ANSWER: Not relevant in my specific case, as this is tax-deferred money.
Ah! Then you are in a different category in terms of the capital gains.
I followed this call of Brinker's, and- so far - I am negative on this portion of my investment program. I don't hold Bob accountable for this reduction in worth........But, whenever Brinker says sell QQQ, I'll probably do so, and hold that money as cash until he calls another counter-trend rally, or until he calls MOABO (Mother of All Buying Opportunities - i.e., the bear market bottom, or near-bottom) When Bob calls MOABO, I'll commit much of my other cash (now in bonds and MM's) too.
I find it interesting that you will follow what Brinker says, but would not hold him accountable by doing so. Wouldn't it be worth your time as an investor to develop your own plan and study the micro and macro issues of the economy so you know what kind of balanced portfolio you need for your retirement needs? That way it would be you deciding when to buy and sell rather than a newsletter writer. They may all be seeing attractive valuations here and there for things to buy, but the mutual fund industry has been distributing all those shares they bought on the way up. Yes, someday they will have to accumulate them again, but this might be something Brinker or others who have made "bottom" calls or "it's time to buy" calls overlooked. In addition, if you study the history of newsletter writers or the market 'gurus', the long term track record has blemishes for all regardless of how long they were able to string together successive 'good calls'.
That being said, I don't mean to harp on Brinker because I've never heard the man or read anything that he has said outside of my brother-in-law mentioning the call to get back into the QQQ. There was an interesting link on the Home page of SI to a James Cramer 'buzz and batch' piece about the funds distributing their technology shares. Noted bear Bill Fleckenstein's column has been harping on this for months now in his daily column here at SI as well about distribution mixed with his special flavor of it is the end of the world as we know it. Most of been looking for and calling for a mass capitulation in one swoop similar to the bottom in 1998, yet market history in the Dow, S&P and Nasdaq don't confirm that it always is that way. It's interesting that those who make those calls don't refer back to history to study all the other previous cases. Wednesday's sell off was an interesting type of capitulation:
Wednesday "smelled like capitulation and I hate that word," said Scott Bleier, chief strategist at Prime Charter. "But it wasn't the capitulation you'd normally think of: This was the money managers' capitulation. They were selling stocks at any price to get losses on the books to balance gains. Most of the public that's left standing are the ones who aren't going to sell their Cisco (CSCO:Nasdaq - news)" or Microsoft (MSFT:Nasdaq - news), or any number of bellwethers that hit or approached 52-week lows this week.
This was an example of "money management at its worst," Bleier continued. "It's money managers that bring us to the extremes. They are the ones who panicked to get in [at the beginning of the year] and panicked to get out" at the end.
There is also an excellent chart in "Random Walk" about how money managers have held their largest positions in cash exactly at the points of each trough in the market over the past 30 years. I don't know if Wednesday was it, but the above comments from Bleier certainly fit in the same type of scenario as the past 30 years. Likewise, it seems to address some things that Cramer brought up about the money managers buying and upgrading stocks at or near the highs.
In terms of the distribution cycle, a typical example would be what we saw Qualcomm go through from the $200 share price down to the $51 share price this year. Then, slowly a base was built and accumulation began of the shares once again. It's part of the industry and has been more magnified in a shorter period of time this year due to the extreme rise and drop of individual equities in technology and the Internet issues. That's why my inclination is to have t-shirts made up for everyone on this folder that says "Have your stocks been Qualcommed?". In spite of that, it is the longer term that we are interested in as gorilla gamers as a company builds its franchise and dominates a particular segment of a TALC. Trying to time Cisco in and out from 1990 to 2000 would have been difficult at best to even come close to the returns of just holding through that period. Although this board specializes in technology, many investors use a balanced strategy for their portfolio that includes investments outside of technology. A year like this year was a perfect example of how that strategy was a benefit for long term investors with many share prices increasing 25 to 100%+ outside of technology. To be fair, many of those same equities did not increase during 1999 or parts of 1998 as the technology shares did. The balanced strategy is certainly one that meets the needs and goals of many investors.
I would imagine that if one looks at a 10 - 12 year return of Qualcomm once the company's traded shares reach that age in 2002 - 2004 that in spite of the rise and fall we saw in the past 12 months, it will have proven to have been difficult to time all of that and match or beat the returns of simply holding through it all.
Here's a chart of Cisco and Qualcomm from their IPO's to current:
finance.yahoo.com
Or Microsoft:
finance.yahoo.com
Or Oracle:
finance.yahoo.com
Or application favorites of Siebel, i2 and BEA Systems:
finance.yahoo.com
Or some Web architecture companies like Veritas, Verisign, Brocade, Network Appliance, Juniper, Ciena, PMC-Sierra, Broadcom, Applied Micro Circuit, EMC, JDS Uniphase, Sun Microsystems:
finance.yahoo.com
finance.yahoo.com
finance.yahoo.com
Tremendous rises for all of them, yes. Some rather significant haircuts for all of them at points along the way as well. Yet, where will investors be 5 years from now simply by holding and not trying to time it all? Good question and one that is open to criticism. Where will traders be that do try to time it all over the next 5 years? An equally good question.
Here's an intersting Nasdaq chart for most of the 90's that indicates where the FED eased and where they tightened. You can certainly see the increases leading up to and at the top of the Nasdaq's ascent in this chart:
geocities.com
IMO, this is, by far, the best board on all of SI.
I think most would agree the board is a wonderful gathering location.
BB |
