I have not changed anything. There is a tradeoff between committing all one's cash and having cash at the bottom. In 1996, I had cash left over. In 1998, I wanted to be fully committed and I was, a little early. In 2001, I, also, want to be fully committed. In previous posts, I stated the % of net assets and the % of liquid assets I have committed to stock. In 1998, I had more cash, but I did not want to commit it. I will have more cash available in 2001, but I probably will be reluctant to commit it, except at prices like AMAT @$10. It is difficult to keep averaging down when it requires more cash at risk and it is required because of a faulty model.
I have been thinking about the economic impact of last week's tragedy. I think it makes the next two quarters worse than they would have been, but the monetary efforts of the fed and the fiscal efforts of a war focused government could make the recovery come sooner and accelerate more rapidly.
The effect of the tragedy on the stocks I am buying seems to be that they are driven to prices I expected but the market did not. Again, the bottom will be reached sooner, it will be lower, and stocks will recover faster.
These assume that our government, military, and diplomats can deal with the terrorists in a way which raises our confidence that reasonable security measures at home will severely reduce the probability that last weeks attacks can successfully reoccur. The worst scenario would be an extensive military action on our part followed by a successful terrorist attack of last week's magnitude. That could bring us to a depression, both psychological and economic. |
