re: none of this sturm and drang matters to the LTB@H'er
Well, that's right. If you are really going to be a LTB&Her, not a Cycle Timer, then any purchase at any point in the cycle will outperform the market, eventually. To qualify as a LTB&Her, you have to be holding through several cycles, at least 5 years. 3 years isn't long enough, if you don't worry about where we are in the cycle. As long as you are willing to hold dead money for 3+ years, (from the 1995 high through late 1998, for instance), you don't need to pay attention to supply/demand in the industry. A LTB&Her can't use margin or options, either.
But, if you pay just a little attention to it, and get it approximately right, it can improve investment returns a lot. It isn't necessary to time the bottom perfectly. I remember, from early 1996 through early 1997, and again in summer/fall 1998, agonizing endlessly about when to buy AMAT. Looking at the chart now, it's obvious that any purchase during the entire time I was considering the stock, held till today (even with the 50%+ recent haircut), would be a good investment.
But buying out-of-the-money LEAPs in September/October 1998 was better than good.
JS@sturming&dranging.com |
