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Pastimes : Ask Mohan about the Market

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To: tekgk who wrote (12955)	1/11/1998 10:10:00 AM
From: Tommaso	Read Replies (1) of 18056

I believe that the "fifteen-year" delay reflects more the difficulty of getting back to where you were near the top of a previous bull market. Every bear market that I know about provided wonderful opportunities for reinvestment within three years of the onset and often sooner. Sometimes it can be much sooner--I hardly need mention 1987. And 1970 was a good time to get in provided you got back out a couple of years later. It's true that it got excruciatingly boring between about 1977 and 1982, waiting for the markets to recover confidence. Even more boring than waiting for this bull market to collapse. Because of the incredible duration and rise of the present market, it may take five years to persuade most people that it's over and that the stock market is a dangerous place to be. Usually the stupidest things I go have to do with making guesses about the future instead of considering genuine present values. But I hope to take advantage of any intermediate fluctuations by getting completely out of short positions if the market is down 25-30% and reestablishing those positions if it bounces back up 15-20%. Shorts don't pay any dividends--indeed cost dividends and you can't just hold for the long run. Better to be in interest-paying cash for the later stages of the bear. And then average back into the market. Sometimes putting money into a bottoming market is like a downslope on a roller coaster where you can't see ahead--but if you jump off then you really mess up. Markets always bottom out except when a country suffers military defeat. Very few people are going to make money getting in and out (whether with stocks, futures, or options) more often than once a year--and longer is better. Bad guesses, whipsaws, commissions, and margin interest will eat you alive. Not to mention the complexity of doing taxes on all those trades.

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