Wear 'em out or tear 'em out
"In the 1970s, we had no volume and no interest and the brokerage community laying off large percentages of its staff. No one wants that again. I think we want the tear 'em out scenario because it heals itself faster with the shock impact of its happening," he said. "I'd like to see a thousand-point down day in the Dow because it accelerates the healing process."
Schaeffer suggests investors read "The Art of Contrary Thinking" by Humphrey B. Neill. The business writer penned a number of stock market guides in the 1930s, 1940s and 1950s, including "Tape Reading and Market Tactics" and "The Inside Story of the Stock Exchange."
Schaeffer also has an observation for those of us still glued to our television sets, or Web sites, for news of the market's hourly moves. "This whole bull market created people who became hyper-kinetic about checking what was happening, and they lost track of whether they were traders or investors. But you can't be both," he says.
"Warren Buffett has an investment-style edge," Schaeffer says about the Berkshire Hathaway chairman (BRK.A: news, chart, profile). "No matter how poorly he does on his bad positions he can only lose 100 percent, but with his good positions he can quintuple his gains or more. That is what the Buffets of the world do as very, very long-term investors. I find it difficult to see Buffett sitting there watching CNBC, waiting for the countdown to a Federal Reserve meeting. He would screw up his financial results if he did." |
