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Sunday, September 14, 2008

Buy and Hold?

I was just looking at the NASQAQ Composite hovering somewhere around 2200, and recalling March of 2000, when the index was at... 5048! It's well over eight years, and the index is still down well over 50% from its peak. When will we see NASDAQ 5000 again? 2015? (Of course, it could be much sooner -- it only took a few years to go from 700 to 5000.)

And if you bought at the peak, you must be wondering if you will ever catch up with inflation.

6 comments:

  1. I knew a guy (really, it's not me!) who bought into tech stocks the hour the market peaked. He also has a black cloud that follows him around.

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  2. I had the biggest short position of my life going into New Year's Eve, 12/31/1999. I wasn't just net short, I didn't own any stocks.

    Man, it was a sick and twisted time. I remember the painful gyrations, and even my wife yelling at me for my stupidity, "It's a new economy!" I think the whole position turned out to be a push by the time I unwound it.

    Sell and Hold would have been the way to go. Tech stocks don't pay dividends, and you can earn interest on the credit balance. But the pain, the pain...

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  3. Gene, remember I was way too early on housing stocks too? I was shorting housing stocks, based on the fundamentals in 2003-2004. I lost money on that too, but if I had balls of steel it would have been a big winner.

    People like to think real estate is a great "buy and hold" too.

    At least being bearish on housing got me out of my dump in Connectictut at a price that will never probably been seen in a generation. My current dump in Florida is basically a push, but I have twice the house and half the market exposure I had up north. I was way too negative on real estate to buy into speculative markets.

    Price levels of vacant land are back to 2001 in several markets down here. It's almost competitive with agriculture in some places. LOL Buy and Hold

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  4. Yes, there's a smart economist who thinks Austrian boom-and-bust stories must be wrong, because people who saw the boom happening "could just short bonds."

    The problem, of course, is that you can be 100% right about the boom and 100% broke by the time you are proven correct.

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  5. Well, I'll have to admit, I guess I don't have the power of bad luck to manipulate the market like the guy Bob mentioned.

    Hey, maybe you should have told him to pop the commodities bubble?

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  6. Hey, maybe you should have told him to pop the commodities bubble?

    Silas,

    That same guy and I were THIS close to buying puts on oil futures back around March 2007, when oil was around $60 I think. We were even going to play it "safe" by buying them for December 2008. I think I even did a spreadsheet showing that we could only get really hurt in the "ludicrous" case that oil broke $90, and we all knew that was impossible unless a suitcase nuke went off in Saudi Arabia.

    ReplyDelete