Will the DJIA drop below 10,000 This Year? (10/6 Update: Welcome back, 2004!)

[quote name='dmaul1114']Yep. You want to buy low and sell high, so now's a pretty good time to buy. I doubt will see any huge drop offs, probably just bounce around from 7500-9500 or so for the next year. So it's a good time to buy in, and hold stuff for a while--especially if you're young.[/QUOTE]

This is not simply a reply to you dmaul but more of just general info to many of the youngsters on this board that may be dipping their toe into the investment waters for the first time.

I disagree with, and actually hate, that old saying "buy low, sell high." If you want to make real money, you need to do much more than simply buy low, sell high. You need to buy sound businesses that have attractive growth opportunities and that are selling at a market discount. Basically, you need to buy strength because the strong companies in the downturn will only emerge stronger during the next upturn. You can't simply look at a stocks price in relation to what it was trading at 12-18 months ago and say, well this is cheap because it is only $20 now and it was $95 a year ago.

Just because something is "low" doesn't mean it will recover even over many years. A lot of companies are not going to survive this downturn and a sizeable amount of companies that were trading at very high levels over the past few years are unlikely to see anything close to their highs of the past few years anytime soon. There are a lot of broken business models out there that are going to fail or need massive change in order to survive.

If you are looking for long term plays, start with the business model, then the balance sheet and then look at the current price, valuation and growth expectations to determine if it is in fact a low or cheap price.

A lot of companies have got "cheap" because their businesses have simply fallen apart and you don't want to buy a broken business.

You also need to be well diversified because the volitility is far from over. The 3-5% daily swings are going to be the norm for quite some time to come.

There are certainly a lot of opportunities out there but don't be fooled into thinking that just because a company is trading for $30 less today than it was 12 months ago that it is now "cheap."
 
[quote name='mtxbass1']That's part of your problem right there. If you get your financial input from Squawk Box, it's no wonder you have a skewed view of the market. They're a joke.[/quote]

They aren't a joke. They're serious propaganda.

The reason I watch Squawk Box is very simple: my 2 year old son won't scream if it is on.

Here's the background: We moved into apartments recently where I can hear the neighbor sneeze if I'm watching TV.

My 2 year old son and 6 year old daughter share a bedroom, but not beds.

My son wakes up some time between 10PM and 2AM. At that point, he will open his door, stand at the baby gate and scream. The best description of his scream is the vampires' scream from "30 Days of Night".

Normally, I pick him up and go downstairs to the couch and sleep. I would let him scream except he will wake up Caitlyn, my wife or continue to scream for at least 2 hours.

Between 3 and 4AM, he'll wake up again. I'll change his diaper to avoid couch stains, turn on the DVR and start episodes of "Sesame Street" or "Play with me Sesame".

I'll hear my wife's alarm around 6AM. When that episode finishes, I quickly turn on "Squawk Box".

My son can't tell the difference between the Muppets on SS and the Puppets on SB. At first, I thought he was retarded until I watched enough to realize there isn't a difference.
 
[quote name='BillyBob29'] showing off his big brain again [/quote]

That's all well and good, but why not invest in a mutual fund and let some investment specialist such as yourself deal with the headaches and ulcers?
 
Certainly a option but the historical average for mutual fund investments averages out to about 10% or so a year and I personally think you can do a lot better than that with just a little effort on your part.

Investing/trading isn't rocket science and I firmly believe that anyone that is willing to put a little time and effort into their investments can see sizeable returns. It is the people that just try to jump in blindly and follow the heard that end up getting killed.
 
I just do the mutual fund things, at least for now. Probably could do better if I took the time to learn more and then be more hands on. But I'm just busy as hell and just don't have the time or motivation and I'm not that interested in retiring young or anything so I just don't care that much as long as my investments are doing reasonably ok.

Maximizing profit isn't (and probably never will be) much of a concern of mine. Else I wouldn't stay in school until 30 for an academic job that doesn't pay all that great!

But I agree on the buy low sell high thing being too simplistic. I didn't mean just buy cheap individual stocks because they are cheap.

I was talking more for people like me that nows a good time to throw some extra money in diversified IRAs, mutual funds etc. If you're buying individual stocks, then you need to find ones that are cheap that you can be confident will rise in the future. But I doubt I'll ever get into that as I just don't have the time and interest in doing that.
 
[quote name='fatherofcaitlyn']They aren't a joke. They're serious propaganda.

The reason I watch Squawk Box is very simple: my 2 year old son won't scream if it is on.

Here's the background: We moved into apartments recently where I can hear the neighbor sneeze if I'm watching TV.

My 2 year old son and 6 year old daughter share a bedroom, but not beds.

My son wakes up some time between 10PM and 2AM. At that point, he will open his door, stand at the baby gate and scream. The best description of his scream is the vampires' scream from "30 Days of Night".

Normally, I pick him up and go downstairs to the couch and sleep. I would let him scream except he will wake up Caitlyn, my wife or continue to scream for at least 2 hours.

Between 3 and 4AM, he'll wake up again. I'll change his diaper to avoid couch stains, turn on the DVR and start episodes of "Sesame Street" or "Play with me Sesame".

I'll hear my wife's alarm around 6AM. When that episode finishes, I quickly turn on "Squawk Box".

My son can't tell the difference between the Muppets on SS and the Puppets on SB. At first, I thought he was retarded until I watched enough to realize there isn't a difference.[/QUOTE]
:rofl:
 
[quote name='dopa345']Stocks are super cheap right now from a fundamental analysis perspective. There are rock solid blue chips at bargain prices, especially if you take into account their dividend yields. Stocks like MO, PFE, GE, DOW etc have dividend yields heading into the double digits in some cases which I suspect will become more attractive to investors as interest rates drop. However, as crazy as the market behaved last season, who knows what will happen but in the long run, the market will eventually recover. The absolute wrong thing to do would be to stop contributing to your 401k at this point.[/quote]

I'd continue contributions to a 401k, but would stick with a high percentage in fixed income accounts (For the last year, I transferred almost all of my meager savings out of the market and into CDs and other fixed rate accounts... so I've been yielding ~4-5% rather than losing 25-30%)

Also the percent you contribute depends on your status, I make peanuts and the University of California is made up of a bunch of cheap bastards who do not match my 403b contributions... I'm relatively young and am not in that high a tax bracket, plus I need much dinero to pay off my student loans... so I contribute less than 5% to my 403b...

My parents on the other hand have jobs in which their employer matches 50% of 401k contributions, they are in a pretty high tax bracket, and are getting close to retirement... for them it makes sense to put in a lot of their earnings into a 401k... it's a no brainer: either pay ~30% tax on the money to Uncle Sam...errr...Obama, or get 50% extra in matching from the employer plus a tax deferment... ;)
 
[quote name='BillyBob29']Certainly a option but the historical average for mutual fund investments averages out to about 10% or so a year and I personally think you can do a lot better than that with just a little effort on your part.

Investing/trading isn't rocket science and I firmly believe that anyone that is willing to put a little time and effort into their investments can see sizeable returns. It is the people that just try to jump in blindly and follow the heard that end up getting killed.[/QUOTE]

10% is actually about right on target for a properly diversified portfolio. You can do better but you would be taking a lot of risk and frankly right now anything not going negative is considered to be doing well.

Only investment vehicles I have seen doing amazingly well are mutual funds specializing in precious metals.
 
It's true that just because a stock is cheap, does not mean it's a good value. For example, auto stocks like GM and Ford are pretty much garbage at this point and not worth the risk at their single digit prices.

Just look for companies with lots of cash on hand, little or no debt, low P/E ratios, even better if they pay a dividend and you'll do okay in the long run. Microsoft for example actually looks like a pretty good value at its current price.
 
[quote name='Msut77']10% is actually about right on target for a properly diversified portfolio. You can do better but you would be taking a lot of risk and frankly right now anything not going negative is considered to be doing well.

Only investment vehicles I have seen doing amazingly well are mutual funds specializing in precious metals.[/QUOTE]

See you can't just look at funds. Funds, by their very design, are geared to limit losses, which also means they are limiting your gains. They are designed to provide limited risk and thus return relatively small amounts. Don't get me wrong, funds should be a part of every long term investment portfolio but IMO it shouldn't be your only exposure.

IMO, you can do much better with very little added risk if you are willing to put some time into your investments. I fully understand that not everyone can watch the markets everyday but it is still not very difficult to watch the market on a weekly basis and after doing the proper research, drastically outperform the average fund.

I also hate how the industry takes a look at their benchmark averages, for example the S&P 500, and say something like.....well the S&P was down 40% last year and we were only down 28%, we rock! If your fund is down, you need to take a close look at what is happening not only in the markets but within the fund itself. Are the fund managers not adapting to changes in the economic climate? Are they over-exposed or under-exposed to one particular area? Are they simply following the market step for step? If they are I guarantee you that you are underperforming the markets after all costs and fees are included.

I just hate how so many people give the fund industry what seems like a free pass on their performance.
 
Not all funds are created equal, it is sort of like how not all bonds are safe.

I mean there are some stocks that look promising such as those companies dealing in canned soup, bottled water and even a few green tech stocks but still...Feel free to feel you can beat the market all the time, especially now.

Just be sure to keep us updated, I could use the laugh.
 
Feel free to laugh all you want. Active traders have been doing quite well. I've beat the market handily every year for the past 15 years including a total return of over 50% last year while the market crashed.

BTW....if you want to chat about more specific trade ideas join the CAG stock club.

http://www.cheapassgamer.com/forums/group.php?groupid=72

The wonderful thing about the stock market is that there are always gains to be had if you are willing to look for them.
 
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Billybob is a very knowledgable trader so I would listen to him if you're serious about investing in the stock market.

Mutual funds are good for those who aren't active investors. However, as they have expense ratios, your gains are automatically reduced by that amount (on average between 1-2%). It doesn't sound like much in the short term but over time, that adds up to lost gains (or increased losses) compared to investing on your own. Also big funds often miss small caps which as a whole outperform large cap stocks in the long run. Obviously, if you don't have a clue about the stock market, mutual funds are the way to go but definitely an individual investor can consistently outperform the market if you know what you're doing.
 
[quote name='dopa345']Billybob is a very knowledgeable trader so I would listen to him if you're serious about investing in the stock market.
[/quote]

this. The man knows his stuff and has provided sound advice for many people on this board.
 
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