: How Things Have Changed



tojo
2009-07-23, 05:07 PM
Wow....how things have changed in just a few months.

Just four months ago, many were calling for the end of the world, a repeat of the Great Depression - basically total doom and gloom.

Now the Bank of Canada has declared the recession over and not only that, this would be one of the shortest downturns ever: http://www.theglobeandmail.com/report-on-business/recession-over-growth-resumes-bank-of-canada/article1228484/.

Since March 9th the market has gone almost straight up - but at low and somewhat unconvincing volumes. This left many retail, institutional investors, and money managers in the dust, praying for another downturn that never quite materialized. Now after a good run, do you see another leg up? or has the market already factored in the supposedly good times ahead. For myself, I've secured my positions and asset allocations - and will coast along for good times or bad...what are your plans?

Rickson9
2009-07-23, 06:07 PM
Times change but cycles are always the same -the cycle of greed and fear. When the market is booming, the bulls are out on the streets and greed is in the air, save your money. When the market is tanking, the bears are crying and fear runs rampant, invest like crazy.

I've heard it mentioned that more millionaires are created at the end of recessions and depressions than at any other time and I can believe it. We made a lot of money in the last recession and we're looking to make a ton more in this one.

People were going into cash and we went full out into dirt dirt cheap stocks.

tojo
2009-07-23, 06:16 PM
We made a lot of money in the last recession and we're looking to make a ton more in this one.

People were going into cash and we went full out into dirt dirt cheap stocks.

Well if it is truly the end of the recession and consumer confidence has returned then you will do very well for yourself - being fully invested in stocks.

I took a more conservative route and took a fairly large position in fixed income as well. I'm currently sitting at 2% cash so basically fully deployed - never been so low in cash - full steam ahead for better or worse :p.

humble_pie
2009-07-23, 08:16 PM
hmmmmn. Far, far away in the mist-shrouded highland valleys one can hear the faint call of the hunter's horn. These are the first notes of what could turn out to be a buying mania, as institutions scramble on board to try to scoop up a few of those 20-40% returns.

a full-blown mania such as we saw in the tech boom in the early part of this decade would take 1-2 years to develop, imo, so it's early yet. As soon as we see the first pundit opining that this-market-is-different-here's-why-it-can't-go-down, we'll know we've entered middle mania. But i haven't seen any hint of this yet.

$1600 Gold by 2011
2009-07-24, 03:44 AM
Richard Russell (Dow Theory Letters): Are we in a bear market rally or a new bull market?
“(1) The market turned up in a V-shaped reversal off the March 9 low. However, almost all bull markets start with a period of accumulation. This entails a sideways move, sometimes taking weeks or even months. Or it may require a non-confirmation of the Averages as per December 1974. At the March low, we saw neither - no indication of accumulation. And that bothers me.

“(2) At the March lows, we did not see the ‘great values’ that usually accompany major bear market bottoms (i.e. P/E’s in the 5-8 area, average dividend yields of 5-6%).

“(3) The market was severely oversold at the March lows, a condition that often sets off a ‘relief’ (‘let off the pressure’) rally. The advance was probably triggered by the severely oversold condition of the market.

“(4) The one thing a money-manager cannot afford to do is be on the sidelines during ‘what could be’ a major rally. Once the market started up from the March 9 low, many money managers leaped in. The big short positions were immediately squeezed. The rise became a momentum advance. Retail buyers moved in, many trying to retrieve some of their brutal losses.

“(5) The rally moved up ‘too fast’ - action more typical of a bear market rally than the slow, plodding rise that is characteristic of the advance in a new bull market.

“(6) Two groups that led the rally were Financials and Consumer Cyclicals. Interestingly, these two groups contained respectively 5 billion and 2.7 billion shares sold short. This suggests strongly that a significant part of the rally was fired up by short-covering in these two groups (thanks Alan Abelson for this information).

“(7) Many investors and analysts turned optimistic after the market had rallied for only a few weeks. At true bear market bottoms, investors remain stubbornly sceptical or bearish for months after the bottom. Remembering 1974, people were actually angry when I turned bullish at the bottom. I was receiving hate letters and subscription cancellations.

“All of the above have kept me skeptical and cautious about this rally.”

Source: Richard Russell, The Dow Theory Letters, April 20, 2009.



See this link for the stock market in the great depression. It just illustrates that a rally can go on for many months before resuming the longer term trend. http://2.bp.blogspot.com/_r_4bas-lh0U/SOz0oTSy1FI/AAAAAAAACHg/nwwjsjvbVWM/s1600-h/29to32percentchart.PNG

From the article: "The bank's revisions are based on a domestic economy that has weathered the global recession better than policy makers expected and confidence that the rebounds in the United States and China are about to give a lift to exporters and commodity prices." They are at least right abuot China. The BOC is declaring the recession over just based on their forecast so we'll see how it plays out soon.

In any case, my investments are still based on the USD going down and gold going up.

canadianbanks
2009-07-24, 05:45 PM
I don't buy this "end of recession" BS for one second. This is government propaganda to prop the system, nothing more.

tojo
2009-07-24, 09:40 PM
I don't buy this "end of recession" BS for one second. This is government propaganda to prop the system, nothing more.

Time will tell if this is true...so, given your perspective, are you waiting on the sidelines until you are convinced the recession has ended, or have you been slowly getting in, say with the Canadian banks?

mogul777
2009-07-25, 01:53 AM
Time will tell if this is true...so, given your perspective, are you waiting on the sidelines until you are convinced the recession has ended, or have you been slowly getting in, say with the Canadian banks?

Ironically CB apparently doesn't like bank stocks. I could understand the moniker better if this forum was a couple years old. :p

The downward spiral may be over... that is what they actually said/meant. Remember the media is propaganda as spread by idiots. The long painful recovery is not one to get excited about. It's hardly a case of YAY we've hit bottom and YAY we get to wallow there for a while... hey wait that doesn't sound like much fun. People are kinda slow on the uptake. ;)

tojo
2009-07-25, 04:09 AM
People are kinda slow on the uptake. ;)

Well can you blame them for being a bit slow? Many are still shell-shocked from having our butts handed back to us by a market that has nearly wiped us clean...to add insult to injury, the upturn has been so quick that many have missed the ride back up.

The market is very efficient as a leading indicator when heading into, and out of a recession. This has been observed many times over and definitely a well known market pattern. As each day passes and the TSX gains more momentum, the Bank of Canada is only stating the obvious, given the market and the metrics/indicators in the economy.

When I started this thread, I was hoping to get a sense what strategies are being used, now the the market has done a 180 ... but I still sense a lot of pessimism and perhaps some resentment - but its not unique to this forum ... if you look at some of the other financial blogs and sounding boards you will experience the same thing. I suppose this is not a bad thing: so long as pessimism persists we are less likely to be in a state of "irrational exuberance".

sprocket1200
2009-08-22, 03:47 AM
strategy used is always the same. dollar cost averaging.