Jambo-bwana,
It's been a long time since I've posted here, but I've been reading this thread since it began. The post you made (to which I'm responding) had a number of good points, not the least of which was that there is a rather large group of SI members who regard what has been happening on this thread with a growing sense of concern, and yet have not been willing to speak up.
I've been one of them, for a number of reasons. First, as a thread leader myself, I've been subjected to personal attack and an attempted coup, and I wanted to couch my comments in a manner free of that kind of unproductive nastiness. Second, I've noticed how critical comments about some of the investment decisions here have been met with a wall of negativity and now, outright banning. Frankly, like a motorist passing by an accident, I've slowed down but driven past.
All that said, I want to share my thoughts with you all because I'm concerned that the losses many of you have suffered will continue to mount unless you do something to protect yourselves. In my opinion, we're at the end of a long bull market, in a time filled with worldwide economic and political uncertainty. The Nasdaq has been in a distinct downtrend for months now. The days of buying stocks, even solid tech stocks, and holding them while they double and triple in a matter of months is gone. If we're interested in preserving our savings, we should be adjusting our investing strategies toward conservation, not speculation.
There are a lot of things about the stock market that I don't understand (like FA <g>), but I do understand options very well, as I trade them full time. Options, unlike equities, have both volatility and time factors built into their pricing. In a downtrending market, even far-out-in -time calls will whither, as their premiums reflect the downtrend in the price of the stock. And calls bought in times of high volatility (like now, when the VIX is high) will deflate precipitously as the market calms down and resumes its normal volatility. Buying far-out-in-time calls on stocks in downtrends during times of high volatility is a recipe for financial disaster. No matter how promising the company's technology, if the market is downtrending, the stock will follow. I attended a seminar recently in which they illustrated this with the following metaphor: picture a helium-filled balloon in an elevator car that is going down. When released, the balloon will rise and bump against the ceiling. But the car is descending, so it takes the balloon down with it as well.
Please protect yourselves and your savings. And enjoy each other. Friends are far more valuable than money. |
