RE...the usual frantic action in the markets
Being out of the office the last two days
has advantages and disadvantages. While
I didn't continuously observe and suffer through
the Tech drop on my screen it still hurt to
mark my portfolio to market today to end
of July levels. (Those levels are however
still respectable.)
FWIW, I am now going to change a 10 year investment
policy in my IRA. Being very bearish and holding
no stocks throughout 1987 I bought 15 and 20 year
Zeros on 10/14/87 at a 10.67 YTM. I am now going
to use these funds to add to my core holdings
of INTC,CPQ,and AMAT. I observed the '87 runup and
selloff from a trading desk and from floor of the MERC.
While recent action has certainly been bearish we are
not, IMHO, in the same economic scenario.
Over the next few months recent stock sellers will
look at their statements and see only 5% cash
returns albeit with less risk. But when Techs eventually
recover, and they will, shortterm holders will wonder
why they panicked.
I do not expect a recession/depression as the hyper-bears do.
I think interest rates and stocks are tightly intertwined here.
A recession will quickly lower rates which is good for stocks.
A Fed tightening, which is already being anticipated
by the market, will also be good for stocks over the long run.
If I am wrong about the economic outlook,
I am not uncomfortable with the attendant risk of
my core holdings. I pay Grove, Pfieffer, and Morgan
good money to manage expected cashflows even
(or especially) through downturns imagined and
real.
Good investing all. |
