It’s not like we didn’t know this is a bear market. That there was a credit crunch. That economies would slow. That oil was too high. That gold was traded upwards for no reason other than to trade. That the whole market was a huge bubble. My only amazement is how pundits say so - during or after the market crashes. I could dig up stories on how the market could rally from only 3 days ago. How the economy is turning, how it’s all political talk and nothing bad is really happening. On the same note, it’s easy to dig out gloom forecasters at any point in time. Especially politically motivated doomsday forecasters, and special interest ones who have put a bet on a market belly up at the wrong time.
So the story right now is that Hedge funds are truly falling apart and thus everything is on sale. The simple guy who’s hearing the words on sale in any other context would rush to buy. Clothes on sale, groceries on sale - heck, Picasso on sale - wouldn’t you buy? It doesn’t work like that with equities. Mainly because emotions are involved, and watching huge chunks of one persons NAV decline so immensely in one day or even a full year is sure to give you a heart ache.
Since during market sell offs - every pundit is a genius who can come up with a dozen reasons why the market should crash right now - and never go up ever again (yea, right) - I tend to ignore and disregard such opinions. There is a bear story, there’s always a bear story - but there’s only one true fact out there, stocks are falling. When stocks are falling there’s only one direct reason which you cannot refute - it’s because many big holders are selling, liquidating to be accurate.
I was playing with iCarra.com to back test my tactics, holdings and ideas. Consequently I updated the “tactics” page with a few more ideas, do check it out. My latest addition’s chart is quite amazing on the long run:
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The tactic to reach that graph is the very last one in the table on my “tactics” page…
P.S. the teddy bear image at the top is from the Chelsea Teddy Bear company’s web site: chelseateddybear.com. I suggest a new teddy bear - for your investor/trader daddys (or mommys)… the trader-bear-on-market-collapse…. not sure how cute that would come up as.
Cheers!
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November 18th, 2008 at 5:16 pm
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