april showers

[gerihearne]

April in the market has not been great for me. I'm hoping these showers bring may flowers.

Question: when the market goes south: what do you do? sell and get out while you're still up? any benefit to holding on for better times?

A few posters talked about avoiding april .. wondering if this is just turbulence on an otherwise o-kay flight.

Any and all opinions welcome .. thanks

Cordially,
Geri

[mrmarket]

Dry your eyes, princess. The market is fickle but as long as you hold companies that are profitable, and reasonably valued, the market cannot rain on you forever.

[DSteckler]

But it can rain on you longer than you can afford to hang on. Witness 2000 - 2002, when many tech stocks lost 90% of their value and have never come close to getting back to where they were at the peak.

[New-born baby]

But it can rain on you longer than you can afford to hang on. Witness 2000 - 2002, when many tech stocks lost 90% of their value and have never come close to getting back to where they were at the peak.

Geri,
Of course, we should mention that these aforementioned stocks had no earnings at all. They were not 'reasonably valued.' Emotion and greed had driven them to unprecedented heights, and then, the bubble burst.

Back to holding in a downturn: do you see the freight train coming? I'd get off of the tracks, esp. with a profit. "When in doubt, get out." Add to that that you don't sell calls on your stock, so you have no insurance whatsoever. So my advice to you would be most certainly get out of the way. Never let a profit turn into a loss.

[DSteckler]

Geri,
Of course, we should mention that these aforementioned stocks had no earnings at all. They were not 'reasonably valued.' Emotion and greed had driven them to unprecedented heights, and then, the bubble burst.

Many of those stocks had earnings, NBB. For example, MSFT lost 2/3 of its value. INTC lost 83% of its value.

[New-born baby]

Oooooopppss!

Many of those stocks had earnings, NBB. For example, MSFT lost 2/3 of its value. INTC lost 83% of its value.

Dave,
I stand corrected. You are most correct.

You do agree with me that, if one sees the freight train coming, that he ought to get out of the way?

[DSteckler]

Dave,
I stand corrected. You are most correct.

You do agree with me that, if one sees the freight train coming, that he ought to get out of the way?

Absolutely! Charts is charts...when you see one breaking down, get short or get out of the way.

[Karel]

A lot depends on the stocks and why you bought them. The average $$$Mr.Market$$$ stock did a lot better than MSFT and INTC did. Those stocks still haven't recovered from the tech crash. My portfolio returns more than 16% annualized since I started investing in the US of A. I started with losses in 2001. January 2002 I started "following $$$Mr.Market$$$" (and duplicating him). I took care to be diversified and accepted ridiculously small position sizes to accomplish that, and it worked. (Past results...) If this is a freight train coming, what was January 2002?

If your style is more Buy-and-hold like, like $$$Mr.Market$$$'s, learn to sit tight with your well-diversified, carefully picked portfolio. If your style is different, act differently.

Regards,

Karel

[mrmarket]

Many of those stocks had earnings, NBB. For example, MSFT lost 2/3 of its value. INTC lost 83% of its value.

MSFT's PE was greater than 60 or 70. INTC's PE was also very high but they DID have a fundamental erosion of their margins due to price compression in the PC.

[lemonjello]

The Efficient Basketball Hypothesis

Good point Karel. Most people are too greedy when they buy and buy too much and too fearful when they sell and are easily scared out.

Note also that almost all of the dot.bomb/tech stocks that crashed did not meet MMs criteria of earnings AND value before they tanked. The PE of BBD 2006 is a lot different than the Nasdaq 100 index which was trading at 170 times earnings when it hit its peak in March 2000 (and those were the "good" tech stocks). Barring big international or company specific adverse event, keeping a MM type stock down is like holding a basketball under water.

It would be interesting to know how an MM pick would have worked purchased just before March 2000 or even Sept 2001.

Good luck to everyone!

...I took care to be diversified and accepted ridiculously small position sizes to accomplish that, and it worked. ...
Regards,

Karel

[Adman]

A lot depends on the stocks and why you bought them. The average $$$Mr.Market$$$ stock did a lot better than MSFT and INTC did. Those stocks still haven't recovered from the tech crash. My portfolio returns more than 16% annualized since I started investing in the US of A. I started with losses in 2001. January 2002 I started "following $$$Mr.Market$$$" (and duplicating him). I took care to be diversified and accepted ridiculously small position sizes to accomplish that, and it worked. (Past results...) If this is a freight train coming, what was January 2002?

If your style is more Buy-and-hold like, like $$$Mr.Market$$$'s, learn to sit tight with your well-diversified, carefully picked portfolio. If your style is different, act differently.

Regards,

Karel

Sage advice! If you are really not comfortable with the bumps, set some stop losses at levels you can live with, to lock in your gains on the way down. Just make sure you don't set them too close to the current price, to prevent a normal intra-day bounce from triggering them.
If it drops, and it sells off, you can always buy it back at the lower level: Remember, the wash sale rule only applies to loosers bought back, not winners.

[mrmarket]

Barring big international or company specific adverse event, keeping a MM type stock down is like holding a basketball under water.

Good luck to everyone!

Great analogy lemon...and I've seen it happen time and time again over the last 15 years to be pretty confident with my strategy.

[spikefader]

keeping a MM type stock down is like holding a basketball under water.

lol yup great analogy.....holding most MM picks underwater, or holding most of those many excellent stocks discovered by MM's data dumping method (ala Creme of the Crop), is gonna result in the same thing.....plop! out they come!



And they outperform the broader market.....or don't get as hammered. Now that's generally speaking, on average, an estimation on many stocks the model uncovers. Of course there are going to be the BELs that come along, but across the board, MM's model makes $$$, and it's easy work. He doesn't watch the market actively, even forgets to take profits at the first opportunity lol, but when all is said and done, it's a robust system. As long as you diversify and don't overcomit.

And Adman is right; it's sage advise indeed from Karel. As long as you are well diversified, investing only what is reasonable, even if the share amount is ridiculous, and sticking with a robust method, and sticking with the discipline, THEN you improve your chances for doing well.

Personally, I'm a stops guy. I have the patience to look for perfect entries, and weather the stop outs, with a strong desire to keep losses small. I figure if I keep my losses small, and get out of the way when the market screams such, or better yet, get short some issues, then the winners will present themselves, and take care of themselves.

gerihearne, may next month shine on you and give you rewards!

[gerihearne]

Thanks

Thanks for all the comments! I'm learning how trading can get emotional. My plan was to stay long, so technically, I should not have gotten anxious about the bumps. But looking at what's going on in my life (my 8th grade son in France hadn't called me, a pitch at for a new tv show that sometimes appears stuck in mud ... anxiety rules here on 4030 N. Kolmar

So, turning all that negative "energy" into something positive: Can someone start a thread on "energy" stocks? I'm trying to wade through them, as I have gathered from several posters: the stocks are doing well, and could do even better throughout the year. Es verdad? ((Maybe the thread already exists .. I'll keep looking))

Graciously,
Geri

[Shadow]

I thought I would relay this story......more as a way to vent than
anything else. It’s not an April shower; more like a thunderstorm.

I’ve been following the market and investing for many years but
a few years back I began to pick up my pace and became a lot
more involved on the technical side. The results have been worth
all the work / education involved and my investing has improved.
As you all know it takes a lot of work, study and experience to
even began to know 10% of it and the learning never stops.
I still have lots of learning to do.

Over time friends and family have picked up that I’m really into
the market. We’ve been at get togethers and you know how that
goes....... the men in this corner talking and the ladies in this corner.
Some man will begin discussing the market and look at my husband,
he will reply don’t look at me, my wife’s the market person at our
house, ask her. It usually stops the conversation right there. A few
chuckles about the little lady and her milk and egg money. Grrrrrr!!!!
As a result we usually try to steer clear of any and all market talk.

This weekend we were invited to a cookout. Everyone was having a
good time and THEN some idiot started talking. The main idea I
got was this........ “ cute the little lady plays with her stock. I guess
it keeps her out of trouble; my wife just spends hers at the mall. They
just have to spend it somehow.” I actually can’t remember the last time
I was so furious! Luckily my husband was smart enough to step in before
my temper cut loose and explained I was doing VERY well. Percentages
do have a way of shutting CPA’s up!

Fast forward to yesterday. One of the ladies at the cookout asked me
to stop by yesterday. Talk about being blind sided. There sits this group
of ladies who have all opened brokerage accounts this week.
Surprise.....surprise! They each have a stock their going to buy (how
quaint). Now I’m still trying to figure out what they want from me
when they start telling me about their stocks. Had anyone performed
any FA or TA research? NO! Why were they buying them....... because
Cramer said so. The conversation wasn’t one of my more fun ones. I
tried to encourage them to educate themselves...... they don’t think
they need to and don't want to spend that much time..... Cramer is
soooooo smart. They think they have the next Walmart and Google.
I told them if it was that easy we would all have Gates' and Buffet’s
money. I explained that I’ve studied for years and still have lots to
learn. It was all a useless effort.

I’ve had 4 phone calls this morning already. Thank goodness for caller
ID because I’m not taking those calls! Bets on how long it takes them
to lose half of it?

I think I fell into the twilight zone.
Shadow