Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Joshua Corbin who wrote (713)	11/17/2000 9:39:19 AM
From: Tommaso	Read Replies (1) of 74559

I began investing on my own in 1969, after following my parents' investments for some years. I was unsuccessful in persuading them to get out of the market in 1972, when I became convinced that it was wildly overvalued. Polaroid was at 145 and 25% of their net assets were in Polaroid. I finally got them out as it dropped to 95. Eventually it hit something like 17. I put everything I could save into a tax-sheltered annuity bond fund and sat on that, getting 7.5% for three years. I scaled this money into the stock market as it fell through the latter part of 1973. By the middle of the next year I was 80% ahead. By 1982 I had a good bit of t other savings, and margined them to the limit despite the 22% margin loan rate prevailing then, buying discounted closed-end mutual funds (which I would be much better off simply to have held to the present moment). I think Tradermike's perception of the market levels and the danger to them is correct, despite the fall that has already occurred, because the overvaluation was higher than in 1973. Experience is useful, but intelligence is more important.

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