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How long is the sell offs/sideways...another month or two, DOWS down another 15%% ...anyone know?
@John, I hope you intend that question rhetorically. But if you want a definitive answer, consult Jim Cramer, John Hussman or some other charlatan.
Truth is no one knows. The “financial world” consists of dozens of national & regional economies all working together (or not working together as the case may be). What happens in Brazil, China or Germany has repercussions for the U.S. And what happens here affects other global economies.
We might be in a brief 15-20% correction. But we might also be looking at something like ‘07-‘09 when equities and low quality bonds worldwide dropped 30, 40 or even 50% in some markets. Assuming that last scenario occurs (a 50% drawdown in the major indexes), it would place us at this time in the early stages of the downturn. I don’t know. And suspect no one knows.
All the fund houses I deal with go out of their way to emphasize the need for a long-term investment horizon if investing in any risk asset. I’d embellish that by saying that if you will need the money anytime sooner than 10 years, you probably shouldn’t put it in equities or in funds with heavy equity concentrations.
As a side-note, with equities now priced about 20% lower than they were six months ago, sentiment here has turned decidedly more negative. Now, please do tell why folks were enthusiastically buying and owning companies priced at (a hypothetical) $100 per-share six months ago, but are now disinclined to buy or own the same companies at $80? Would you pass a store selling bread for $1.50 / loaf just so could you could pay $2 for it further down the block? Would you pass-up a car you wanted selling at $25,000 than buy the same one elsewhere for $30,000? Only in investing does this kind of warped valuation metric seem to apply.
While still bearish, I have been starting to nibble in the silver miners. I'm on my third wee step now and watching. Easy ETF plays are SIL and SILJ. Very early in any sort of movement, but we'll see.
Comments
Truth is no one knows. The “financial world” consists of dozens of national & regional economies all working together (or not working together as the case may be). What happens in Brazil, China or Germany has repercussions for the U.S. And what happens here affects other global economies.
We might be in a brief 15-20% correction. But we might also be looking at something like ‘07-‘09 when equities and low quality bonds worldwide dropped 30, 40 or even 50% in some markets. Assuming that last scenario occurs (a 50% drawdown in the major indexes), it would place us at this time in the early stages of the downturn. I don’t know. And suspect no one knows.
All the fund houses I deal with go out of their way to emphasize the need for a long-term investment horizon if investing in any risk asset. I’d embellish that by saying that if you will need the money anytime sooner than 10 years, you probably shouldn’t put it in equities or in funds with heavy equity concentrations.
As a side-note, with equities now priced about 20% lower than they were six months ago, sentiment here has turned decidedly more negative. Now, please do tell why folks were enthusiastically buying and owning companies priced at (a hypothetical) $100 per-share six months ago, but are now disinclined to buy or own the same companies at $80? Would you pass a store selling bread for $1.50 / loaf just so could you could pay $2 for it further down the block? Would you pass-up a car you wanted selling at $25,000 than buy the same one elsewhere for $30,000? Only in investing does this kind of warped valuation metric seem to apply.
@hank- Well, not all of the folks were. But you know that. Going to be interesting, though.
While still bearish, I have been starting to nibble in the silver miners. I'm on my third wee step now and watching. Easy ETF plays are SIL and SILJ. Very early in any sort of movement, but we'll see.
and so it goes,
peace,
rono