don't try to outguess the markets!
Isn't that what you've done by going to cash?
I think it was about 6 months back, that I finally figured out that the indexing was distorting the market, yet it was graphs of the indexes that we all bandied about to support our bearish nature. And usually non log versions of those graphs.
If you look at the stocks outside of that select group, say the middle of the S&P500, stocks with dividends, and PEs in low double digits weren't hard to find. In microcaps, single digit PEs were more the norm.
If I move gradually, I don't have to hit the exact bottom nor the top to show profits using range trading. Say you suspect that we have a rally with 700 points comming. You buy 5k per day over 7 days, and on the 6th day the rally starts. You then sell 5k per day over 7 days, assuming the rally lasts that long.
Now the 00 on the roulette table kills this strategy. War breaks out, and Dow 7000 is a mere pit stop on the way down. You aren't a trader any longer, unless you use stops. In this event, I want to own the best companies at decent values, even if I show paper losses for a couple of years. And I'd like to have some cash to throw at the market down there too.
Check out this link- re looking for a place to hide. Some of the recent weeks posts are truly interesting too, if you haven't already seen them.
contraryinvestor.com
My current theory, is that there is always a good stock to buy, and a good stock to sell, it's up to us to figure out which are which. Given the recent trend, owning a few puts wouldn't hurt, of course. Unfortunately, I gave up buying puts in 1998 after a few good trades.
I expect you prefer options on the indexes over my "find what the market hates the most and buy the best stocks in that sector approach". Is that true? |
