T, My favorite was the ad from Kidder, Peabody (I don't know where they went. An interesting firm that got sucked into one of the mega boring cos.): "If you aren't earning 9% on your money, somebody else is." I love scary advertising. 8% will bring money from the planets was definitely something I remember.
Then there was good old American Capital where mgt. blanched when they found out I was buying long Treasuries at 14%. "Don't you think you ought to wait? They could go to 17%. Why not wait until the trend turns positive?" Because it's too damned late then. Of course, when rates eventually fell to 7.25% it was "why the Hell are you shortening maturities? Rates are going to 2%. Art Laffer told us so this morning." <G> They were at 10% 4 months after that. So, hang out with those guys and do the opposite is the easiest answer. Alas, most are dead or out of the business now.
So how do you know when high is high enough? You don't. You just know when it is high. I got lucky to buy at 14%. I didn't have a bond fund to manage until they hit that rate. If I'd had a bond fund when they hit 12%, I would have bought there and, temporarily, lost money. Long term, I still would have made money, because 12% was high and I knew it was high so I wouldn't have panicked out.
Ditto for stocks. I know that a PE Ratio of 8 on the S&P 500 is low. It could go to 6 after I buy at 8, but I don't care. Is it 8 yet? <VBG> |
