Mike, Lucius and David -- thank you for your responses
In the interests of minimizing the number of posts on this thread, I shall attempt a combined response.
Mike, thanks for the welcome to the thread -- it is appreciated.
Mike re Most of us have not experienced a market like the one that occured in the 70s. My only hope is that we don't experience the same macro-economics that helped perpetuate the downside of that market
I cited the 70s bear market as an example -- as you are aware, when one is dealing with high beta stocks, it need not take a 60% correction to decimate a portfolio of these stocks.
Each of you have in various ways cited the need to stay the course(my interpretation of what you have said) -- and have recognized that individual reactions vary in terms of how people react to such a down-turn.
In my original post, I was trying to forestall the likelihood of anyone who is caught in such a situation acting precipitously and liquidating at the bottom. Fear and greed are powerful emotions in terms of market dynamics as we all know.
The reason that I posed the question to the thread was because I needed to deal with that issue before committing additional funds to these stocks. As a futures trader, I am used to utilizing stops -- but that is not a practical approach to these highly volatile stocks. I wondered how others are approaching this issue. At this time, about 20% of my stock holdings are in these type of stocks -- I would like to increase the size of these holdings without increasing my level of risk to unduly high levels. Despite my aggressive trading style -- futures, options, etc -- I am fundamentally fairly conservative when it comes to investing.
Believe it or not, since I began lurking on this thread about two months ago, I have actually skimmed through every single post from the inception of the thread to get a flavor of the thread and the main participants. It is interesting to see how the confidence level -- may be even the cockiness -- of some of the participants has increased as some of these stocks have done well -- particularly QCOM. Having been in the markets for more years than I care to remember, I tend to be a shade wary of that since more often than not, my personal experience has been that it is after I have been spectacularly successful in my trading/investing, that something occurs which blind sides me!
Mike, you are quite right that the macro-economic factors that exited in the early 70s are not present at this time. However other risks are more prevalent -- particularly the extent of inter-dependence on other world economies.
Please don't view any of the above as criticism of the thread or its approach. As I said in my first post, I am impressed with the content and civility of the posts on this thread -- though I do sense a level of complacency that, perhaps, because of my personality or past experiences is a shade disquieting.
In many respects, when it comes to core holdings, I am the ultimate believer in the LTB&H approach; in the past 5 years or so I have only liquidated one stock from my core holdings! So when I referred to portfolio protection, it was less to do with timing the markets and more to do with hedging risk on high beta stocks.
From a personal stand-point, before I take a more aggressive position in these stocks, I shall need to find a way to address this issue of risk. As I state this I am mindful of a post by Lucius:
Message 12654500
I think that the challenge to those who have achieved a level of financial independence is ensuring that they preserve their new-found wealth!
My thanks again to each of you for your responses.
Back to lurking -- until I have something profound to say:) |
