impossibility) of market timing from some of the most experienced stock market experts that ever lived, Rob sounds like he still thinks the best strategy is to avoid the down days - and better yet, avoid the bear markets. In other words, time the market.

While I happen to think it may be possible for some (very few) "experts" to time long term moves in the market and use them to their advantage, consistent (profit generating) short term market timing is a fantasy. The lion's share of money made in the stock market is by analyzing and investing in individual stocks/companies, not in calling/timing highs and lows in the major market indices. But I know you already know all of that. :)

My favorite quote on market timing - "Nobody rings a bell at the top (or bottom)."

And one I just made up - "There is nothing more humbling than trading the market."

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Bags

Rob you are hilarious. I have to go with Kim and Dean on this one. If there was some magical way to avoid the 10 worst days over a 10 year period please tell us. The chances of hitting the super lotto would be much more likely.

When you talk about a bear market is sounds like you are investing your entire fortune at once and then the market crashes. That would be bad. It is more important to invest consistently over a long period of time. When a crash does happen take the cash you do have and invest even more. If you had started buying Apple in 2006 you would have lost a lot of money by 2008, but if you kept buying you would be rich by now. You have to have a stomach for the long term not the day to day.

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trioderob

"When you talk about a bear market is sounds like you are investing your entire fortune at once and then the market crashes. That would be bad. It is more important to invest consistently over a long period of time. When a crash does happen take the cash you do have and invest even more. "

not true at all and i can prove it.

thats called "doubling down" and it never works - the stocks gurus 80 years ago knew not to do that !

so the market crashes from 1500 to 1100 lets say what you own is down but who cares - so you buy more

and now it goes down more and you dont pull out and it drops to 1000 - now you are really down - so you buy more

now it drops to 900 and you buy more and guess what you are down even more and the new stocks are down too

so what do you do - you buy more ! - why not ?

now it drops to 800 - more buying

700 you get more .........................

now you are down bigtime and on top of that you are in a severe downturn so it could drop to who knows what ???

well in dropped even more to 666 so now your $1000 bucks in stocks is worth 450 but thats ok it wiill come back some day

thats a good idea - but waiting for the markets technical indicators to improve before buying and presearving cash is a bad idea ???

Edited by trioderob

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Bags

I totally disagree, because over time the stock market has always gone up. If you bought at the absolute peak of the market at any time in history before a major crash in 15 years you would have made a profit. Take a company like Warren Buffett's Berkshire Hathaway. The value of all of the stocks and companies they own is their book value. It has historically traded 1.6 plus times its book value which has grown at around 20% for over 50 years. Right now it trades at around 1.1 times book value, a good deal historically. If the market crashes 15% tomorrow you could buy this company at a deep discount. The market may crash another 15% and you could have gotten a lot better deal by waiting, but you already got a great deal and in a short amount of time the stock will rebound (like the market always does after a crash) and you will be way up either way. If you miss the crash great but if you sell when you think it is half way down and it rebounds you screwed yourself.

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trioderob

"I totally disagree, because over time the stock market has always gone up."

true but can take 10+ years - look at a chart of the S&P 500 from around 1963 to 1973 it went up 0%

now the SPX is at the same price as april 1999 - so in all those years it went up 0%

tell me that you actually make money in the market - do you really ?

and also dont kid yourself - if a company drops 30% it can and sometimes does keep going down !

maybe to nothing - zero

please do yourself a favor and read a few books on the basics of stock trading.

i am not trying to be a jerk here just trying to help you.

Edited by trioderob

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Bags

I am laughing right now. Can we add stocks to politics and religion. You are right, it can be flat for 10 years, I said up to 15 years if you bought one time at the absolute peak. If you bought in 63, in 73 you would be even but if you bought in 63 and in 64, 65, 66, 67, 68 ,69 ,70, 71, 71, 72 and 73 you would be way up and by 83 you would be waaay up. But thanks for the advice, I wil tri and red som boks on stok investing.

And generally great companies don't just disappear. They come back over and over again. That is what Buffett has invested in for a very long time and he has done alright.

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Dypsisdean

Rob, don't take Dean's attacks as personal(maybe 'attacks' is not the best word). I had a few determined debates with him and it may seem like he's getting under your skin, but that's just his charming self. He seems to be a smart guy and is also engaging--we are lucky to have someone like him to keep us in line and to challenge our own opinions with a competent opinion of his own. Thanks Dean, for what you do.

Andrew - your kind words are appreciated. I'm pleased you have understood the intent of my "charm." :) I was unsure at times.

I have always enjoyed having my way of thinking questioned by someone who can put together logical and informed counter arguments. It either helps me strengthen my position, or brings out where I need to alter that thinking, and allows me to "grow." So I naturally assume, sometimes incorrectly, that others will enjoy the same.

I'll tell you a secret if you promise to keep it to yourself. As the Mod, I do everything I can to increase hits, clicks, and views - because for a variety of reasons, more web traffic benefits us all. And there is nothing like a lively exchange to provoke interest. Case in point - this topic already has well over a thousand views - way more than comparable topics. And who would have ever imagined a topic about the stock market, here on PalmTalk, could attract such attention.

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richnorm

What are some of your favorite quotes about market timing?

The past is no guide to the future. In investing, time doesn't heal.

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Cindy Adair

Since I've never taken a single economics or business course, I have enjoyed reading everyone's comments without feeling the need to add my uneducated opinion, until now.

For me, working hard and saving whatever I can afford every month has been my major financial plan, beginning with opening a passbook savings account in college. Remember those where you kept an actual small paper book from your bank that showed interest added with no risk?

Later when I had a real job, I sought professional advice and regularly "automatically invested" the same amount every month increasing the amount as my salary increased, but mostly in mutual funds. I "paid myself first" and lived on what was left. When the market went down, I reminded myself that with "dollar cost averaging" I just got more shares. Since I wasn't looking to sell anything, I didn't get overly concerned with the sometimes dropping overall value. We'll see how my stress level changes when I retire.

So I guess the words I just put in quotes above constitute most of my entire financial knowledge. So those of you with expertise and strong opinions can try to figure out the market while I just look at pictures of palms. I can't argue with free entertainment mixed with knowledge.

Like Dean, I wouldn't have guessed a non-plant topic like this one would have generated so much interest.

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trioderob

rule #1 - never lose money

rule #2 - never forget rule #1

-Warren Buffet

Edited by trioderob

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bgl

I thought I wouldn't post in this thread, but I guess I was wrong! :lol: Warren Buffett may be a legend and I am sure he knows more than all of us here but if someone never lost money in the market, I'm guessing that person never invested to begin with. Catchy quotes are just that.

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sur4z

You all should just compromise and become "day traders"...that will test your mettle!

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trioderob

"Remember that stocks are never too high for you to begin buying or too low to begin selling."

"In a bull market the game is to buy and hold until you believe the bull market is near its end. "

"Obviously the thing to do was to be bullish in a bull market and bearish in a bear market. "

Jesse Livermore

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trioderob

"There's a Sucker Born Every Minute"

P.T. Barnem

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Moose

Dow went up 172.79 yesterday, back over 13,000 threshold.

I'm not stock market savy, are these indicators of the pending crash? :indifferent:

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edbrown_III

it crashed another -1 % again

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trioderob

guess you did not read this post I made:

"Posted 16 November 2012 - 11:59 AM

ok ARMS index hit 2 - we are now oversold- look for a nice bounce "

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Dypsisdean

guess you did not read this post I made:

"Posted 16 November 2012 - 11:59 AM

ok ARMS index hit 2 - we are now oversold- look for a nice bounce "

And if it crashes next week you can still claimed you "nailed it" - explaining by "bounce" you just meant a temporary week long up trend.

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trioderob

DEAN -

I nailed it 100%

the thread was not intended to be "never ending'

And using your logic - no matter what I had said - you could have stated I was incorrect - LOL !

:floor:

Edited by trioderob

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Moose

DEAN -

I nailed it 100%

the thread was not intended to be "never ending'

And using your logic - no matter what I had said - you could have stated I was incorrect - LOL !

:floor:

How is your Kodak stock doing? :mrlooney:

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trioderob

market is at an important turning point right now

keep an eye on it.

Kim - any comments ????

Edited by trioderob

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trioderob

Exhaustion gap got filled when someone made a comment on the news mid day it crashed and we got a pop off the gap fill.

watch out tho - as the VIX is at a major low and 6/1 everyone thinks we have a deal cut.

euro is coming into play now

interesting times................

Edited by trioderob

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Stevetoad

im investing all my money in chicken stock. i cook with it all the time...

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Pedro 65

"Eat The Rich" :)

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Dypsisdean

Exhaustion gap got filled when someone made a comment on the news mid day it crashed and we got a pop off the gap fill.

watch out tho - as the VIX is at a major low and 6/1 everyone thinks we have a deal cut.

euro is coming into play now

interesting times................

Did you get that from the same source as the following prediction you posted:

S.&P. 500: DOWN 0.5% OR MORE TO 1367 OR LESS AT NOV. 23rd CLOSE

S.&P. 500: DOWN 0.9% OR MORE TO 1362 OR LESS AT NOV. 30th CLOSE

Just for the record, the S&P closed at 1416 today the 29th. That's the equivalent of missing the best case scenario of that prediction by about 450 DOW points. If you followed that advice you would be way underwater at this point. Instead of the market down .9% or more, it is up 3.2% --- Ouch!

By the way, is that crash prediction still on the table?

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trioderob

Dean-

you keep on a trying to make your case that I was wrong - thats a falsehood.

you are trying to tie things together to stir the pot - dont OUCH ME as I posted a real time turn on this forum.

i dont follow any advice 100% from other peoples internet posts.

as long I made some money I won - as long as i end the year in the green i am doing OK

do you agree at least with THAT ?

Edited by trioderob

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Dypsisdean

as long I made some money I won - as long as i end the year in the green i am doing OK

do you agree at least with THAT ?

Nope - I don't consider myself a winner unless I have beat the averages after I have paid any taxes and costs. And trading as you are advocating means that you have to pay short term cap gains, which are a killer, and wipe out a good chunk of any profit. So you have to take all of your trading costs, minus taxes, and not to mention any time invested - then if you soundly beat what holding an ETF for the S&P for a year would have returned (for zero effort), then you can say you won. But only if you can do that year after year, because one bad year could wipe out all of your profits for the previous four. So if you can show profit on paper for five years that beats the average, after taxes and expenses, then you will have my admiration.

But look up sometime what percentage of professional money managers have failed to do that.

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trioderob

DEAN-

good luck to you.

have fun and thanks for teaching me about the market.

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paulgila

testing...1..2..3..

is this thing on?

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trioderob

this time DEAN can make the call as he appears to be an expert in the market.

what say you Dean ?

the next few days - up or down ?

whats that market going to do the next month ?

the next year ??

Edited by trioderob

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Kim

market is at an important turning point right now

keep an eye on it.

Kim - any comments ????

Much ado about nothing. A tempest in a teapot. What is this, Boiler Room? Don't quit your day job.

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Dypsisdean

this time DEAN can make the call as he appears to be an expert in the market.

what say you Dean ?

the next few days - up or down ?

whats that market going to do the next month ?

the next year ??

The market will go up, down, and sideways - over the next few days, next month, and next year. That's my call.

And a year from now I can claim I nailed it - guaranteed. :)

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Dypsisdean

has it crashed yet? :mellow:

The dot indicates the first chance you could have taken a position after Rob's crash call "got a bad feeling its going down hard." This chart of the S&P speaks for itself. But I think its safe to say, "Not yet."

post-11-0-21741600-1354253426_thumb.jpg

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