
Is Now the Time to Buy Stocks? - peter123
http://online.wsj.com/article/SB122645226692719401.html?mod=rss_opinion_main
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tomsaffell
_I fear I may be breaking with etiquette here, so please let me know if I am,
and then I will remove this comment.._

I did an analysis of this recently, available at:
<http://saffell.wordpress.com/>

My conclusions:

1\. Now is a better time (on average) to make a 5-10 year investment than a
random point in time is.

2\. For 20-30 year investments, the recent fall in prices make little
difference to returns over such a long period.

This is all based on historic data (from 1871 to 2008), which, as we all know,
is no guarantee of future performance..

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davidw
What would be breaking with etiquette about your post? Unless you ripped off
the data in your blog post or something, it's informative, interesting and
polite.

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vaksel
a lot of people don't like "blog spam" so it gets looked down on, not saying
this is, but to many people the common idea is that if you see it on a blog,
its just copy pasta from a legit source.

~~~
davidw
If people post links to things they've taken the time to write themselves, I'm
more than happy to see them. By all appearances, this is something he did
himself.

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13ren
According to Warren Buffett, don't buy a stock, buy a (part of a) business:
Find a good business to buy. If the price is right, buy it. It's like buying
anything, really.

In a market where all stock prices have fallen dramatically, you'll be able to
buy it cheaper than before - but note, it might still be too expensive.

The trick is in recognizing a good business and valuing it - but that's much
more doable than deciding whether to "buy stocks", because it's more definite
and specific.

To put it in perspective: it's what ycombinator does.

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eleitl
Warren Buffett (assuming his performance is not due to chance) buys things he
understands. He also has deep pockets.

For normal investors, in ordinary times one should pick up an index fund
(roughly one third of your total investments, the rest of them are not stocks)
and hold unto them until you retire. The formula can be bend slightly
depending how far you are from retirement.

Of course these are not ordinary times.

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tyn
As I have pointed out before, "deep pockets" is actually a disadvantage

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13ren
Yes. Warren Buffett has gone on record saying that if he only had a million
dollars to invest (as opposed to umpty billion dollars), he was sure he could
double it in a year. His problem is that there just aren't that many multi-
billion dollar investments around, and those that are, are well known, and
therefore accurately priced. Maybe also, for the same reason, it's hard for a
massive company to keep growing (a smaller co has more room to grow).

With a million or less, he could assess the small companies that aren't
covered by analysts and so on, to find one that was (1) great (2) cheap

The lack of _money_ is not the deficit that stops you (and me). Mostly, it's
effort, and self-confidence in your own considered opinion when it is contrary
to everybody else. To buy when others sell - because you've done the research,
and trust your judgment. It's mostly an emotional or moral quality. If your
judgment is wrong, you have a lovely _learning experience_ that cannot be
obtained in any other way (and Warren Buffett has had that experience).

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tlrobinson
He should have a little fun and set aside a million bucks to try to double
each year. It's not like he _can't_ make smaller investments just because he
has billions of dollars.

Of course if he announced which stocks he picked at the time he purchases them
the price would probably increase. Heisenberg and all that...

I often wonder if people like Jim Cramer end up manipulating the market just
by talking publicly. And is it illegal? If Cramer says "I just bought such and
such stock and think it's a great buy", and the price goes up because of it,
and he sells his shares for a profit, is that illegal? He simply stated a fact
and his opinion. Where is the line drawn?

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imgabe
I think the SEC has rules about when people like Jim Cramer are allowed to buy
and sell stocks that they talk about publicly. He wouldn't be able to buy a
bunch of shares of Company A, then go on TV the next day and say what a great
buy it is, then sell it when it goes up the next day.

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alecco
Not for me. When this kind of crisis hit a bottom it plateaus there for a
while and doesn't suddenly spike up 30%. In fact, in that graph the top curve
follows the bottom curve, except the last bit. Based on that they should
predict dividends will collapse soon dramatically.

They either didn't base their argument well or are completely delusional and
can't read their own graphs.

And this current crisis is all about prediction based on past data can be
plain wrong. See: <http://news.ycombinator.com/item?id=360412> The End of Wall
Street (HN main page today. Beware it is _very_ long!)

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fauigerzigerk
Oh the market does spike. Just look at the recent month. You just don't know
in which direction and whether a further leg down is in the cards. At the end
of the day market timing is a game that makes the end of your day come so much
quicker, and I'm asking myself, what have I achieved in terms of innovation?

Unless you do it algorithmically, it's incredibly boring, but once you have
started it's hard to stop. Market timing is an addiction :-|

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siculars
yes, yes, yes. stocks with dividends. stocks that have been crushed. big name
companies that have been around for a long time and will continue to be.

appreciate your downside risk against your upside potential. if you fear the
market will go to zero than we will all have much bigger problems than
counting our returns.

if you have any faith in the american model than you must conclude that this
too shall pass.

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alecco
Like GM?

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Retric
I am not saying you should buy GM but if a 3rd party where to get interested
and do a leveraged buyout they could make a lot of money or if the government
does a big bailout you could make a lot of money etc. The real problem with GM
is they are not making money today so they might not _continue to be_.

PS: Options on GM stock could be a good investment of you are willing to take
a lot of risk.

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metaguri
the point isn't that we've necessarily hit the bottom. if you look at the
dividend/price chart, we're probably heading into a big "hill" just like some
of the early ones (we've only begun to swing up.

the point is that things are relatively cheap where we stand today. they may
get cheaper, but they may not. look at your downside risk (missing 25% of a
bigger bottom) vs. upside risk (we've already hit bottom).

or, if your nicholas nassim taleb, you think that you'd be crazy to make any
decision based on the graph, because tomorrow everything could go to zero, and
you'd be broke.

i'm thinking of shifting part of my portfolio to stocks. but given volatility,
like the article says, it's going to be a small segment, and i can allocate
more as it goes up. but i'm investing in the long term, and if the S&P goes to
0 then i won't be worrying about money. i'll probably be worrying about people
trying to break into my house and steal my cans of campbell's.

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timae
Answer: Yes. Now is probably the best buying opportunity in your lifetime
(assuming you're 18-30).

Buy the fear, sell the greed!

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aneesh
I'm probably paraphrasing someone here, but ... by the time you start seeing
articles like this, chances are you're late already.

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peter123
i think if you invest for the long term (3 yrs or more), a lot of stocks are
still undervalued at this point... and they continue to fall as we speak.

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aneesh
Which is what confuses me. How can there be a consensus that something is
undervalued over a period of time ... wouldn't the markets just correct the
price quickly?

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tyn
Markets are not efficient

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aneesh
That's one possible explanation.

The other explanation is that investment firm XYZ is wrong when they say that
a particular asset is undervalued.

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jmtame
Answer: No.

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david927
If lotteries are a tax on those who don't understand odds, buying in the
current market would be a tax on those who don't understand what's happening.

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eleitl
Why does his graph start with 1945, and not, say, with 1890?

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TweedHeads
AAPL and YHOO

Both are cheap, both will double in a year.

Mark my words.

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cosmo7
Toss a coin; it will be heads. I guarantee it.

