Grim Stock Markets

[Rockslinger]

It is awful everywhere. The best performing stock market is MINUS 33% so far this year (with 7 weeks left to go) and the worst is minus 70%. Every market is underwater. Don't look now, but you are poorer than you think.

Anybody brave enough to guess the stock market for 2009? Better, worse?

 

[Rockslinger]

Lower in 2009 but not as great a drop as in 2008.

I guess you can only drop 70% twice before hitting rock bottom. There is a floor and it is just north of zero.

 

[alex52]

The AVERAGE person should not be in the stock market, but in fix interest products.

 

[hairyfucker]

Anybody brave enough to guess the stock market for 2009? Better, worse?

I predict it will either be up or down or possibly stay the same.

Anyone want to bet that I am wrong?

 

[JohnLarue]

The AVERAGE person should not be in the stock market, but in fix interest products.

While that would have been a good strategy for 2008, its a little too specific

The average person should
1. Understand there is risks in any market (including fixed income)
2. Determine their tolerance for risk and determine what their expectation for returns are
3. Balance their risk / return trade off & other factors such as age and future needs for cash.
4. Allocate their investment money across asset classes based upon 1, 2 & 3

Most think it is the individual stock selection that determine your returns
Not so
It is the proper allocation of funds to various asset classes (stocks, fixed income, real estate, cash, fine art, cash etc)that determines 90% of total returns.

 

[fuji]

I'm buying.

 

[fijiman]

The following chart shows that it took 3 years from the peak of 1929 before the bottom was reached.

http://stockcharts.com/charts/historical/djia19201940.html

It also shows that the initial 45% drop over 3 months was followed by a series of dramatic dead cat bounces (today these are called "buying opportunties"). The 1930's stock markets were characterized by some of the biggest one day swings in history (both up and down). Sound familiar?

Do I think this is going to be another great depression? No, there are too many income replacement programs in place, and central bankers have more tools and experience at their disposal.

On the flip side, the depression of the 1930's was largely confined to the US and Germany, whereas now we see a far more global phenomena. Spain for example has seen unemployment shoot up to 14%. Iceland is bankrupt. The IMF has already begun issuing emergency loans to countries like the Ukraine and Hungary. Further, we have a far larger population to globally support.

In conclusion, I think there is a lot more ground to cover before this mess is over. My prediction on the stock markets is that I have no idea. Personally, I'm moving in a small way into small caps and blue chips, but only with cash that I'm not dependent on for the next few years.

fj

 

[drexyl]

guess??????

Buddy, the market always goes up! just have to have a long view.

 

[Malibook]

Don't try to catch a falling knife.

Only risk money you can afford to lose.

Always use a stop loss to avoid disasters and hopefully to lock in some gains.

 

[dcbogey]

The AVERAGE person should not be in the stock market, but in fix interest products.

If the AVERAGE person follows that advice they will never make any money.

 

[alex52]

While that would have been a good strategy for 2008, its a little too specific

The average person should
1. Understand there is risks in any market (including fixed income)
2. Determine their tolerance for risk and determine what their expectation for returns are
3. Balance their risk / return trade off & other factors such as age and future needs for cash.
4. Allocate their investment money across asset classes based upon 1, 2 & 3

Most think it is the individual stock selection that determine your returns
Not so
It is the proper allocation of funds to various asset classes (stocks, fixed income, real estate, cash, fine art, cash etc)that determines 90% of total returns.

Your advice is good, but inexperienced people follow the herd instinct, and studies show they usually buy high and then panic and sell low.
The public understands the mechanics of the stock market, but not the strategies of stock investing.

 

[alex52]

If the AVERAGE person follows that advice they will never make any money.

They would not lose any money either. If you invested in the market from 2000 to 2008 in a index tracker fund you would have lost money.

 

[JohnLarue]

They would not lose any money either. If you invested in the market from 2000 to 2008 in a index tracker fund you would have lost money.

Oh I do not think so
A well thought out investment plan has periodic buying to average in & it also has periodic selling to take profits.
In addition over the long haul 60% of total stock returns are dividends
Assuming a 2% yield for 8 years the dividend return is 16% , more if they were re-invested

 

[Rockslinger]

Audentis Fortuna Juvet
Please excuse my grade 9 Latin. It means fortune favours the bold. Who is bold enough to buy when there is panick selling? Citigroup at $10 to-day. Anybody want to bet it won't be higher in 3 years?

 

[nottyboi]

Invest your money in SP's you know your gonna get screwed anyway. lol