Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch
I think the better wording might be lost to false opportunity? No doubt in my mind the markets are highly levered up by big money at this time. I think, I'd be pulling some of it off the table too before it gets vaporized in a sell down frenzy. I am already there within my asset allocation as I am currently heavy in cash. I can not remember recently reading anybody saying they were all in. How about you ... Are you all in? Or, are you holding some cash?
Mostly agree. However, unless you're very young, you probably keep a portion in fixed-income investments like cash and investment grade bonds. So, I can't relate too well to the concept of being "all in."
Lynch's remark can be read in a couple ways. On the surface, he's probably saying that bailing from stocks every time you sense danger in the air will kill you. A second take on it - using high cost products like long-short funds to protect against potential losses will slowly eat away at your earnings. Over time the compounded losses are enormous.
Everybody needs a long range plan. I see nothing wrong with varying exposure to assets within pre -set boundaries if it helps you sleep better. The important thing is that by having pre-set limits you won't find yourself bouncing in and out of markets based on which way the wind's blowing. (My cash today is about 10% higher than it was in March 2009 - and a few % over normal).
As sometimes discussed, the definition of cash here varies. Some count some pretty exotic investments as cash. Others include intermediate-term bonds. Get's complicated.
@MikeM: Thanks, you should get the congrats, your Bills ae 2-0. I was shocked the Bears were able to mount a comeback. Based on the first two week it appears there will be a lot of parity in the NFL this year.
I am no longer a working person myself ... and, my portfolio helps support my life style.
My late father had a saying that I follow today. "If you are prepared for the worst then you are also prepared for the best." This morning, I came across this article in Seeking Alpha and after reading I thought I'd post under your tread that you started "Upcoming Correction." After reading ... I guess ones needs to ask themselves ... "Are you prepared?" I can answer ... Yes, I am prepared ... Holding a good amount of cash along with being invested within my portfolio's asset allocation ranges which are set based upon my risk tolerance.
Here's is one of the article's key paragraphs.
"Decide now if you will be a buyer or a seller. Ask yourself if you can withstand a 20%, 30%, 40%, 50% or 60% decrease in the value of your holdings? Can you stomach your $800,000 portfolio that then shows up on your statement as a $500,000 or $400,000 portfolio? Can you stomach your portfolio reaching a new top and then going under water and staying under water for 2, 3, or 5 years? If any of the above scenarios make you nervous just thinking about the possibility, imagine how it will "FEEL" when those portfolio drops are for real."
You can read the complete article by clicking on the link below.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch
True in the 90s. Not true in the 2000s. Not sure when Lynch made that comment. For someone who was not around "saving" people's money in 2000, this comment is bogus.
Remember there was a period of 16 years in the middle of last century when market went nowhere. Look at Japan. Some skepticism is warranted.
@VintageFreak - I don't think the comment by Mr. Lynch is bogus at all although I have no data, numbers, statistics or Monte Carlo simulations to back up my statement. What I do know is that no one can accurately predict which way the market will move and when it will do so. Therefore, all I do is follow along with it and when it changes direction so do I.
According to many this current market has been stretched, overvalued, out of whack etc., etc., for at least 2 years now and probably more. Who got out 2 years ago and feels good about it?
IMHO, per the best of my recall; which may have a shorter duration than a Treasury note, recent notations here (MFO) indicate that anything other than facts that can not be disputed; must have consideration of just plain old chit-chat.
'Course I always considered most of the fine commentary here to be of great value; whether facts existed or not.
Tis a place, here, to stimulate thinking; which the last time I checked, did not have a mandatory, facts-must-be-included, mandate.
I do believe I should start all posts with: IMHO,
Sadly, most of us here are strangers; and it has been noted here before, that we should never take advice from strangers, eh? . 'Course, I don't know any of the folks who write articles available on the internet either; PH'ds or not, facts or theories or not.
Hi Catch- it's still OK for candy though, right? Yes, in your specific case ALL of your posts should be prefaced with the mandatory "IMHO"
Seriously, if we hadn't taken advice from total strangers we'd still be trying to find our way back to the hotel in about 27 different European cities.
@VintageFreak - I don't think the comment by Mr. Lynch is bogus at all although I have no data, numbers, statistics or Monte Carlo simulations to back up my statement.
You, me and Peter lynch. Which is why none of use should say anything.
I don't understand people. You quit your job. Take permanent vacation. There is no need for Peter lynch to comment on markets any more than Greenspan has to comment on economy or fed policy ( actually there are other reasons for him to not do so as in he was incompetent at best and corrupt at worst)
Comments
I think the better wording might be lost to false opportunity? No doubt in my mind the markets are highly levered up by big money at this time. I think, I'd be pulling some of it off the table too before it gets vaporized in a sell down frenzy. I am already there within my asset allocation as I am currently heavy in cash. I can not remember recently reading anybody saying they were all in. How about you ... Are you all in? Or, are you holding some cash?
Old_Skeet
Lynch's remark can be read in a couple ways. On the surface, he's probably saying that bailing from stocks every time you sense danger in the air will kill you. A second take on it - using high cost products like long-short funds to protect against potential losses will slowly eat away at your earnings. Over time the compounded losses are enormous.
Everybody needs a long range plan. I see nothing wrong with varying exposure to assets within pre -set boundaries if it helps you sleep better. The important thing is that by having pre-set limits you won't find yourself bouncing in and out of markets based on which way the wind's blowing. (My cash today is about 10% higher than it was in March 2009 - and a few % over normal).
As sometimes discussed, the definition of cash here varies. Some count some pretty exotic investments as cash. Others include intermediate-term bonds. Get's complicated.
Ahh --- Tampa Bay on the Sunshine Coast
I am no longer a working person myself ... and, my portfolio helps support my life style.
My late father had a saying that I follow today. "If you are prepared for the worst then you are also prepared for the best." This morning, I came across this article in Seeking Alpha and after reading I thought I'd post under your tread that you started "Upcoming Correction." After reading ... I guess ones needs to ask themselves ... "Are you prepared?" I can answer ... Yes, I am prepared ... Holding a good amount of cash along with being invested within my portfolio's asset allocation ranges which are set based upon my risk tolerance.
Here's is one of the article's key paragraphs.
"Decide now if you will be a buyer or a seller. Ask yourself if you can withstand a 20%, 30%, 40%, 50% or 60% decrease in the value of your holdings? Can you stomach your $800,000 portfolio that then shows up on your statement as a $500,000 or $400,000 portfolio? Can you stomach your portfolio reaching a new top and then going under water and staying under water for 2, 3, or 5 years? If any of the above scenarios make you nervous just thinking about the possibility, imagine how it will "FEEL" when those portfolio drops are for real."
You can read the complete article by clicking on the link below.
http://seekingalpha.com/article/2500975-in-the-next-correction-will-you-be-a-winner-or-a-loser?source=feed_tag_editors_picks
I wish all … “Good Investing.”
Old_Skeet
Remember there was a period of 16 years in the middle of last century when market went nowhere. Look at Japan. Some skepticism is warranted.
Regards,
Ted
According to many this current market has been stretched, overvalued, out of whack etc., etc., for at least 2 years now and probably more. Who got out 2 years ago and feels good about it?
WHAT???
Worthless commentary such as this is REQUIRED to be prefaced by "IMHO", as you are well aware. Don't let this happen again!
IMHO, per the best of my recall; which may have a shorter duration than a Treasury note, recent notations here (MFO) indicate that anything other than facts that can not be disputed; must have consideration of just plain old chit-chat.
'Course I always considered most of the fine commentary here to be of great value; whether facts existed or not.
Tis a place, here, to stimulate thinking; which the last time I checked, did not have a mandatory, facts-must-be-included, mandate.
I do believe I should start all posts with: IMHO,
Sadly, most of us here are strangers; and it has been noted here before, that we should never take advice from strangers, eh? . 'Course, I don't know any of the folks who write articles available on the internet either; PH'ds or not, facts or theories or not.
We'll survive, eh?
Take care out your way.
Catch
Hi Catch- it's still OK for candy though, right? Yes, in your specific case ALL of your posts should be prefaced with the mandatory "IMHO"
Seriously, if we hadn't taken advice from total strangers we'd still be trying to find our way back to the hotel in about 27 different European cities.
Take care- OJ
I don't understand people. You quit your job. Take permanent vacation. There is no need for Peter lynch to comment on markets any more than Greenspan has to comment on economy or fed policy ( actually there are other reasons for him to not do so as in he was incompetent at best and corrupt at worst)