|
Edited on Thu Aug-12-04 07:59 PM by rapier
If you want to buy low then at least wait till it gets low. 770 might be a good place to dabble. A retest of the Oct. 02 lows. Of course that wasn't really all that low either on an historic valuation basis. Buy low and sell high is certainly a pr oven nostrum but really low comes maybe every 20 years or so. 1050 isn't low. It isn't even close to low. As a trade it might work but please don't pretend it's low. There is no rational historic basis upon which it could be called low.
Stocks are faltering for the same reason they always falter, on failing liquidity. The gigantic liquidity machine which is the modern credit system cannot reignite on rising rates. Al's baby steps toward a neutral Fed Funds rate is still too much for the markets to bear.
The selling has been strongest by far in the NASDAQ market where the 8000 hedge funds have been trying to play catch up buy piling into and out of various crappy stocks for a long time. However their performance has been terrible for the most part and some hedge funds are now blowing up and being forced to liquidate. (This is going to become a persistent background story going forward. Forced liquidations of hedge funds. Mark my words)The hedge funds are in fact a perfect surrogate for the entire economy. The hedge fund economy. Leveraging stupid speculations with ultra low sort term credit.
Did you know that the discount brokers are hurting. BAD. The public has abandoned stock trading in this nutty environment. Most weeks now half of all volume is in program trades. That is by the hedge funds and mutual funds and the Street for it's own accounts.
That doesn't mean the average Joe or Jane has sold their IRA or 401K stock holdings. They will NEVER sell. 20 years of buy and hold propaganda have made them incapable of selling.
Stocks are flat for 6 years now, based on the broad averages. Who would have thunk it. 10 or 15 more years of sideways and we would be back to historicly low valuations. We could only be so lucky to get there by going sideways.
You will know when stocks are low. That will be when everyone hates them and MSNBC goes off the air due to lack of interest and disgust with their propaganda.
If you can't think of any reason to sell stocks try this one. Principal. The nation and the world will not make wealth from the inflation of paper assets. The mania for paper assets is really the foundation for many or our social, cultural and political ills. If you think you'll get rich or retire comfortably on the gains in your stocks, instead of real work and real savings then don't bother imagining your even a tiny bit of a progressive.
The only problem is that if stocks and other assets return to mean historic value then the economic repercussions are going to be profound and there is no political/cultural alternative to the status quo. Authoritarianism/fascism will probably be the result.
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
