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"occurrences that nobody was aware of and that were only understood afterwards"

Umm, I'm no genius but I was managing my mother's money at the time of the 2008 crash. It was very obvious to me that there was going to be a crash, I pulled out of the market in late 2006 and didn't lose a dime in the crash.

I think the better statement is "The 2008 crash was obvious but many people were in denial".

Again, I'm not a financial wizard, I could just see the writing on the wall on that one, everyone was getting approved for houses they couldn't afford, you just knew that was not going to end well.




You can see the writing on the wall now, with stocks being pumped up around the world by central banks and with margin debt at an all time high.

The problem is, it could be years before there is a collapse, or it could be tomorrow. That's a lot of yield you might be losing out on. A near similar argument could be made in 2014. You probably could have doubled or tripled your money in that period.

And even if there is a correction, not all equities will decline significantly (some will stagnate, or just decline a few percentage points, some will still double), whereas others will lose 80% of their value.


> The problem is, it could be years before there is a collapse, or it could be tomorrow. That's a lot of yield you might be losing out on. A near similar argument could be made in 2014. You probably could have doubled or tripled your money in that period.

All true. I think what makes sense then is not to get out of the market entirely, but depending on your risk tolerance, simply re-balance so that you own less stocks at a time like this, while holding more cash or alternative investments.


Look into structured notes. You can get some gains with sort of an insurance policy.


I just started reading about structured notes.

How does one go about actually purchasing them? It doesn't seem they're available through typical online brokers like Etrade or Scottrade.


Predicting a crash is easy but timing it with accuracy is extremely difficult. In fact you were two years too early and lost out on a lot of potential return.

There will always be a crash/correction. Easy. But when?


Completely agree. Yeah luckydude I can say with 100% certainty that if you took all of your money out right at this moment, you won't lose any money in the next crash. Give me the nobel prize in economics guys.


unless the 'next crash' is runaway hyper inflation.


Great point! Important to look at crash in real, not nominal, terms.

More: https://en.wikipedia.org/wiki/Money_illusion


The correction will happen immediately following the moment the tape prints it. It always has, it currently is, and will continue to do so in the future.

The problem is people aren't watching the tape. It's thought of "too hard"(by those who fail), which is another way of saying their net ability is inadequate for a career in trading.

The market has always told us what it is going to do, seconds before it happens. You have to be willing to watch those seconds though, and capable of interpreting the tape during them... 1 day candles? too late. 30m candles? too late. 1m candles? maybe, but overall too late. The timeframe you are looking for is "real time", which is present in time and sales(and nowhere else). Anything else is inadequate for consistent profitability, but there is no shortage of people failing to be the exception.


You did well (you are a lucky dude), but I'm sure there was someone else who pulled out in 2003 and looked foolish.

If it was obvious, more people would have pulled out.


A crash is simply the result of it becoming obvious that the market is overvalued, is it not? Everyone heads for the exit at the same time.


Not really, it can be obvious the market is overvalued, to the point where almost everyone agrees this is true, but there is still money to be made and the momentum is still upwards so it keeps getting even more overvalued. A trader doesn't care how overvalued a share is compared to fundamental economics, he cares whether it's overvalued compared to it's likely price tomorrow or in 10 minutes, or in a few milliseconds. Then something happens that makes it real, like Lehmans being unable to meet its obligations.


Yeah, there were a huge number of articles in 2006 with a theme of market doom and housing debt and CDOs being the culprit.


So you pulled out in 2006... When did you get back in? Timing the market is hard...


Like I said, I'm not a financial wizard, so I'm mostly in cash and I've missed some upside. Not completely, have a pile of Apple stock that's done well, but I'm not the right guy to be managing money. So I've moved most of it to a guy at Morgan Stanley that a friend has been using for a long time.


What are you paying, out of curiosity? 1% of AUM?


It varies based on what gets traded. And I don't really know because I stopped thinking about what I was paying and started thinking about what I'm earning. I really don't care what his cut is if I'm netting 3.75-4.0% on average.


If that works for you, that's fine... It's your money. You're probably paying this guy 1% in fees and expenses, minimum.

To be frank, 4% is not good. For comparison, my Vanguard account, which is mainly low cost ETFs and index funds, has had a 11.8% average annual return over the past 5 years.


Enjoying those fees?


Are you in the market presently or have you pulled out again?


Mostly in cash but I would not base decisions off of where I am. Investing is complicated, I've decided I suck at it and have handed it off to someone with a good track record.




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