Are Stocks the Bargain You Think?
A surprisingly good article from the New York Times. Here is a snip:
Some of the country’s most famous investors, including Warren Buffett and John Bogle, have started to make the case that it’s time to dive back into the stock market.
...
But there is another argument that deserves more attention than it has gotten so far. It’s the bearish argument that is based neither on fears that the country may be sliding into another depression nor on gut-level worries about the unknown. It is based on numbers and history, and it has at least as much claim on reason as the bullish argument does.
It goes something like this: Stocks are truly cheap only relative to their values over the last 20 years, a period that will go down as one of the great bubbles in history. If you take a longer view, you see that the ratio of stock prices to corporate earnings is only slightly below its long-term average. And in past economic crises — during the 1930s and 1970s — stocks fell well below their long-run average before they turned around.
Buy when you're convinced they've hit bottom.
J. Paul Getty made the bulk of his fortune by buying stocks during the first great depression.
-jcr
Stocks, like any other investment, are about timing.
Mr. Buffet's (a globalist) opinion does not count. He is known for his ability to "buy right" and to this I say good for him.
The time to buy is when it is right for the individual investor.
It take a lot of courage to buy stock, or anything else for that matter, when there is blood in the streets.
Once you understand what a share of stock actually is, you realize that the stock market is fraught with risk. Due to the power of the financial industry and their marketing many average Joes think that investing in the stock market is conservative.
It is most certainly NOT.
If the company you have invested in goes sour you will lose everything. Take it from me, I have.
In the same breath an old friend bought IBM in 1952 and held. He, and many others, were able to stay ahead of the ridiculous inflation curve with a buy and hold strategy with a company that ended up being one of the largest in the world...luck? Yes. What about the other stocks that bellied up? No one like to talk about them...do they?
If you had bought Cisco systems in 1989 you would have done very well. I will add that the stock went from pennies to 80 and then 19 and has been there for almost 8 years. So in the last 7 years csco has been a lousy investment. Timing just bit you in the a$$ on that one.
It is extremely difficult to define which will be the next IBM. Try though, because this is America and that is what we are about. We take shots and that is why we are the greatest country in the world.
Now for the bad news. The stock market is a casino. It is regulated by the
same guys that own it. When you arrive at the stock market you are a sheep.They are eyeing your wool and figuring out how to make some sweaters.
There are two sides to every trade and "they" usually are on the correct side. Just like the rest of the planet the media is "owned" by the folks who own the casino.
Thus, look at you stock investment as you would the roll you take to the black jack table....don't take more than you can afford to lose. It is not a conservative investment.
A mutual fund is just a nice way to trick you into feeling you are making a conservative investment....welll...if you are "in" a commodity fund you have had your a$$ kicked this month...so don't buy the "safe" angle.
The other issue that I personally don't like about mutual funds? You don't get the "Cisco." Sure you get the up move but you only get a fraction of it. Yes you "lose less" in a bad market, but you still lose and you don't get to brag about paying $6 bucks for a $87 dollar stock.
I suggest to everyone to stick with bonds that you have carefully researched. Then you gamble a little at the casino on the side. Always remember...YOU MUST RESEARCH THEM YOURSELF. Researching is fun.
Too much work? Stop complaining and get a CD....research those too...regulatory requirements force the CD issuer to state where the money is....hopefully not in mortgages...right?
Good luck, I know a housing stock that has $28 a share in cash and is trading at about $31. If you don't understand what I just said, buy some CD's and start studying...ignorance may be bliss in life, but, in the market it means losing all your money.
T
Article insight of bailouts/wallstreet
In a section, of Bad Money, called “The Evolution of Critical Derivatives, 1972-2005,” we learn of the origin of the derivatives most closely connected with the current crisis, “So-called risk management techniques proliferated in the 1990s and thereafter, but the products that became famous in 2007-8 (mortgage-backed securities, collateralized debt obligations, collateralized mortgage obligations, credit default swaps) had varied origins, catching hold in the 1990s but ballooning in the 2000s. Mortgage-backed securities (MBSs) arose from the secondary market in 1970, and in 1983, FNMA introduced the first collateralized mortgage obligation (CMO). Sperry Leasing Finance Company developed the first asset-backed security (ABS) in 1985. The collateralized debt obligation (CDO) was invented in 1987 by Drexel Burnham but developed during the 1990s. Credit default swaps (CDSs) came into use during the early 1990s, but their volume metastasized only during the 2000s.”
Efforts to regulate the estimated $531 trillion derivatives market have been blocked since 1997, and are not addressed in the bailout.
Now, add secrecy.
In the May 23, 2006 BusinessWeek, in an article, “Intelligence Czar Can Waive SEC Rules,” it was revealed that on May 5, 2006, President George W. Bush gave his presidential powers to intelligence czar John Negroponte, in order to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. BusinessWeek states, “Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office.”
The article states, “Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act…A trip to the statute books showed that the amended version of the 1934 act states that ‘with respect to matters concerning the national security of the United States,’ the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate ‘books, records, and accounts’ and maintaining ‘a system of internal accounting controls sufficient’ to ensure the propriety of financial transactions and the preparation of financial statements in compliance with ‘generally accepted accounting principles.’”
Full article here:
http://www.finalcall.com/...
Stocks are like a good boob job ...
socks, prostitutes, and everthing else ...
they are worth what you are willing to pay for it.
Would you buy anything without compare shopping ...
If your answer is yes, then I would say stay out of the stock market.
WAHOR!!
http://www.dailypaul.com/...
You can't just sit on US Dollar in cash
You gotta' do something. These are the times that a few prescient moves can pay off big. I'm sticking with Peter Schiff and keeping an eye on what Gary North says too.
"The question is not who will let me- the question is who will stop me" - Ayn Rand
Water purification...
In large developing countries is a sure bet. Reverse osmosis, desalination.
International Stocks is the only play
Dollar goes down the relative value of foreigns goes up. The value of foreign dividends goes up. - Unless your ballzy enuf to risk it all on gold GLD or short the dollar UUP/UDP
"The question is not who will let me- the question is who will stop me" - Ayn Rand
I will buy in 4 or 5 years
I will buy in 4 or 5 years when the dow sits at 700...... ask Prechter!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
The Stock Market is a scam
This is an excellent podcast partially explaining how the stock market went nuts about thirty years ago:
http://feeds.feedburner.c...
Or if you want to listen to it in-browser, go to http://freedomainradio.co... - it's podcast #9.
I wouldn't go near the stock market.
Just like the Bellagio in Las Vegas...
The house for the most part, (97.4% of the time) wins.
I don't think it
is a good time to buy. I think they should wait til after the election to see what the new fellow will do. Very uneasy times.
Interesting article...
Especially this part:
The 10-year price-to-earnings ratio tells an incredibly consistent story over the last century. It has averaged about 16 over that time. There have been long periods when it stayed above 16 and even shot above 20, like the 1920s, 1960s and recent years. As recently as last October, when other measures suggested the market was reasonably valued, the Graham-Dodd version of the ratio was a disturbing 27. But periods in which the ratio has jumped above 20 have always been followed by steep declines and at least a decade of poor returns.
The 27 certainly seems alarming.
I also didn't know Buffet was guaranteed 10% returns. They failed to mention that small detail when he got big into stocks.
I have no motivation to buy any stocks. Yet, I'm not sure what to do with my investments. I already have some gold, probably will shift to more but don't want to put all eggs in one basket.
I'm in the process of moving my funds to Schiff's company. We'll see what they recommend.