Is it Time to go Long?

[sishya]

I just went long with my 401K into US equities. I had moved my entire 401K from US Equitites to Money market account in Feb 2007 when DOW was around 13,000. I had done this then because I thought there is more downside risk than upside and was willing to forfeit any profit if it happened - I was lucky it did not happen.

I went long with UYG at $5.86 yesterday .

I am doing this because I see more chance of an upturn than a downturn at this Juncture at least till next April 2009. I could be wrong and I am ready to take a loss if it happens because I am not leveraged. I am not a Trader, so my knowledge is very limited.

Any one want to comment on their positions.

[kingcopper]

Re: Is it Time to go Long?

we're way oversold in US markets and will have a bear market rally at some juncture that should last until February 2009. Then we'll see NEW LOWS!

[doharra]

Re: Is it Time to go Long?

I'm no trader either. But I moved my 401K from DODGX, RERCX and VFINX in August 2007 into Pimco Bonds PTTRX. And there it remains. Up slightly. My IRAs are in cash and PMs.

Aside from the drumbeat of iTulip advice to remain in CASH with a bit of gold insurance, don't you fear the results of a fourth quarter that unfolds without a Xmas spending orgy? Won't every equity that depends on consumer spending plunge come January -- just to maintain its current P/E?

Take these as friendly questions, too. I'm as perplexed as any one here...

[sishya]

Re: Is it Time to go Long?

I'm no trader either. But I moved my 401K from DODGX, RERCX and VFINX in August 2007 into Pimco Bonds PTTRX. And there it remains. Up slightly. My IRAs are in cash and PMs.

Aside from the drumbeat of iTulip advice to remain in CASH with a bit of gold insurance, don't you fear the results of a fourth quarter that unfolds without a Xmas spending orgy? Won't every equity that depends on consumer spending plunge come January -- just to maintain its current P/E?

Take these as friendly questions, too. I'm as perplexed as any one here...

I think the downturn in consumer spending is already factored in the current US Equity prices(down -40%). So if any good news comes, it can lead to a rally. That is a reason why I thought it is time to shift my position for the short term.

[ASH]

Re: Is it Time to go Long?

I just went long with my 401K into US equities. I had moved my entire 401K from US Equitites to Money market account in Feb 2007 when DOW was around 13,000. I had done this then because I thought there is more downside risk than upside and was willing to forfeit any profit if it happened - I was lucky it did not happen.

I went long with UYG at $5.86 yesterday .

I am doing this because I see more chance of an upturn than a downturn at this Juncture at least till next April 2009. I could be wrong and I am ready to take a loss if it happens because I am not leveraged. I am not a Trader, so my knowledge is very limited.

Any one want to comment on their positions.

I'm not a trader, either. My opinion is that if one is not a trader, one should not be attempting to time bear market rallies or, indeed, the bottom of the market. A non-trader would try to get out before the big crash (which you did) and then back in once "the coast is clear" to participate in a long-term recovery. Any recovery worthy of the name should be sustained over years, which means the non-trader can afford to wait for sound fundamentals to become manifest, rather than anticipating the bottom. I personally think a non-trader should wait for the housing market to bottom, unemployment to contract, consumer confidence to rise, the impact of heavy government intervention in the banking system to become apparent, etc. etc. etc. for a minimum of 2 quarters before buying back into the stock market. What about these fundamentals makes you think you see the light at the end of the tunnel, or indeed basic economic stability?

I am not saying you won't make money getting back in now, nor am I saying that this obviously is or is not the bottom of the market. What I am saying is that if you really aren't a trader -- and you feel your knowledge is limited -- then I think the decision to get back into the market now, before things resolve themselves, is risky.

For my part, regular contributions are still going into the money market trading accounts of my self-directed IRA and 401k. I'm not buying anything yet. Once I see a resolution to this crisis taking form, I will be buying back into energy and taking a few other selective positions if appropriate. I won't be spreading my money across the market in general until we're a few quarters into a broad-based recovery, and I know what the rules of the new game are. I was heavily invested in PM going into this financial crisis, speculating on an ultimately inflationary outcome, and I'm going to hold onto those positions. As I've remarked elsewhere, I feel unequal to the task of trading the ka-, and I'm prepared to wait up to two years for -poom. If, along the way, it becomes apparent that -poom isn't going to happen, then those speculative PM positions turn into expensive currency crash insurance, and I move along with other ideas.

[sishya]

Re: Is it Time to go Long?

I'm not a trader, either. My opinion is that if one is not a trader, one should not be attempting to time bear market rallies or, indeed, the bottom of the market. A non-trader would try to get out before the big crash (which you did) and then back in once "the coast is clear" to participate in a long-term recovery. Any recovery worthy of the name should be sustained over years, which means the non-trader can afford to wait for sound fundamentals to become manifest, rather than anticipating the bottom. I personally think a non-trader should wait for the housing market to bottom, unemployment to contract, consumer confidence to rise, the impact of heavy government intervention in the banking system to become apparent, etc. etc. etc. for a minimum of 2 quarters before buying back into the stock market. What about these fundamentals makes you think you see the light at the end of the tunnel, or indeed basic economic stability?

I am not saying you won't make money getting back in now, nor am I saying that this obviously is or is not the bottom of the market. What I am saying is that if you really aren't a trader -- and you feel your knowledge is limited -- then I think the decision to get back into the market now, before things resolve themselves, is risky.

For my part, regular contributions are still going into the money market trading accounts of my self-directed IRA and 401k. I'm not buying anything yet. Once I see a resolution to this crisis taking form, I will be buying back into energy and taking a few other selective positions if appropriate. I won't be spreading my money across the market in general until we're a few quarters into a broad-based recovery, and I know what the rules of the new game are. I was heavily invested in PM going into this financial crisis, speculating on an ultimately inflationary outcome, and I'm going to hold onto those positions. As I've remarked elsewhere, I feel unequal to the task of trading the ka-, and I'm prepared to wait up to two years for -poom. If, along the way, it becomes apparent that -poom isn't going to happen, then those speculative PM positions turn into expensive currency crash insurance, and I move along with other ideas.

I agree with your assessment that it is not wise to test the waters now.
But since I had taken the step forward, I will have to take one on my chin to take a step backward and learn my lesson.

[runlikehe11]

Re: Is it Time to go Long?

I agree, a trade needs to be in your favor as much as possible.
When the time is right I will scale into the trade, till then
I will be sitting it out until these moving averages move into my favor.


http://stockcharts.com/h-sc/ui?s=$IN...d=p45951235778

I'm not a trader, either. My opinion is that if one is not a trader, one should not be attempting to time bear market rallies or, indeed, the bottom of the market. A non-trader would try to get out before the big crash (which you did) and then back in once "the coast is clear" to participate in a long-term recovery. Any recovery worthy of the name should be sustained over years, which means the non-trader can afford to wait for sound fundamentals to become manifest, rather than anticipating the bottom. I personally think a non-trader should wait for the housing market to bottom, unemployment to contract, consumer confidence to rise, the impact of heavy government intervention in the banking system to become apparent, etc. etc. etc. for a minimum of 2 quarters before buying back into the stock market. What about these fundamentals makes you think you see the light at the end of the tunnel, or indeed basic economic stability?

I am not saying you won't make money getting back in now, nor am I saying that this obviously is or is not the bottom of the market. What I am saying is that if you really aren't a trader -- and you feel your knowledge is limited -- then I think the decision to get back into the market now, before things resolve themselves, is risky.

For my part, regular contributions are still going into the money market trading accounts of my self-directed IRA and 401k. I'm not buying anything yet. Once I see a resolution to this crisis taking form, I will be buying back into energy and taking a few other selective positions if appropriate. I won't be spreading my money across the market in general until we're a few quarters into a broad-based recovery, and I know what the rules of the new game are. I was heavily invested in PM going into this financial crisis, speculating on an ultimately inflationary outcome, and I'm going to hold onto those positions. As I've remarked elsewhere, I feel unequal to the task of trading the ka-, and I'm prepared to wait up to two years for -poom. If, along the way, it becomes apparent that -poom isn't going to happen, then those speculative PM positions turn into expensive currency crash insurance, and I move along with other ideas.

[metalman]

Re: Is it Time to go Long?

I just went long with my 401K into US equities.

you figure all of the debt that started the debt deflation bear market this year is gone, eh?

I am doing this because I see more chance of an upturn than a downturn at this Juncture at least till next April 2009.

what's special about april 2009? tell it to the japanese.

I could be wrong and I am ready to take a loss if it happens because I am not leveraged. I am not a Trader, so my knowledge is very limited.

what is your thesis? rule #1 of investing: avoid losses.

Any one want to comment on their positions.

still in the itulip camp... 85% cash, 15% gold. since i bought gold is up 2.7x and stocks flat. cash (treasuries) have kept up with inflation. time spent messing around with stocks, tossing in bed at night, & arguing with & paying for trading 'experts' on the internets: 0.

[rdgmail]

Re: Is it Time to go Long?

I personally think a non-trader should wait for the housing market to bottom, unemployment to contract, consumer confidence to rise, the impact of heavy government intervention in the banking system to become apparent, etc. etc. etc. for a minimum of 2 quarters before buying back into the stock market. What about these fundamentals makes you think you see the light at the end of the tunnel, or indeed basic economic stability?

Ash: Like others, I struggle with when to get back in the market. It seems to me that once all of the things you mention occur, the stock market will have already gone up 10, 20, 30, 50 or 100%?. The stock market historically turns about 6 months before the real economy turns, so your criteria for a non-trader might seem safe, but could result in opportunity lost. To make money, you have to get in when things look really really ugly, like when your taxi driver or barber brags about not owning any stocks or houses. Of course, I'm essentially advocating buying at the bottom, or at least a theoretical bottom, which is admittedly impossible to determine, and I'm also assuming that market-wide p/e ratios will reach that of prior recessions and depressions. We're not there yet. The wild card, of course, is that if the "e" of p/e keeps going down, it could take a really long time to reach bottom. Debt and credit deflation is funny that way.

With all of that said, I'm beginning to figure a strategy of when and what to buy as things deteriorate (whether or not at the absolute bottom). My idea at this point is to identify individual companies that are cash rich, have little or no debt, provide necessities or near-necessities, and whose products require relatively little fuel to produce. Ideally, this list would also include a number of foreign companies whose revenues are generated in something other than dollars. In the event the dollar partially or fully collapses, it would be nice to have equity in some strong foreign companies with a low correlation to life in the U.S., if that is possible.

Although my research has only just begun, I am already amazed at how much debt nearly every US public company has on its books (and this assumes they are reporting their debts accurately). This makes it easy to exclude the vast majority of companies from investment consideration, but also heightens my worries that a self reinforcing debt deflation is more than just an intellectual curiosity.

[LargoWinch]

Re: Is it Time to go Long?

still in the itulip camp... 85% cash, 15% gold..

So your gold holdings are down 5 pct points then... You sold some gold or that previous 80-20 allocation fluctuated with cash inflow or change in gold prices?

[jimmygu3]

Re: Is it Time to go Long?

what's special about april 2009? tell it to the japanese.

The NIKKEI went from roughly 22,500 in late 1990 to 26,500 in April '91. If you timed that dead cat bounce perfectly you could have made 17% or so, otherwise it was flat most of the year. If you didn't get out until April '92 you lost 25%. And that wasn't even a global depression.

I'm not trying to time the market so much as rebalance and lock in gains. I plan to cover some of my short positions soon. They have grown to about 18% of my portfolio and I plan to cut that in half. Some are up over 100%, so I could take my initial investment back off the table and still have a 9% allocation. Almost did it today until that late rally.

Jimmy

[Chris]

Re: Is it Time to go Long?

Not yet time to go long, IMO. Even the start of a rally could fail first time and you don't want to be long and wildly confident if that is the case. There are some stocks that look like buy and holds for the long term - selling at below cash - but even they *might* trade sideways or lower for a long time.

I was looking to short the long bond as the next trade but that baby isn't slowing at all.

[ASH]

Re: Is it Time to go Long?

Ash: Like others, I struggle with when to get back in the market. It seems to me that once all of the things you mention occur, the stock market will have already gone up 10, 20, 30, 50 or 100%?. The stock market historically turns about 6 months before the real economy turns, so your criteria for a non-trader might seem safe, but could result in opportunity lost.

No argument there. There is definitely an opportunity cost associated with waiting for clear signs of a recovery, and there are definitely riches to be won by being an astute trader. I just think that if one's self-assessment is that they're not a great trader (yet), then it would be better to stick to less risky plans, and accept lower returns (for now). A once-in-a-century financial crisis may present once-in-a-century opportunities, but it's a hell of a time for a novice like myself to be making tough timing calls. I'll leave that to more experienced traders... maybe I'll learn something.

[blazespinnaker]

Re: Is it Time to go Long?

I just went long with my 401K into US equities. I had moved my entire 401K from US Equitites to Money market account in Feb 2007 when DOW was around 13,000. I had done this then because I thought there is more downside risk than upside and was willing to forfeit any profit if it happened - I was lucky it did not happen.

I went long with UYG at $5.86 yesterday .

I am doing this because I see more chance of an upturn than a downturn at this Juncture at least till next April 2009. I could be wrong and I am ready to take a loss if it happens because I am not leveraged. I am not a Trader, so my knowledge is very limited.

Any one want to comment on their positions.

Funniest iTulip Post Ever.

[Tulpen]

Re: Is it Time to go Long?

I just went long with my 401K into US equities. I had moved my entire 401K from US Equitites to Money market account in Feb 2007 when DOW was around 13,000. I had done this then because I thought there is more downside risk than upside and was willing to forfeit any profit if it happened - I was lucky it did not happen.

I went long with UYG at $5.86 yesterday .

I am doing this because I see more chance of an upturn than a downturn at this Juncture at least till next April 2009. I could be wrong and I am ready to take a loss if it happens because I am not leveraged. I am not a Trader, so my knowledge is very limited.

Any one want to comment on their positions.

For all intents and purposes the stock market crash may just have started and you could see your 401k flushed down the drain in just a few days particularly with a leveraged ETF like UYG.

But regardsless, UYG is a traders tool not an investment tool. It is a great tool for trading intraday or over the cause of multiple days with strong momentum but not for any kind of long term investment. You say you are not leveraged but you are leveraged with this tool. Also you are not diversified with this fund.

UYG is based mostly on swaps in order to seek twice the daily returns of the Dow Jones U.S. Financials index. However twice the daily returns does not become twice the returns over longer periods.

Not a good idea IMHO.