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sentinelbrit (85.67)

How afraid are you?

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May 21, 2010 – Comments (36)

I ask this question because the best times to buy are when your stomach is churning, your palms are sweating and you can't understand why prices are where they are (of course the opposite is true when the market is at a high - you're basically thinking investing in stocks is easy and you should have put a lot more in the market!).

I must admit to feeling a little complacent. I wish I felt worse. I think it is because I have done okay over the past year and I'm not hurting enough. If I were losing a lot of money, I know my stomach would be churning etc.

I have been taking advantage of lower prices and bought Oracle and Genworth today. I think both are good value, Genworth is cheap but risky. Also, some very respectable fund managers have decent positions in both. I still have some dry powder to put to work if prices continue to fall but I'm hoping we're close to support here.

Have a great day!

36 Comments – Post Your Own

#1) On May 21, 2010 at 10:18 AM, outoffocus (23.04) wrote:

We are no where near "stomach churning".  I hear most people saying "load up theres alot of bargains". I think the current sentiment is this is just a "correction" and we wont fall too far.  Once you start hearing renewed calls of DOW 2000, then you know its time to buy.

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#2) On May 21, 2010 at 10:26 AM, catoismymotor (35.13) wrote:

I think you and I are in the same position. I'm not freaked out at all. The companies I own have been purchased with a specific plan in mind, for the way I think the global economy will behave over the next five to ten years. That affords me some peace of mind. This downturn provides us with a way to buy more shares of the companies we know and trust at a sale prices, which is a very good thing.

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#3) On May 21, 2010 at 10:29 AM, JakilaTheHun (99.93) wrote:

I'll admit that I'm terrified right now.  I was practically giddy in late '08 and early '09, but I don't have the same feeling right now.

Europe has pretty much botched everything it has done.  I'm increasingly of the opinion that the Eurozone should permanently dissolve. The experiment has failed.  My fear is that they are going to drag us into global depression.  People forecasting hyperinflation are nuts --- if anything, the risk is precisely the opposite in Europe.  We could be heading for severe deflation.

The only alternative to breaking up the Eurozone is to radicially reform the institution and give up substantial powers of sovereignty in order to form a 'US-like structure'.  

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#4) On May 21, 2010 at 10:40 AM, sentinelbrit (85.67) wrote:

I lived in the UK for 30 years before moving to the US, and my views on Europe are shaped by the Thatcher years. I think France and Germany will do anything to preserve the EU and the euro. The euro is a crazy idea but I think the governments will take the position that they can't abandon it after the first real hurdle threatening its existence.

I totally agree that inflation is off the agenda for some time and deflation is the bigger worry. Somehow, the EU together with the US have to come up with a plan to stimulate growth and at the same time cut their deficits. Frankly, low interest rates and pumping liquidity into the system is the only way to do it. Hopefully, the deflationary pressures are such that the increase in liquidity won't ignite inflation. As I have written before, low interest rates and growth in money supply with slow but steady growth are potent for the market.

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#5) On May 21, 2010 at 10:48 AM, portefeuille (99.60) wrote:

Feeling pretty good here. Calculated in EUR my portfolio is around 5% below its post 2007 peak value which it reached around 3 weeks ago. And as 90% of what I spend (with the exception of "financial instruments" of course) is more or less stable in EUR prices (the other 10% would be stuff like a new macbook I might buy) the euro is probably the currency I should calculate my "net worth" in, hehe ...

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#6) On May 21, 2010 at 10:50 AM, dragonLZ (99.39) wrote:

#1) On May 21, 2010 at 10:18 AM, outoffocus (21.49) wrote:

We are no where near "stomach churning".  I hear most people saying "load up theres alot of bargains". I think the current sentiment is this is just a "correction" and we wont fall too far.  Once you start hearing renewed calls of DOW 2000, then you know its time to buy.

 

Agree 100%.

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#7) On May 21, 2010 at 11:01 AM, portefeuille (99.60) wrote:

5% below its post 2007 peak value

Well, whatever that means. The stuff I have bought pre-2009 is, taken as a group, probably around 20% below its peak value (reached in 2007) and I added some positions in 2008-2010 and those are up around 50% as a group. The "old stuff" makes up the larger group. Currently "in the red" are my positions in Commerzbank, Deutsche Telekom, HeidelbergCement, Air Berlin, Infineon, ATPG and a few smaller equity positions and some of my EMC calls. Oh well, I think most of those have a decent chance of reaching the green zone in the not so distant future, let's see ...

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#8) On May 21, 2010 at 11:05 AM, portefeuille (99.60) wrote:

# 5,7 What is somewhat spectacular is the gain of most of my positions from their post-purchase lows. I think the weighted post-purchase "low to high performance" might be around +200% and was around 250% around 3 weeks ago (guessing!).

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#9) On May 21, 2010 at 11:10 AM, portefeuille (99.60) wrote:

and the answer would be "not afraid".

----------------

I think I will start selling some of my boring DAX company shares and put the money into some "high beta" stuff, hehe ...

...

some sell candidates (a recent list of my larger positions is here).

BAS:GR - BASF

BAYN:GR - Bayer

DAI:GR (DAI) - Daimler

DTE:GR (DT) - Deutsche Telekom

EOAN:GR - E.ON

HEN3:GR - Henkel

LHA:GR - Lufthansa

RWE:GR - RWE

SIE:GR (SI) - Siemens

----------------

(from comments #38,39 here

 

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#10) On May 21, 2010 at 11:12 AM, portefeuille (99.60) wrote:

I added to my ATPG positions yesterday and today and now have a break-even of maybe $15 per share. That should be doable ...

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#11) On May 21, 2010 at 11:15 AM, JakilaTheHun (99.93) wrote:

I lived in the UK for 30 years before moving to the US, and my views on Europe are shaped by the Thatcher years. I think France and Germany will do anything to preserve the EU and the euro. The euro is a crazy idea but I think the governments will take the position that they can't abandon it after the first real hurdle threatening its existence.

That's my fear actually.  

My belief is that they either need radical reforms in the structure of the Eurozone or the Euro should be abandoned.  Yet, I'm afraid that France and Germany will continue to fight to keep the Euro, all while coming up with dimwitted plans to "save it." 

The thing they don't seem to realize is that this is not a fiscal crisis.  That's certainly what all the gloom-and-doomers want you to think, but the more I examine this, the more evidence I see that it's not one.  Rather, this is a monetary/currency crisis.  The only solution is to dramatically reform the Euro or abandon it. 

I do believe that the weaker Euro will help a bit, but I don't know that it will be enough. 

 

Funny enough, and I'm really surprised to be saying this, I believe the UK is probably in the best shape of major world nations in terms of economic and fiscal policies.   The UK's debt levels are too high, but the Conservative/LibDem govt is trying to address that issue. Meanwhile, they are a sovereign issuer of their own currency, unlike all the Eurozone nations, which are forced into an unworkable system. 

Cutting deficits in the Eurozone is only going to backfire and create severe credit contraction and deflation.  This could, in turn, exacerbate the crisis.  So I'm much more worried about all those nations, plus any countries that are pegged to the Euro.

 

I probably exaggerated my level of fear a little bit in my first post, but I am, nonetheless, frightened about the Eurozone.  I actually think that the US seems to be improving (and I'd rather invest in the US right now than anywhere else).  

While the China deal is bad, their government is not in the same odd-ball situation as the Eurozone nations are.  China will simply manipulate its policies to produce whatever outcome it wants.  While this might not be a great thing; I don't see them being a huge drag on the world economy as a result.  

But the Eurozone ... I just don't know.  I'd like to see them figure out the problems and come up with some realistic solutions, but I haven't seen that yet.  They seem to totally misunderstand the nature of the problem. 

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#12) On May 21, 2010 at 11:18 AM, portefeuille (99.60) wrote:

Europe has pretty much botched everything it has done.  I'm increasingly of the opinion that the Eurozone should permanently dissolve. The experiment has failed.

Really interesting to see how fast perceptions can change with almost no new "input". I think it should be considered that very little "news" was revealed in the past 3 months or so. What has changed is the perception.

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#13) On May 21, 2010 at 11:24 AM, chk999 (99.97) wrote:

On a fear scale of 1 to 10, with 1 being utter calm and 10 being I just wet myself and don't care that I did, I am about a 3.5.

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#14) On May 21, 2010 at 11:25 AM, portefeuille (99.60) wrote:

----------------

 

Results of the May 2010 Ifo Business Survey

The Ifo Business Climate for industry and trade in Germany remains at nearly the previous-month value. Both components of the indicator, the assessments of the business situation and the business expectations, show little movement in comparison to April. The firms are just as satisfied with their current business situation as they were in the previous month. Their business outlook has been appraised as minimally less favourable than in April. The economic recovery in Germany is robust.

In manufacturing the business climate has improved further. The business situation of the manufacturing firms is again more favourable than in the previous month. With regard to business developments in the coming six months, the firms are even more optimistic. In terms of foreign business, they again expect a more robust revival than previously. The firms plan only very isolated reductions in personnel.

The business climate in retailing and in wholesaling has clouded over somewhat. In both distribution sectors the survey participants are no longer as satisfied with their current business situation as they were in April. However, with regard to the six-month business outlook, the retailers are slightly less critical, whereas wholesalers are no longer as confident regarding future business as they were in the previous month.

In construction the business climate index has fallen again. Both the current business situation as well as the business outlook for the coming six months have been assessed as less favourable than in April by the surveyed contractors.

Hans-Werner Sinn
President of the Ifo Institute for Economic Research at the University of Munich

----------------


 

Ifo Business Climate Remains Almost Unchanged (pdf)

 



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#15) On May 21, 2010 at 11:31 AM, bigcat1969 (92.84) wrote:

I dunno Greece saying give us money or we default on May's debt payments might be new.  Still I get the point everything gets ignores when it is just a little snowball rolling down a long hill.  Eventually toward the middle of the hill it starts getting pretty big and people start noticing.  Governments hire people to start shoveling in front of the snowball hoping to keep it from getting bigger or maybe they try to get more snow and build a snowramp to slow it down or maybe both.  At Motley Fool we have epic and lovely blogs about the length of the hill and cheer everytime the snowball changes speed as we have been betting on it. Sometimes the betting system breaks down and then we really worry.

Somehow in the end the snowball still rolls to the bottom of the hill.  Then we build another hill and pray for snow.

P.S. Dang I'm good when saying nothing whatsoever.

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#16) On May 21, 2010 at 11:34 AM, JakilaTheHun (99.93) wrote:

Really interesting to see how fast perceptions can change with almost no new "input". I think it should be considered that very little "news" was revealed in the past 3 months or so. What has changed is the perception.

"Input" is irrelevant. Discovery is everything. 

The more I assess the situation, the more I begin to see that Europe is putting itself in a similar situation to the nations that used to be on the gold standard. 

My thinking is evolving along the lines of this article:

http://seekingalpha.com/article/206041-greece-germany-and-a-second-great-depression

I can't see how the Eurozone avoids another recession if it continues along its current course.  

I'm not saying I won't buy into any European securities.  My investment strategy is based around the concept of risk-reward and macroeconomics are not the largest element driving it.  But I can say the macroeconomic issues make me much more relunctant to buy into companies that primarily do business in the Eurozone.  In other words, things are either going to have to get significantly cheaper or I'm going to have to see evidence that European policymakers understand their predicament before I dive more fully into Europe.  

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#17) On May 21, 2010 at 11:34 AM, portefeuille (99.60) wrote:

Maybe the "panic level" is about as high as it was on average "during the July 2009 dip". Then maybe it is correlated with the relative distance of the S&P 500 index from my little green trend line, hehe ...



enlarge

(from comment #40 here)

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#18) On May 21, 2010 at 11:36 AM, portefeuille (99.60) wrote:

Discovery is everything.

What was dicovered that was so spectacular?

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#19) On May 21, 2010 at 11:36 AM, Superdrol (96.51) wrote:

How do I put those charts in posts

 

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#20) On May 21, 2010 at 11:41 AM, JakilaTheHun (99.93) wrote:

What was dicovered that was so spectacular?

Did you even read the rest of the post? 

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#21) On May 21, 2010 at 12:03 PM, portefeuille (99.60) wrote:

I begin to see that Europe is putting itself in a similar situation to the nations that used to be on the gold standard

is that the discovery?

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#22) On May 21, 2010 at 12:50 PM, DarkToast (45.25) wrote:

I sold most stocks I was up on earlier this week, as well as closing some trades I was even on.

I kept the 4 stocks I am heaed into ASCO with, KERX, AEZS, SNSS, and SPPI. 

If the s&p goes back above its 200 dma, I'll reload ARCC, GOV, and RBY.

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#23) On May 21, 2010 at 1:23 PM, portefeuille (99.60) wrote:

#19 see comment #24 here.

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#24) On May 21, 2010 at 2:29 PM, Momentum22 (29.73) wrote:

I have been extremely afraid lately. The news has been ultra bearish on the markets and it is hard not to hit the panic button when you see all your gains of the past year wiped out. 

In my calmer moments I still believe that nothing has fundamentally changed over the past several months (and I am not saying we don't have issues to contend with around the globe)...I just don't believe we will experience the lows of March09 again and over the long run the chaos we are going through now has got to be looked at as an opportunity. 

Even the most bullish have one foot out the door. No one wants to get burned again.

I am afraid but I do have faith in our ability to innovate and bounce back from times of crisis. I am not going to "ring the bell" at a bottom but I think we will get through this episode.

I have been buying "the falling knife"...if I am the investor that I say I am this is the time where the homework pays off...I feel that I am open-minded on all viewpoints but also need to keep firm in my overall thesis... 

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#25) On May 21, 2010 at 2:44 PM, sentinelbrit (85.67) wrote:

I've been out for the last four hours helping a friend move some stuff. He just bought a house on the Cape! Glad someone is doing something to help the economy.

I don't think Europe is the basket case everyone makes out. I think the market is attractive. However, I think the US is further down the curve and offers more growth at reasonable prices.

One theme I am starting to buy into is the relative outperformance of large caps over small/mid caps. In a slow growth environment, large caps will do relatively well and their cash flow will prove valuable. They are also cheaper than small caps. Here is a list of stocks that some PMs I follow seem to like:

MSFT, ORCL, JNJ, CSCO, GOOG, AAPl, KO, PFE, PEP, BRK-B and one of BAC, JPM or WFC.

I doubt you'll rise to the top of CAPS with these but you'll live to fight another day. I own the following blue chips: ORCL, JNJ, BAC, plus MCD, ABT, PG, C, GSK, BP, Qcom and GILD. These stocks will provide some ballast to my otherwise aggressive portfolio.

 

 

 

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#26) On May 21, 2010 at 2:58 PM, russiangambit (29.29) wrote:

> In my calmer moments I still believe that nothing has fundamentally changed over the past several months (and I am not saying we don't have issues to contend with around the globe)...

 Ha-ha. It is the same thing the bears have been sayign forever - nothing changed.

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#27) On May 21, 2010 at 3:05 PM, portefeuille (99.60) wrote:

It is the same thing the bears have been sayign forever - nothing changed.

looking at the chart in comment #14 above they have at least partially been wrong, hehe ...

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#28) On May 21, 2010 at 3:10 PM, portefeuille (99.60) wrote:

I am not so sure the "changes for the worse" that occured during the last few months "outweigh" those "for the better" ...

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#29) On May 21, 2010 at 4:03 PM, russiangambit (29.29) wrote:

The ramp up into the close was  very impressive. Obviously, people are nowhere scared enough.

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#30) On May 21, 2010 at 4:37 PM, sentinelbrit (85.67) wrote:

I just saw a snippet of the interview with Gross and El-Erian at PIMCO. They didn't say anything that was new or we didn't know. We all know the trouble spots or as they said the "known unknowns". They put the odds of a double dip recession as very low. They also noted the liquidity being pumped into the system. For me, liquidity is the biggest positive out there and persuades me that we will get through this period of weakness.

On another note, what I found interesting today was the poor performance of healthcare stocks. I don't know why they didn't rally with the rest of the market. They hurt the performance of my porfolio :(

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#31) On May 21, 2010 at 5:10 PM, portefeuille (99.60) wrote:

They put the odds of a double dip recession as very low.

Talk of Double-Dip is Utter Nonsense: Keating












 

really amusing to hear good old Keating call the double-dip talk "utter nonsense". just a few moments earlier the "guest host" (sitting to the lest) said that she thinks a double-dip will probably occur.

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#32) On May 21, 2010 at 5:13 PM, portefeuille (99.60) wrote:

I think the best part of this current "thing" is that the "bears" have regained confidence in their ideas, so I guess it is okay to make fun of them again ...

 

 

(just kidding ...)

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#33) On May 21, 2010 at 7:33 PM, Imperial1964 (97.83) wrote:

At this point in my life I am a fairly large net buyer, so I am actually feeling a lot better than I was a couple of weeks ago.  I've gotten to about 10% cash from 100% long in December, and while I expect more volatility I am just waiting for the market to come to me.

If I were looking to sell soon I would be concerned, but the time to sell was two weeks ago.  And the time to buy is coming.

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#34) On May 21, 2010 at 7:37 PM, portefeuille (99.60) wrote:

lest

left

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#35) On May 21, 2010 at 10:32 PM, HarryCarysGhost (99.69) wrote:

What is my fear level right now?

Just to put a number on it I'll go %1.

Born and raised a Contrarion, so I actually enjoy it when people completly freak out over Mr Market.

"Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgement is sound, act on it- even though others may hesitate or differ"

`Benjamin Graham

 

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#36) On May 22, 2010 at 12:05 PM, portefeuille (99.60) wrote:

pre-2009

pre-2008

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