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Strategies & Market Trends : 50% Gains Investing
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To: tom pope who wrote (61796)7/11/2008 7:56:18 PM
From: Keith FeralRead Replies (1) of 118717
 
Money managers always lose all their gains in the long term since they all wait for their style to crash. All they want to do is ride all the up cycles and down cycles and charge 1 or 2% a year. We saw this happen with the tech funds in 2000, and we'll see it again with the commodity funds in 2010. None of the money managers have ever seen a market where they didn't want to be fully invested.

The problem with the monolines, gse's and banks is they are all upside down in equity. Things got worse when the FED decided to play cute with interest rates, which forced all the banks to abandon 30 year fixed mortgages to go sell interest only loans. Then, the FED got even dumber by jacking up rates to start the foreclosure process as rates reset too quickly. Now, we just have to wait for everything to fall apart while we watch oil prices shoot to $150. Nothing but pain for the money managers.

I suppose all the tech managers were adding to CSCO on the way down in 2000. It came back for a few years from the lows, but it has a 10 year return near zero. I hope it's that easy for the banks over the next 10 years. It would be groovy if they can just survive and pay their dividends, without defaulting on any bonds. That's when the government would be forced to do a bailout.
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