Comments on: This and That: Hunters becoming the hunted edition

By: Phil S

Phil S — Sun, 01 Mar 2009 22:59:47 +0000

To slickvguy. One other consideration that a lot of financial industry don’t consider is a situation like mine… My non-RSP stock portfolio has been pummeled so badly that I no longer qualify for the lower trading fees. I’m definitely not going to pay the FULL commissions to buy a stock at a time when the economic news continues to be very bad (meaning to me that the market is likely to continue to drop). So, this is the one time that I’m putting all of my new money into money-market funds or GICs until my portfolio value returns to a level where I can pay 1/3 of the full trading commission. Of course, this is going to take me about 3 years to get back to where I was only a year ago, assuming of course that the stock market goes nowhere over that time period. If it falls over the next 3 years, then it will obviously take even longer…

By: slickvguy

slickvguy — Sun, 01 Mar 2009 20:16:07 +0000

Zweig: Only problem is, Jason, yesterday’s mainstream stocks have become today’s lottery tickets, e.g. GE, GM, C.

If you’re going to own equities…either you’d better be damn good at understanding business and their financials (read: balance sheet) OR give your money to someone who can (WEB/Watsa) OR diversify as widely as you can (ETFs).

Even then – I’m not even so sure about the advice I just gave. The past year (s) has shown that just about everything people believe about investing can be wrong. Pick a topic, any belief – and it’s been proven wrong. I think that THAT is the lesson to be learned here. Pretty much sums up my credo on life…whatever you think you know – you don’t! heheh.

Above all, equity investors had better be able to emotionally and intellectually handle the randomness and risk of the markets. As I have now found out firsthand – being a financial advisor for 18 years – very few investors have the appetite and EQ (emotional quotient) to match their investments. I can’t blame them. I empathize with their anger, fear, and frustration. With the best of intentions (unlike many in my industry), and armed with insight, knowledge, and experience – I have failed them. What to do now? I agree with Zwaig – hail mary is obviously never the way to go. But what? Buy? Hold? Sell? Personally, I’ve been buying (slowly) while keeping a lot of cash on hand too. Mainly SPY/XSP and a few individuals. And selling puts (to force me to buy at much lower prices if we get there).

As jaded and cynical as I was toward the financial services industry BEFORE this debacle (which I wrote about in various comments on this blog some time ago), I am beyond disgusted at the corruption, greed, and incompetence of the political and business class that has resulted in the THEFT of many trillions of dollars. I am furious.

The crisis of faith is greater than the economic one.

By: Phil S

Phil S — Sun, 01 Mar 2009 06:15:05 +0000

My company defined contribution pension plan is the only investment account where I’m blindly and passively buying index funds every two weeks out of my pay check. Outside of that account, I’m still not buying anything yet. The economic data that came out for the most recent quarter is still looking VERY very ugly. For me, I’ll wait for another business quarter’s worth of economic data before I decide – and I still may not decide to dive into the market.

As for my past investing skills, at least I was smart enough to dump enough stocks to eliminate all of my leverage BEFORE the stock market crash. Unfortunately, I wasn’t smart enough to dump absolutely everything. So, I’m sitting on some pretty severe losses right now, but at least I can count my blessings and say that they’re un-leveraged capital losses.

By: Thicken My Wallet

Thicken My Wallet — Fri, 27 Feb 2009 15:01:50 +0000

Thanks for the link.

A lot of bubbles and we have survived them all…

By: Canadian Capitalist

Canadian Capitalist — Fri, 27 Feb 2009 14:49:28 +0000

Big Cajun: Tulip bulbs, South Sea bubble, Railway bubble, the Great Crash, the Tronics bubble, Nifty-fifty, Japanese bubble, tech bubble, housing bubble… the list is just too long.

Michael: I don’t know anyone making Hail Mary bets but I do hear that people are going out and spending a bunch of money that they would otherwise save saying — “hey, at least I’m getting some fun out of this, unlike my investments!”.

By: Million Dollar Journey

Million Dollar Journey — Fri, 27 Feb 2009 13:28:50 +0000

Thanks for the mention Ram!

By: Michael James

Michael James — Fri, 27 Feb 2009 13:10:39 +0000

Thanks for the mention. Zweig’s article put the actions of a couple who are friends of mine into context. They recently hurled a lot of money (for them) into a penny stock. Normally they are very conservative with money and sometimes they talk about calculating the date they can retire based on expected future returns on their retirement funds. I guess that date has moved several years into the future and they’re trying a Hail Mary.

By: Four Pillars

Four Pillars — Fri, 27 Feb 2009 12:43:11 +0000

Thanks for the link – yes, we were on the ball for getting the TFSA setup (for once).

By: Big Cajun Man

Big Cajun Man — Fri, 27 Feb 2009 11:34:22 +0000

Thanks for the mention, remember bubbles have happened throughout the ages, you wouldn’t think Tulip bulbs would be that important, but there was a Tulip Bulb bubble in the middle ages as well.

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Fri, 27 Feb 2009 11:33:37 +0000

Thanks for the link CC – have a great weekend!