Ron: Thanks for your thoughts on my "baby boomer" comments.
I'm not a bear by preference. In fact, until this last March I was long a half dozen stocks (that's all I can keep track of). In March I couldn't face the thought of losing my gains and got out. Since then I've shorted MU and QQQ and a few other stocks that seemed irrationally high - but only with a small percentage of my stocks. I should have been more aggressively short since I haven't have single losing trade since April. However, I'm not comfortable being too short.
I've read a variety of books about Investment Pyschology and have developed my own feelings about the market. I think it passes through moods and phases driven by greed, fear, optimism, pessimism, politics, world peace or unrest, etc... At the beginning of 2000 it was greed and optimism. By April I think it turned to disbelief (by the "bellweather" investors)that the valuations could be supported and that started the long down trend. Lately, my I've heard my friends and associates talk about how they getting out of stock Mutual Funds. Sure it's only anecdotal and not scientific, but I don't have time to be too analytical about this.
Several months ago I starting playing Gold stocks (long only) to take advantage of their 10% up and down (short term)cycles. For the last several weeks I've been shifting more assets to precious metals because I think they can't go much lower, the dollar can't get higher, and as the Stocks tank enough people will see Gold as a haven that they should see a nice rise.
I realize that I'm a "trader" and not an investor. And also for every winner in the trade there is a loser. I'm not completely happy with that but then again the liquidity created by the market is an important part of how our economy functions. I consider buying Real Estate or collectibles or starting a business is "investing" - I wouldn't ever try to "trade" them because the liquidity is lower. Conversely, I wouldn't "invest" in stocks because liquidity and volatility are high and my pysche will not accept waiting 10 years to make up for losses incurred in the space of a couple months. That's why I trade them.
Lest you think I'm just a social leech, let me also say that for every dollar I have in my stock account I have two or three in simple old interest bearing accounts. I believe that Americans should be better savers and I've taught my children that and try to influence my friends to do the same. Sadly, every statistic I've seen quoted indicates that the average savings per household is less than $3000 and that household debt is on the rise. If we have a recession these bills will come due.
Finally, if you're 50, 10 years does not seem enough time to prepare for retirement - especially at 6%. And what happens to all sorts of market sectors when that huge slug of population does start retiring. They're going to sell their homes and buy smaller places, they're going to move out of the cities, they're going invest in more stable financial instruments, they're going to travel more, get sick more often, etc... The handwriting is on the wall that there are going to be dislocations in the economy. |
