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Is this market tricky enough for you... ?

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May 12, 2010 – Comments (16) | RELATED TICKERS: F , EAR.DL2

Do you feel nauseated by the recent (daily or even hourly) up-and down, down-and-up movements in this market? Do you catch yourself (more and more often) buying high and selling low? Or are you sitting on the sidelines, afraid of this crazy market, while it seems that everybody else is making money?

If you answered yes to any of these questions, I'd say it's safe to say this market is tricky enough for you.But, don't worry. You are not alone. Actually, I’m sure you (as an individual investor) are the majority.

I mean, just look at the posts here on CAPS from last few days:  "Why would anybody not heavily medicated stay invested in......,   or    Open Thread: Your Favorite Hangover Remedy.

Or I’m sure you've seen posts like this one from zzlangerhans, in which he says:  Sorry no news for a while. I've been busy installing a seatbelt on the chair at my computer desk. It's simply not safe checking my portfolio without one these days. Next up is an airbag for my monitor.

You get the picture, right? I'm pretty positive everybody would agree that this market has been extremely tricky lately.

However, no matter how tricky, there is also one more thing nobody can deny about this market: This market has produced some of the biggest returns in the history. Since March lows of 2009, this market has been up 75%. I hope you agree that's big. Bigger than big. HUGE, I'd say.

So, what's my point?

My point is that I have no idea what the market is going to do tomorrow. Not even sure about the next week or next month. Clueless just like the next Fool.

But I did want to share with you one sentence from this pitch from July of 2009:

The new bull market (the trickiest, but the biggest ever) has begun... 

I think it’s kinda interesting, don’t you agree?

And I also think this might be interesting too.

Here is what was said back in September of 2009 in this post here:

And that will be it for this year. At that time, media (same media that was sceptic all this year) will be celebrating a great year for the stocks, will be listing this year's winners with huge returns,... basically will be doing everything (but not on purpose) that will entice the average small investor (also called: show-me-good-news-investor) back into the market. Of course, a frustrated small investor (who will be kicking himself/herself for missing this year's rally) will jump back in with both feet.Unfortunately, 2010 will not be near as good to the stocks (and brave investors) as 2009 was...There will be plenty of opportunities for skillful traders, but the small investor will once again be aking herself/himself: "Remind me, why do I invest in stocks...?" (But there will be some good news in 2010 for those investors: The economy will improve...)  

And that would be it. I just thought I’d share this with you. I think it's very appropriate for what we are experiencing right now. Who said making money in the stock market was easy...?

Good Luck Fools (and stay medicated, my friends)… :)

16 Comments – Post Your Own

#1) On May 12, 2010 at 1:04 PM, YodaBuffett (< 20) wrote:

Very good.

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#2) On May 12, 2010 at 1:15 PM, Griffin416 (99.98) wrote:

I stated my long term bullishness in many various ways across different blogs. Here is a new one:

Historically, bull markets last 4 years on average. With the small exception of a double dip. I have felt this possiblility earlier, but the central banks of the world will make sure this doesn't happen. You NEED to be in the market, only question is which will go up faster stocks or gold.

This bull market is only a baby, there are a few good years left in the rally. Every time it dips 5-10% jump in. Every dip is a buying opportunity, don't let the media scare you out. They have been wrongly EVERY time.

Enjoy, Griffin

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#3) On May 12, 2010 at 2:01 PM, JaysRage (88.84) wrote:

This economy is still on life-support.    The housing market has been propped up from the dead by the housing credits, and the auto industry has been propped up from the dead by the cash for clunkers, but the truth is that there aren't enough buyers for the goods being produced.    The media doesn't even understand the next series of triggers yet. 

There are two severe and horrible scenarios.   One is double-dip, and the other is hyper-inflationary.   Your whimsical dismissal of double-dip either suggests that you don't understand the real risks or that you choose to ignore them, and that you don't understand the repercussions of the alternative worst case scenario.    Sure, hyper-inflationary will mean that it's been to be in assets than in cash, but it would have horrific shock-wave type ripples through the financial industry if the U.S. bonds went below AAA rating, which is what would happen in this scenario, and this would be the end of the U.S. as the world's leading economy and it would crush many U.S. stocks and U.S. dependent stocks.   We might be heading that way, but it's not a happy feel-good bull market scenario, and the central banks do understand the nastiness of this scenario and will not drive us there lightly.     The U.S. government becomes insolvent in this situation.   Central banks cannot write checks forever that they can't cash.   This money eventually has to get funded by the tax payers or inflated into oblivion.   

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#4) On May 12, 2010 at 2:05 PM, dpdoor (36.35) wrote:

I totaly agree and have blog so. If I could right like that I might get a few rec's here and there

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#5) On May 12, 2010 at 2:25 PM, dragonLZ (99.35) wrote:

Thank you everybody for your comments and the recs.

Griffin, I agree with you, but I'm not quite sure about jumping in after each 5-10% dip. You might be right, but I do think this year we'll see some more serious dips than just 10% ones.

Good Luck All!

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#6) On May 12, 2010 at 2:33 PM, Griffin416 (99.98) wrote:

Jaysrage,

Ahem, but clearly 14 months have gone by and the bear have been crushed. Every dip HAS been a buying opportunity. My extreme bullishness has pushed my caps rating into the top 150-ish. And those people who are still bears slide down the ranking everyday.

Do you watch Larry Kudlow? We are in a "V" recovery, by every signal imaginable. "When the facts change I change my mind, what do you do, sir? Said a great economist, Keynes.

Being in the real estate industry, I understand what is going on better than most. Things are getting better. These are the simple facts. Go ahead, be my guest, keep shorting the market until, bankruptcy...yours!

Admittedly, I mention gold because I am truly terrified about all the money printing...no debate there.

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#7) On May 12, 2010 at 2:39 PM, Griffin416 (99.98) wrote:

DragonLZ,

With all else being equal, the Dow throughout history has corrections about every 6 months, regardless of the market type. Even now, although they are a little closer, i.e. July-09, Nov, Feb, May-10. I do expect something horrible in Nov/ Dec from all of the tax selling and fear of new taxes. We all need to make sure to raise cash before.

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#8) On May 12, 2010 at 2:43 PM, JaysRage (88.84) wrote:

Unfortunately, there is no V.    A world cannot decouple debt that quickly.   The market may have a V-shape currently, but the debt has not gone away.   Jobs have not returned, and there is no more buying power now than there was a year ago.   People who couldn't afford houses bought houses with government help.   People that couldn't afford cars bought cars with government help.    All of the V-shaped progress to-date has been funded by debt, and the housing subsidies are about to go bye-bye right at the same time that all the ARMs say HELLO!    36% of all purchases right now are foreclosures, and that is without all the people that are currently living in their houses without paying a mortgage.   Banks have not even begun to realize all their losses.    There is no room for new houses, and the ones that will be bought are going to be smaller with smaller profit margins.   Home builders are going to get sucker punched pretty hard. 

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#9) On May 12, 2010 at 2:45 PM, JaysRage (88.84) wrote:

The higher we go, the harder we fall.    I wish we could correct now.   If this thing reaches 1400 or 1500 by the end of the year, I suspect we're looking at the Greatest Depression.  

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#10) On May 12, 2010 at 3:13 PM, Griffin416 (99.98) wrote:

Guys,

Being in the real estate industry, economics is my game too. The last real estate debacle was in the early 90's. The stock market bottomed the mid-1990 and I personally believe real estate bottom in 1993. We had a ton of foreclosures, bad debt, bank problem, etc. Granted not as bad as it is now. But some things are often disconnected, which is my main point. Look at the chart below of the home builder TOL during the crisis.

People who were saying to buy real estate and/ or stocks at that time were laughed at. Who feels stupid now? (If the HTML thing is messed up, it is TOL vs the S&P from 1990 through 1993.) TOL was up 450%, did that make sense...not really. Could you have made tons of money investing...YES.

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?symbol=TOL&E1=0&LPR=2&C1=2&C9=0&C5=1&C5D=1&C6=1990&C7=1&C7D=1&C8=1994&D5=0&D2=0&D4=1&width=612&height=258&CB=1&DB=1&DC=1&CE=0&CF=0

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#11) On May 12, 2010 at 4:15 PM, EnigmaDude (87.69) wrote:

Re: comments 3 and 8 from JaysRage - I find it ironic and typically hypocritical of bears on this site.  This is what you wrote in your profile:

JaysRage says:
I believe in investing for growth in any economy.

This is any economy, right?

Nice post dragon.  You have quickly become one of the most respected CAPS members in my humble opinion.  I still take your advice with a grain of salt and will do my own research, but you provide some great tips!

+27 recs

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#12) On May 12, 2010 at 4:20 PM, JaysRage (88.84) wrote:

I just don't think we can use our own experiences and memories on this one.   

The only debt comparison that is on the same magnitude is the Great Depression.    The 90's don't compare.   People did not mis-diagnose this thing when the Great Depression comparisons occurred.   Right down to the driving factors, it is stride for stride.  

If you think this is 1990, then that is where we differ and therefore why our strategies at this point will be different.   I have been bullish for quite some time, especially in emerging markets.   I have just become slightly bearish in the past 6 weeks or so.   

Believe me, in the 1930's, they declared an all-clear multiple times.   The disaster was averted multiple times according to multiple sources, each time driving the country deeper and deeper.  

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#13) On May 12, 2010 at 4:28 PM, JaysRage (88.84) wrote:

Maybe I'll change my investing philosophy in my profile.  I'm debating a fundamental change in my own investing style and philosophy.   I've historically been a hard-working growth finding machine.      

That has been my strategy and approach for many years.    I'm just finding it too darn hard digging for the small number of gems that are out there from a growth perspective at this point, and yet is seems easy to identify relatively over-priced situations. 

Hey, bulls will be bulls.    Invest with what you believe.   I'll invest with what I believe and we'll all hopefully achieve our goals.  

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#14) On May 12, 2010 at 4:28 PM, bullnada (< 20) wrote:

(90's debacle .people who were saying to buy real estate at that time were laughed at)  who feels stoopid now? 

Griffin, you must be a realtor.. Are you saying that real estate has bottomed?

I wouldnt laugh at someone buying houses now for investment.. I would cry for them.. check out realtytrac.com for your reality check on housing. Option arm is going to put some more pain on prices 2

 

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#15) On May 12, 2010 at 8:17 PM, dragonLZ (99.35) wrote:

Enigma, thanks for the nice words. Thanks a lot.

Good Luck! :) 

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#16) On May 12, 2010 at 11:54 PM, Mega (99.97) wrote:

"The only debt comparison that is on the same magnitude is the Great Depression."

US government debt, corporate debt and personal debt were NOWHERE NEAR current levels.

The more apt comparison is World War II debt. To dig our way out of that we had to raise the top marginal tax rate to 90% and goose economic growth by doubling the workforce over the next few years.

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