2 major points:
1) It is IMPOSSIBLE to time the market. Impossible. The pros can't do it. The pros don't even know other pros that can do it consistently. I said "experts" predicting 13 of the last 3 recessions tongue in cheek as many of these so called experts are charlatans who look and sound good on TV. Sorry man, not taking your advice to sell the house and sell stock. In fact, I'll be buying on the dips.
2) I have over 208 years of U.S. stock market, Bond, T-Bill, and Gold history sitting next to me on my desk that I refer to when the latest talking head talks about "the big one." The squiggly lines go down. The squiggly lines go up. And the trend has gone up overall- for 208 years. In "recent" history (the past 100 years), we've been through 2 World Wars, Vietnam, Korea, stagflation, the "nifty fifty," an internet bubble, 9/11, and that's just off the top of my head. Even if you're right about the unwinding of credit due to a housing bubble, the market (housing, stock, bond, whatever) will correct, and we'll come out the other end chugging along. Sorry, not buying economic castrophe yet considering this economy has made it through far worse.
Good luck with your predictions, though. I hope they make you a lot of money!
Keeping it off topic for a bit longer.
I don't try to time the markets. I shifted from long to short this last spring. Initially lost on the short side, but it's been extremely profitable since late May. Of course, I only went short specific sectors - home builders and mortgage originators, not the entire markets. BZH, LEN, PHM, CFC, DSL worked out well; have since closed my shorts on the home builders and CFC (not enough left there). Continue to hold short positions on DSL and have now shorted momentum stocks (AMZN, AAPL, RIMM, GOOG). The momo short isn't working yet, but I'm not an in & out trader.
If there's one stock to take a close look at shorting, it's DSL - Downey Savings and Loan. Can't short it anymore; it's on the Reg SHO threshold list, but you can still buy puts. I'd go with Feb or May 08; I'm not good at timing it in the short run, but can tell you that DSL's a zero. If you look at their monthly NPAs (nonperforming assets), assets, and interest rate spread trends, you'll see why.
And yes, I've made a lot of money this year.
I'm not calling for economic armageddon, but the vacancy rate on houses for sale is at an all time high, which will drive home prices downward for several years. We have a surplus of housing due to the amount of building done over the last seven years. If you don't mind taking an average 30% haircut on your house (according to Shiller; YMMV), stay put. That's a whole lot of equity to sit back and watch getting vaporized.
Did you notice how smooth this last week was? It's because load factors were about 10-15% below normal. Less people were traveling. There were more shoppers out this last weekend but the average shopper spent less. It's not shaping up to be a very good Christmas season.
Good luck on buying on the dips. I don't think that strategy will fare very well for a while.
ualdriver said:
If you've made a total (nominal?) annualized return of 18% on average over the past 15 years, you are probably in the 99th+ percentile of all investors. You should consider a career in professional investing. Miller beats the S&P 500 for about 10 years (and he didn't even make 18% annualized) and he's legendary. You've trounced it for 15 years, a feat the vast, vast majority of professionals have not even accomplished. You're in the wrong business.
I know this comment's aimed at Lear70, but managing a small amount of money to produce above average returns is much easier than managing a large amount of money.
Bill Miller definitely won't be beating the S&P this year. Looks like he's down a tad over 10% to date. Of course, he's been long the home builders and Countrywide. They're not what I'd consider to be value stocks.
lear70 said:
I shifted everything into international mutual funds with a nice, stable 7% growth on a 10-15 year average about 3 months ago and will likely leave them there until the housing bubble finishes popping and the dollar's decline against foreign currencies stabilizes.
You're OK going overseas for now. Watch out in 2008. The rest of the world's economy will start slowing down and I can see a case for a nasty snapback in the dollar. Right now, it's sinking like a rock, but once other central banks start cutting their interest rates, the dollar will rebound strongly. I wouldn't be surprised to see it happen in spring 2008, but it seems like my timing is usually a few months too early.
