(my hand is up)
That's what I thought. If you made some money today, great, you don't need to hear from me. (You should be giving me advice.) I lost money today. These are the kind of days that can make or break you--and I don't just mean in a monetary sense, I mean in a psychological sense. In my opinion, the most important thing for times like this is to have a plan ahead of time, a plan that is constructed in calm, rational times, that you will stick to and execute in more emotional times like this. Maybe you've got stops in place. Maybe you're one of those crazy value guys that might buy on a day like this, when something gets cheap enough for you. (I must confess I thought Berkshire was heading in that direction, for me, today. Maybe another day.) The point is to have it planned ahead of time--don't decide on a day like today, when things are breaking down all over, that it's time to buy or sell or whatever. You might get lucky, but you probably won't. You've got to know ahead of time at what price you want to buy or sell. Stephen Vita has a great quote from Pit Bull about how when you feel like you want to puke, that's the time to double your position. That may or may not be what you need to do, but again, figure that out ahead of time, in the clear light of day.
Plan your trade.
Trade your plan.
Preserve your capital, because tomorrow is another day.
The only advice I give my oldest son about women is "There are plenty of carp in the river." The same is true of stocks--there's always another play.
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4 comments:
Jaloti-
If you are operating on the assumption that we are in a long term range bound market such as 1966-1982 have you considered that during that period commodities were in a secular bull market? Today, this year, commodities and related stocks are UP. And have they not outperformed since we entered the bear phase for financial assets? If stocks and bonds are negatively correlated with the CRB/CPI the current phase is negative for financial assets and positive for 'hard' assets which are positively correlated with same. The bull phase for financial assets started with the secular bear phase for the other right? While the hard asset plays will not move in a straight line (any more than financial assets in their bull phase) they are 'core' to a portfolio in the current phase in my view. Today looked like confirmation of what works and what doesn't work in the current phase...
long raw materials, energy... and CASH.
John, I think you are exactly right, that we are in a commodity bull phase, and that is part of my long term view laid out here-http://jaloti.blogspot.com/2004/11/long-term.html
Jaloti-
So we are on the same page. Any thoughts/ideas on why the election cycles were so important in the 1966-1982 phase? I just tried to send a chart.
John--we are on the same page. I got your chart--it is compelling data. As to why?--the only guess I can make, and it is only a guess, would be how does change in the money supply correlate with the Dow in those years--i.e. was the Fed "juicing" the system in the election years, and some of the money wound up in the market.
Thanks for your comments, and the charts.
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