Hi GST,
You said You bought and held into a bubble -- the bubble burst and now we are in a broadening economic slowdown brought on by energy prices, interest rates and the bursting of the bubble itself.
First, my take on your comments has nothing to do with William's position. There's nothing about buy and hold that doesn't work through a bubble, unless one happens to buy all of their stocks on the Big Bubble edges. Buy and hold doesn't necessarily work over any three year period, it's a longer "long term". It hasn't worked very well for AMZN or YHOO, but it has worked well for many other good companies (again, assuming a ~ three-year time frame).
Beyond that, your assessment of the economy going forward matches many people's current view. In light of that, you'd have to assume the market's current pricing is doing its best to accommodate that view turning out to be wrong. Where are interest rates going now? And where is the *current* damage resulting from the bursting of the bubble? When YHOO trades at about 35 times free cash flow, there's not a lot of bubble left. If it's investor confidence you're referring to, that's not an issue for buy and hold -- it will cycle too. Energy prices, could easily go higher but also lower. I do have a long term energy play -- Astropower. They are risky: their management may not be strong, and they could (unlikely IMO) fall prey to a swift shift in solar cell technology. But as the price for traditional energy rises, solar falls in step. Solar won't get more expensive for any reason other than demand which continues to outpace supply.
You may be right, but forecasting the economy wrt the stock market still seems like a lot of guesswork. |
