Is the market overdue for a pullback like we had in February? I am a new member and I am wondering if it would be wise to wait for a pullback or buy now?
Putting your money in the market can feel very risky and hurt--especially short-term losses. Especially when Mr. Greenspan is yammering (probably rightly) about China's markets. Not putting your money in and watching it go up while you're on the sidelines can make you feel silly. The worst is when you're hanging out on the fence, with these two feelings pulling you back and forth while you get sawed to pieces. So with that in mind, let me try to pull you into the pool.Absolutely, the market is due for a pullback. But it might go up some first. After the pullback, it's going to go up again and crash, maybe 1%, maybe 20%, and then go back up. Repeat until forever or extinction event. :)Buffett says he can't do forecasting and doesn't see the point. "I don't care about a possible recession; I don't spend a minute thinking about it. The next 20 years should be good; we're in the game forever. We focus on things that are known and important. We don't know how to forecast, it's meaningless to us."-w.b.Buy great companies, or distressed ones or whatever your mojo is. You'll be fine. If you really think the market is going to tank in six weeks, then OK. Stay out and go shopping when everything's on sale. But it's a really great market right now for bargains. Maybe it always is, I dunno. Haven't been doing this long enough. Seems like it.Personally, I hope we get another February (or May 06) really soon to yank down some prices. Boy, would I love some more NUAN at $8/share. :)My take is: If you don't understand it, don't buy it. (Although, this has cost me a lot of money by not buying BWLD, which still, if you'll pardon the pun, bewilders me.) If you need the money, keep it out. I don't invest in securities, for example, with the money I need for paying taxes or mortgages, because inside a month or a year, it might get cut in half. If you understand the business(es) and they're good ones and good values, get in the pool and stay in. Building positions in thirds can help shield you from some financial risk and mental shock. If you feel global financial disaster is imminent, get your next third at half off!
Thanks for the reply.Sitting on the sideline when stocks like CTRP and BWLD go no where, but straight up is frustrating. Especially, when I thought about buying these stocks, but listened to nay sayers repeating "sell in May and go away." I waited (still waiting) for a pull back to buy and missed out on some terrific gains. I like the idea of buying a little now and even more on a pullback. I may have to redefine my strategy to an investor instead of a trader. It's hard to stay ahead of the game as a trader with comissions and short term tax gains.
Well, there are lots of ways to make money. Good traders should trade. Good investors should invest. I think, though, that investors probably sleep better. They can concentrate on their jobs and know that in general, if they've picked the right companies, a 10% or 40% drop doesn't mean anything since they're on a 10-year horizon. BWLD. Man, I still don't get it.
I joined MF because of the insecurity I found at the end of the 90's and then "the bubble"Looking back at the dotcom days and smaller peak and valley pullbacks since then (including the recent China adjustment)it is obvious the main culprit in stock ownership ..... P/E ratio.Man, we were running up stock prices and convincing ourselves that P/E ratios were like speedometers telling us how soon we could be rich.Little did we know (or accept) at that time that P/E ratios were really Tachometers predicting where the "Red line" was on those paper tiger's engines. Even the recent China pull back was similar.If what you buy is a solid company with good financial's and a growing product offering, in my opinion you cant lose long term.How do I define losing? You must have a benchmark. For me its that today a 1 year CD pays 4.83%. If I can get more than that from my portfolio, I win.Am I happy with 4.83%? No, I do prefer 20+ percent overall and love that feel when you grab that "perfect stock" that shoots up and up. IMO though, if you cant set a baseline of "when is a loss a loss", you will run off chasing rainbows and moving trains rather than firm foundations.Until someone can figure a sure fire way to predict a stocks peak high value before the fat lady sings, I am more than comfortable to buy into company's who's track record and potential is in it's financial's rather than today's hype and get consistent returns rather than trying to jump from fast ride to fast ride.MF has allowed me the luxury of focusing on a few company's that fit the bill and a couple "fast rides" to add a touch of excitement.Bears
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