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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Tim Bagwell who wrote (16906)	10/21/2002 3:33:37 PM
From: Wyätt Gwyön	Respond to of 42834

but you are dismissing the possibility that this could be a secular bear market where the valuations wont be cheap for years actually i don't dismiss this possibility at all. in fact i think it is likely, given how much money is short the market in the hedge funds. it seems obvious that these violent rallies of late have involved a lot of short covering. also, if you look at other mega-bears, they have all had huge rallies (like in the 30s, or the five or six rallies of 50%-plus on the Nikkei this past decade). It's going to really smart if you miss the first bull cycle the problem is, that presumes one can successfully time the market. why not just wait for it to become empirically cheap? it all comes down to what level of tracking error one is comfortable with. i don't mind having tracking error, and i consider it a small price to pay for having a portfolio i am comfortable with. but i admit that my tracking error thus far has basically meant i have outperformed the market (largely by my "underexposure"), and surely it is easier to bear "erring" on the upside than on the downside. having said that, it's not like i'm totally out of stocks. i do have about 25% long positions, in addition to 5% shorts, 25% bonds and 50% cash. i would have done better still by being 100% short, but that's not a level of risk (or philosophy) i'm comfortable with. i would actually prefer to have about 60% longs, and to have my longs indexed, but i don't feel comfortable indexing in a secular bear.