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History paints a bleak picture

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June 01, 2010 – Comments (4)

While I am not personally a big believer in technical analysis or reading the charts, I came across a very interesting article this morning that compares the charts of major bear markets in the past to what we're going through today. It's worth a look if you have a few seconds: History paints a bleak picture.

Of course at the end of the piece, the author talks his own book by recommending that people write covered call options on the stocks in their portfolio.  I actually don't mind people who talk their own books.  One should believe in their investment philosophy enough to talk about it openly (as long as they're being honest).

I'm not really an options guy myself, but I do agree to a certain extent that I have absolutely no idea where the markets are headed in the short run.  I try not to be too optimistic nor too pessimistic.  Very few people are able to consistently and accurately time the market, so I am net long but am trying to play things conservatively by purchasing stocks that pay me dividends to wait out any sort of prolonged downturn.  As an added bonus, I've been trying to find specific "special" situations with catalysts aka free embedded call options that are likely outperform the general market rather than companies that drift at the whim of the general economy.  In my CAPS portfolio I have been sprinkling in select shorts for additional downside protection.  

Deej 

4 Comments – Post Your Own

#1) On June 01, 2010 at 6:56 AM, JGus (28.76) wrote:

Deej,

I don't think the link is working...when I click to open in a new window it merely opens this blog page back up.

 

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#2) On June 01, 2010 at 7:30 AM, cthomas1017 (98.71) wrote:

I googled and found the article here...

History paints a bleak picture

For me, first glance shows the charts to be pretty amazing in their correlation.  Closer inspection shows that timeframes are distorted considerably when making comparisons.  Combine that with selective starts & stops of the charts, the most impressive thing I saw was the chart matching technique of the author.  Not sure one can draw the conclusions in the article given the impact of a number of macro economic factors that must also be compared between '38 & '010.

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#3) On June 01, 2010 at 7:40 AM, JGus (28.76) wrote:

History paints a bleak picture

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#4) On June 01, 2010 at 9:59 AM, TMFDeej (99.26) wrote:

Thanks for the link guys.  Funny, this happens every time I paste a link from Safari while using my new MacBook Pro.  From now on I'll have to use Firefox to blog from that computer or just paste the long link.

Deej 

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