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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: The Zen of "Fixed-Income" Date: 2/27/2007 3:16 PM
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Some of us remember the stock market collapsing in 2000, when the Tech bauble burst. (I know you old timers were around for the mechanized sell-off in '86. I fear a lot of the younuns on the index board, who compare sizes of their annual returns, are in need of sell-shock therapy.)

I happend to notice the stock market is having a downer day, and the Chinese, who are new to momentum trading, had a serious hard time, which may have more important ramifications.

But at the moment, I'm mostly worried what yields will be in a couple of months and whether to push my luck with Pen Fed tomorrow to the tune of an extra $500.

I expect the stock market will still better than other options I would consider between now and when I might need to cash in some of my chips in another 25 years or so.

It really is nice not to care what the game players are up to.
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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19896 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 4:05 PM
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Some of us remember the stock market collapsing in 2000, when the Tech bauble burst. (I know you old timers were around for the mechanized sell-off in '86. I fear a lot of the younuns on the index board, who compare sizes of their annual returns, are in need of sell-shock therapy.)

It was '87. And I remember.

I happend to notice the stock market is having a downer day, and the Chinese, who are new to momentum trading, had a serious hard time, which may have more important ramifications.

But at the moment, I'm mostly worried what yields will be in a couple of months and whether to push my luck with Pen Fed tomorrow to the tune of an extra $500.

I expect the stock market will still better than other options I would consider between now and when I might need to cash in some of my chips in another 25 years or so.

It really is nice not to care what the game players are up to.


I don't know if anyone really has such a luxury (of not caring about the "game players").


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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19897 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 4:22 PM
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I remember 1987, very well. In fact, I just told DH about it, when he said, "Could a drop in the Chinese market really cause such a large, sudden drop, in the U.S. market?"

You bet your bippy ;-).

Remember, in 1987, it started with the Thai baht.

Today's correction is relatively small. I am hoping for a 1987-type correction (say, 20-25%), which would be a drop of, say 2500 to 3000, on the DJIA. A drop of the DJIA to below 10,000 would be the start of a buy signal, for me.

When the dividend yield on quality stocks (e.g. XOM, GE, JNJ, IBM, MMM) exceeds the yield on the 10-year Treasury, I will buy, with both hands. That's what I did, in October 2002.

Wendy

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Author: Cash333 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19898 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 5:55 PM
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As Buffet said, if you can't withstand a 50% correction you shouldn't be in stocks. Damn cash looks great.

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Author: ranshdow Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19899 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 7:11 PM
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Some of us remember the stock market collapsing in 2000, when the Tech bauble burst. (I know you old timers were around for the mechanized sell-off in '86. I fear a lot of the younuns on the index board, who compare sizes of their annual returns, are in need of sell-shock therapy.

Don't remember '86, or '97 for that matter, but I do remember 2000-2002. Lost over 60% on biotechs and frauds before it was all said 'n done. Can I be blamed that my first ever stock purchase was a paper ten-bagger inside of six months? ;)

Today my equities are down 2.2%, comparing somewhat favorably with the rest of the mkt. "Relative outperformance"? ;D



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Author: kentm401 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19900 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 9:03 PM
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Yupper....Wendy & me "think alike"

aside: Oct 87 wasn't a currency "fire" (it was a programed trading debacle) - the Thai bhat was the cause of the 98 LTCM debacle.........

When the dividend yield on quality stocks (e.g. XOM, GE, JNJ, IBM, MMM) exceeds the yield on the 10-year Treasury, I will buy, with both hands. That's what I did, in October 2002.
Wendy


I guess that's what happens to we few that have been around this block a few times.....And don't ignore the REITs, even the mREITs will do well in a declining FFR environment.

KBM (not yet "buying" - but brushing up on "wish-lists")



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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19901 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 9:09 PM
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I remember 1987, very well. In fact, I just told DH about it, when he said, "Could a drop in the Chinese market really cause such a large, sudden drop, in the U.S. market?"

You bet your bippy ;-).

Remember, in 1987, it started with the Thai baht.


No, the Thai Baht crisis was in 1997. In 1987, the crash has no apparent immediate cause, however it was blamed on "program trading", "portfolio insurance", an early storn in London, and many other things.

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19902 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 9:42 PM
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Well, today my net worth (excluding property) dropped maybe 1.5%. My net worth in mid-2002 was much less than in 1999 including having been talked into tech after the first crash by a "financial advisor" (i.e., broker), despite saving lots of new money. Now, some of that has regained value by putting new money in during the down market. But, the fact is, I'm going to be putting about 2/3 as much into Pen Fed between yesterday and tomorrow, about half from a rollover CD, as I lost on stocks today. It makes sitting out crashes much easier.

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19903 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 9:55 PM
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(Ken:)aside: Oct 87 wasn't a currency "fire" (it was a programed trading debacle)
______________________________
My recollection was that it was a piece of bad news, that should have been routine, about the trade deficit. This provoked a sell-off in a market that had been rolling straight up (think "irrational exuberance".
The DJIA went down about 500, from about 2200 to about 1700 that day, or 22%.

You're right that program trading threw extra weight on top of a slide, and helped turn it into an avalanche.


Bill

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19904 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/27/2007 10:42 PM
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Some analysis of today's doings, including some unwinding of carry trade.

http://www.nytimes.com/2007/02/28/business/28stox.html?hp

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Author: kentm401 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19905 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 7:54 AM
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U're correct......iirc the "bad news" was a one of event...but the programs (infancy @ the time) excerbated the slide in the afternoon...

You're right that program trading threw extra weight on top of a slide, and helped turn it into an avalanche.
Bill


And in the "aftermath".....caused the NYSE to institute both "curcuit-breakers" and "Curbs" the next month Dec iirc?

22%>3.6% so I'll wait abit thankyou......LOL

Technology is "wonderful" thing; till it's not.....

KBM ("human's" some-days can do it better........;o)



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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19906 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 8:35 AM
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Pearlstein in Post:

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR2007022702035.html

He's one of those who thinks cheap money (carry trade, derivatives, etc.) has led to asset bubbles, low risk premiums, all over, and even if yeserday was just a blip, something has to give, sooner or later.

My view of economics has always been that money doesn't make money. You can't create real, permanent, wealth by moving money around faster and faster and with variations of buying on margin. At some point the numbers have to add up.

If stocks lose 25%, maybe that will put me in a buying mood. 3% is nothing. And I see on Bloomberg, Treasury yields are back up some, this morning.

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19907 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 9:45 AM
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No, the Thai Baht crisis was in 1997. In 1987, the crash has no apparent immediate cause, however it was blamed on "program trading", "portfolio insurance", an early storn in London, and many other things.

Who said that 7 is a lucky number--1987, 1997, 2007. Could this be the 10-year itch?


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Author: brucedoe Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19908 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 9:59 AM
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Yes, I think years ending in seven are lucky. Don't forget that by yearend the DJIA and the S&P500 were in the black for 1987, 1997, and I expect 2007 to be no different.

brucedoe

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19909 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 10:31 AM
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Yes, I think years ending in seven are lucky. Don't forget that by yearend the DJIA and the S&P500 were in the black for 1987, 1997, and I expect 2007 to be no different.<?i>

Heck, I survived the interest rates and tax rates of the 70s, also a 7. I don't worry about the short-term when it comes to interest rates or stock prices. Buy and hold got me where I am today, and hopefully it will sustain me till death. Yes, I pay attention to my portfolio, but I've been happy with the basic diversification, so I haven't done much for years, other than watch the portfolio grow.


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Author: Tredos1 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19910 of 35400
Subject: Re: The Zen of "Fixed-Income" Date: 2/28/2007 11:25 AM
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Well, today my net worth (excluding property) dropped maybe 1.5%. My net worth in mid-2002 was much less than in 1999 including having been talked into tech after the first crash by a "financial advisor" (i.e., broker), despite saving lots of new money. Now, some of that has regained value by putting new money in during the down market. But, the fact is, I'm going to be putting about 2/3 as much into Pen Fed between yesterday and tomorrow, about half from a rollover CD, as I lost on stocks today. It makes sitting out crashes much easier.

I lost between 3 and 4 % yesterday but I'm still up for the year so it doesn't cause me any concern, the year is young yet :)

Tony

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