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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (33239)	10/2/1998 3:01:00 PM
From: Ralph W.	Read Replies (1) \| Respond to of 132070

Cobalt - 1997-1802=195 years. Is that your time horizon? Just a thought. Ralph

To: Ilaine who wrote (33239)	10/2/1998 3:29:00 PM
From: Mike M2	Respond to of 132070

Cobalt, I'd like to offer my opinion about the dollar cost averaging theme for retirement money. Wall St attempts to rationalize the fact that stocks are trading at the highest valuation levels in history "this time its different arguments" but it never is. Look at history mkts go to extremes and the big booms precede big busts. I would suggest accumulate cash in a money mkt ( w/out derivatives) there are some money mkts that use only short term gov't paper. Wait for the inevitable decline and begin a DCA program buy when everyone is selling as stocks decline to levels that are historicly cheap. We are a long way from that level but it will come. Mike

To: Ilaine who wrote (33239)	10/2/1998 3:49:00 PM
From: Joseph G.	Respond to of 132070

He chose those stocks that did not go bankrupt - and used many other ways to dupe folks ... a work of fiction. <<According to Siegel, $1 invested and reinvested in stocks since 1802, adjusted for inflation, would equal nearly $7.5 million by the end of 1997. $1 in bonds would equal $10,744, in bills, $3,679, in gold $11.17. >>

To: Ilaine who wrote (33239)	10/2/1998 4:54:00 PM
From: HB	Read Replies (2) \| Respond to of 132070

Hi Cobalt. I'm not just discussing how to allocate current contributions (I was tempted to change that to 90% money market, 10% stock today, just to get into the habit of putting something in an equity fund, though. But I didn't.) I'm discussing how to reallocate the existing assets in the plan, which had a bit of an RE fund and mostly bond fund and cash (money market), more bond fund than cash. This combination has beaten the tiaa/cref stock funds since the beginning of the year. I tend to trade my retirement plan funds a bit (although this is the first major reallocation in this one about a year), because there are no tax consequences. Buy and hold is for a taxable account. I'll consider starting to shift some into stocks, or at least put some fraction of new contributions into equities, at around low 7000's on the Dow, perhaps, if it looks like some stability has been reached. If I think stocks are going to continue to go down, I wait until I think they've got a reasonable chance of going up, then I start shifting money in. Basically, I think there is going to be some kind of recession in the U.S. sometime over the next year. Impact of Asia on trade, and probably overinvestment by US corporations... and possibly excessive fiscal tightening by US govt in the name of budget balancing. It's the good 'ol classic Keynesian recipe. There may be some elements of the classic Keynesian business cycle that have moderated in the "new era", due to weak labor movement (but labor is restless, have you noticed?) and Covin/Dell(whoops, I mean Pfeiffer)-esque inventory management, but that just leaves room for elements of the good 'ol late-1800's robber-baron-capitalism style business cycle to rear their heads. Stuff like overextension of credit, rampant speculation, bursting bubbles. With lower earnings, stocks will have to drop just to keep their current high P/E's, and I think once that gets going, we'll see some multiple contraction and perhaps panic as well. It looks like there is some serious leverage to get wrung out of the system (Long Term (:-)!!!) Capital and Friends... banks that lent to them... banks that lent to Asia, Russia... who knows what else. People who bought houses they can afford as long as the economy keeps booming and their stocks keep doing well...) That will probably provide a better buying opportunity for stocks. I plan to move more seriously in that direction if the Dow gets to 6000 or so, but tempered by how bad the fundamentals seem to be getting. Right now, more and more rats, like Long Term Capital, seem to be getting flushed out. The long term stats you hear are somewhat skewed by the fact that we have just had record returns for a couple of years, and the fact that they are based on indices that tend to drop underperformers, sometimes by definition (the X largest-cap stocks in the US), and almost always drop those that have gone bankrupt :-). Maybe I should take a look at Siegel's book; perhaps his studies adjust for this factor. Has anyone evaluated this particular book carefully? But I aim to get into stocks (actually as I mentioned, I do have some long positions in a taxable account) eventually. I have seen patience pay off, and belief in my views of the way the economy is going pay off. Probably many people don't have as much ability to evaluate the macroeconomic picture as I do (this is not a put-down or self-puffery; it's important to know what you're good at and what you have time for in investing; e.g., I don't have time for careful stock-picking right now, so I'm not buying as many beaten-down biotechs and techs as I probably should be), and for them dollar cost averaging may make a lot of sense, rather than being swayed by whatever economic or pseudoeconomic theory is currently fashionable on whatever news source comes ones' way. I'm taking the risk that the market will get away from my retirement fund. But when I'm making decisions for myself, I don't hesitate to change my mind if I feel the fundamentals warrant it. If the market gets away from this fund, I have other battered long positions that will come roaring back. But I think this risk is low, and this seems a decent time to undiversify... into cash. I also selling some more (but by no means all!) of my BEARX at the close, as part of this undiversification program. I agree, I want to have a lot of my retirement money in stocks sometime, the sooner the better. But I want them cheaper than this. How cheap? I'd probably buy Merck or Lilly starting at a P/E of 20, more heavily at 15, like gangbusters at 10. Take care, HB

To: Ilaine who wrote (33239)	10/2/1998 5:08:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

cobalt, all my 401k money is going into cash. i think stocks are a good deal when fairly valued. when at manic market tops where pes, growth, dividends, fundamental, etc don't matter you can expect to have a poor return for quite some time. those that bought in 1929 tops had some 30 years before they broke even. did your book mention that? ;-) or how many people died before they broke even? buying at fair value over time is good. buying a little above fair value is ok. buying below fair value is awsome. keep in mind that picking the low in 1802 may have been done. if the high was twice the low then your return is cut in half. also, we are at manic high levels in some indices so that is not a good end point. there is also room for much creativity b/c ibm didn't exist in 1802. in fact, how many companies exist today that existed in 1802? iwhat criteria was used to switch companies then? hindsight is 20-20. i could tell you how to start with $100 jan 1st and turn it into a couple million by now if i knew what the year's chart looked like for amzn back in january. this guy has the same kind of hindsight. 1802 through now has been incredibly productive. will we move as far from here? what is the next car? electricity? airplane? etc. i'm in cash until i get better prices. i do own a lot of stock long and some puts. my longs are small caps that i feel will do well and they are already cheaper than what i originally thought was cheap.