Who knew. Ben Graham knew, that's who, and he warned us. Many of us didn't listen or want to know the truth. A lot of newbies entered the markets setting up shop as day traders, private partnership managers, hedge fund managers and so on. Now they are learning some lesson. That the market is a real f**ker!!
Now the market is claiming victims. It's claimed a few of my friends, and others that I heard about second hand. Blew em up!! That's what the markets do. It's really hard to win at this game, really hard....
Many forgot the tech disaster and plowed forward. Always in the back of the old timers mind though is how in the end the market will rip your lungs out. It's always been that way I guess -- going back to the Panic of 1907, and, of course, the 1929 crash. No one escapes unscathed from this type of decline... this one is touching everyone in same way, shape or form. Whether it's through tumbling stock prices, falling house values, or loss of a job. If there is any doubt that house prices are not going down another 25%, then someone is kidding them self. Yet I still see those outrageously priced capes for $400K and basic bi-levels with asking prices of close to $1 mil. Go ask your realtor now about the great investment in buying a house w/ no money down and 2 mortgages when price doesn't matter. The realtor and mortgage broker would ask some naive purchaser, how much can you pay each month? Wrong metic. Graham talks specifically about "price" mattering in Security Analysis, within the first 50 pages or so, that he penned back in 1932.
The trick in investing is to go where the crowd ain't. Turns out these hedgies aren't the sharpest knieves in the draw, but they are creating a lot of pain for inocent bystanders. You don't want to follow them now. I believe now is the time to break out your Graham and Dodd. This is the environment that it works best. Not when the hedgies are buying the exact same stocks and pushing them to the moon, like some of those commodity names we've heard about all summer. Those are the stocks that are killing those guys not to mention their 10/1 leverage ratio.
The stock market is falling off a ledge caused primarily by what I believe is forced liquidation by hedge funds, skittish foreigners, and other loony institutional investors. This is indeed the scariest stock market drop I have ever witnessed. I was around for the '87 crash, '92 recession, '98 long term capital/ Russian crisis, and tech bubble bear markets. I thought that 2000 - 2003 would be the worst decline of my lifetime. I was wrong - this one wins.
But it's no worse than the various commodity market implosions I've seen, and been on the wrong side of, over the years. This market is acting very much like one of those highly speculative commodity future implosions where the selling never seems to stop. In those markets, the rapid never ending declines are essentially exacerbated by trend followers liquidating their positions. In my mind this has all ear marks of one of those commodity market liquidations. I don't think its anything more except the dollars in this stock market panic are enormous compared to anything else in history. The final 2 hours today, and we get a 600+ point Dow decline. That is simply not a natural occurance dictated by rational thought. I think it's caused by having a gun to one's head or blind fear. The redemption issue is adding fuel to the fire -- look for a moratorium on hedge fund redemptions to be sponsored by the SEC.
If you aren't already totally freaked out, this is the bargain buying opportunity of a lifetime of high quality businesses (the best the US has to offer) being trashed by the stock market. There's a huge for sale sign down at the NYSE due to the recent economic problems we've encountered. If you don't know how to value a business and compare it to the prices being offered in the market, then for heavens sake do not participate.
Now the market is claiming victims. It's claimed a few of my friends, and others that I heard about second hand. Blew em up!! That's what the markets do. It's really hard to win at this game, really hard....
Many forgot the tech disaster and plowed forward. Always in the back of the old timers mind though is how in the end the market will rip your lungs out. It's always been that way I guess -- going back to the Panic of 1907, and, of course, the 1929 crash. No one escapes unscathed from this type of decline... this one is touching everyone in same way, shape or form. Whether it's through tumbling stock prices, falling house values, or loss of a job. If there is any doubt that house prices are not going down another 25%, then someone is kidding them self. Yet I still see those outrageously priced capes for $400K and basic bi-levels with asking prices of close to $1 mil. Go ask your realtor now about the great investment in buying a house w/ no money down and 2 mortgages when price doesn't matter. The realtor and mortgage broker would ask some naive purchaser, how much can you pay each month? Wrong metic. Graham talks specifically about "price" mattering in Security Analysis, within the first 50 pages or so, that he penned back in 1932.
The trick in investing is to go where the crowd ain't. Turns out these hedgies aren't the sharpest knieves in the draw, but they are creating a lot of pain for inocent bystanders. You don't want to follow them now. I believe now is the time to break out your Graham and Dodd. This is the environment that it works best. Not when the hedgies are buying the exact same stocks and pushing them to the moon, like some of those commodity names we've heard about all summer. Those are the stocks that are killing those guys not to mention their 10/1 leverage ratio.
The stock market is falling off a ledge caused primarily by what I believe is forced liquidation by hedge funds, skittish foreigners, and other loony institutional investors. This is indeed the scariest stock market drop I have ever witnessed. I was around for the '87 crash, '92 recession, '98 long term capital/ Russian crisis, and tech bubble bear markets. I thought that 2000 - 2003 would be the worst decline of my lifetime. I was wrong - this one wins.
But it's no worse than the various commodity market implosions I've seen, and been on the wrong side of, over the years. This market is acting very much like one of those highly speculative commodity future implosions where the selling never seems to stop. In those markets, the rapid never ending declines are essentially exacerbated by trend followers liquidating their positions. In my mind this has all ear marks of one of those commodity market liquidations. I don't think its anything more except the dollars in this stock market panic are enormous compared to anything else in history. The final 2 hours today, and we get a 600+ point Dow decline. That is simply not a natural occurance dictated by rational thought. I think it's caused by having a gun to one's head or blind fear. The redemption issue is adding fuel to the fire -- look for a moratorium on hedge fund redemptions to be sponsored by the SEC.
If you aren't already totally freaked out, this is the bargain buying opportunity of a lifetime of high quality businesses (the best the US has to offer) being trashed by the stock market. There's a huge for sale sign down at the NYSE due to the recent economic problems we've encountered. If you don't know how to value a business and compare it to the prices being offered in the market, then for heavens sake do not participate.
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