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Strategies & Market Trends : Investing during a Bear Market -- Ignore unavailable to you. Want to Upgrade?

To: Bearded One who wrote (2)	11/7/1997 5:14:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 226

Bearded One, thanks for the compliments. I am not sure if we are really in a bear market. But, US remains the last domino to fall. At least a correction to the order of 15-20% in in order. IMHO, of course. -Mohan

To: Bearded One who wrote (2)	11/7/1997 6:23:00 PM
From: Dwight Taylor	Read Replies (1) \| Respond to of 226

<<I just wanted to be the first one with a thread on the topic.>> Bearded One--the thread has been started. Misc, Market trends and Strategies, Flight to Safety. There are some good ideas for investing in the bear market correction. But don't delay, time is running out.

To: Bearded One who wrote (2)	11/7/1997 8:46:00 PM
From: tekgk	Read Replies (2) \| Respond to of 226

Bearded One, thanks for the compliments. I am not sure that they are deserved - just trying to keep myself and others thinking. Like Mohan I am not sure if we are really in a bear market yet. We are close very close but I am not calling a bear yet. The patterns fit but every once in a while we get a rally whose strength surprises me. Real bears last for 12-16 years and wipe out 75% of the peak value. We have had 3 such bears in this century. cpcug.org My point is that there is plenty of time to profit if the bear is real! If it is not a real bear overly aggressive positions will wipe you out. That is why I currently trade in and out with great caution. Once the bear is confirmed I will get more and more aggressive. During the 66-82 bear I mostly traded gold on the long side. Slowly at first and then eventually getting very aggressive. I then began to reduce my positions long before the final top. I started long in 72 and was mostly out by 79. I missed some of the early run up and the crazy stuff at the end. I was not smart enough to play the start and end and profit. I did very well as percentage gain, but since I started with so little the total proceeds were not all that large. I was also too young too know how to short the stock market. I am still not sure about gold this time. Since the US is significantly smaller as a percentage of the world's gdp I don't think that the fed will be able to do some of the aggressive monetary things that they did back then (negative real interest rates for example). I think that external pressures will prevent the kind of currency debasement we saw back then. I will be watching the Fed carefully for signs of currency debasement which might prompt a return to gold long positions. For now my plan is to short the indexes and occasionally use puts with caution. Once the bear is confirmed then I will aggressively short companies with suspect earnings. Some of the Internet hype trash should be easy pickings. I won't short them until market psychology has turned the corner. It might take another 3-4 months for dipsters to slow down and finally understand the value of an honest P&L and the importance of a reasonable PE/PSR. The big money center banks with a large exposure in South America and/or Asia will be another fine target. This is not an optimal strategy because I am leaving lots of money on the table, but it is one that will make me some money without excessive risk. It is also one that I think that I can actually execute. Picking the exact tops and bottoms is something that I was never that good at. Riding a trend - now that is something that I enjoy.

To: Bearded One who wrote (2)	11/7/1997 8:58:00 PM
From: tekgk	Read Replies (2) \| Respond to of 226

Another area that I will watch is German bonds. I have been in and out of these in the past with excellent results. Last time interest rates fell as the mark appreciated relative to the dollar. Given the decline of the dollar relative to the mark over the past few months this would have been an excellent trade. The uncertainty of the Euro is keeping me out for now. I would love to get a person on the street view of the Euro from someone. If the Euro is even mildly successful it will put downward pressure on the dollar.

To: Bearded One who wrote (2)	11/11/1997 1:05:00 AM
From: Stingray	Read Replies (1) \| Respond to of 226

Interesting thread. Bear markets can create very good investment opportunities, but only after stocks get beaten down so far that they are grossly undervalued. We could not be further from that point - stocks are more overvalued than they have ever been and have a long way to go before they reach fair value, yet alone become undervalued. I think that there are a lot of people around who want to get rich quick but right now there is more danger than opportunity in the market and it is better to focus on making money slowly but surely. For me any form of investment right now must focus on capital preservation, and at this stage of the market it is better to be safe than sorry. Bonds and cash both look pretty good. I have a core holding of a few stocks but I'm not planning on increasing my holdings unless we go down another 20% from here, and I would only nibble at the market at that stage. I think that cash is king and the name of the game in a bear market is to be the last person around who has cash and wants to buy when no-one else does. I'm prepared for quite a bit more upside. A lot of money is flowing out of emerging market and international funds into US stock funds and this could propel the market higher even as earnings growth slows. If anything the recent "correction" has only increased the bull market fever even as it appears to be on it's last legs. I have some puts's I'm interested in picking up if the market does indeed go to new highs (VGEMJ if I can get it for 1 point) but I'm not ready to add to my long positions, shorting is too dangerous and with the current volatility level puts are overpriced. I wish I had a better answer but right now I think that any investment which ends up not losing money will look pretty good a few years from now.