# Where are the makets headed?



## nash (May 21, 2009)

Hi everyone, I have been following your forums for a few weeks now and I have learned alot.

I have a question about investing now.

Given that the TSX is currently up around the 10K mark, which is up about 1/3 from its levels in March (it was around 7.5K), do you think now is a good time to invest, or are things headed for a correction. 

It just seems to me that the market has risen very sharply in a short time, but given the circumstances esp. in the US with the car companies...still unresolved and could result in a lot of job losses...are things going to turn down again?

I am generally not a market timer. I save each pay cheque but am wondering if I should be holding my funds in my ING account and wait to invest if things are going to turn back downward.

Any thoughts?


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## mfd (Apr 3, 2009)

I personally think this bull run was a load of bull. I'm sitting on cash wait for some low points. Maybe the market won't go as low as it did in march but I think there is still downside to what it is now. The problems that existed 6 months ago are still there and the government has only used some slight of hand to make things look better then they are.


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## Assetologist (Apr 19, 2009)

Patience. 

There is always opportunity but there just happen to be many more when the masses panic like in late November and early March.

I would spend as much time as you can creating 'watch' lists of solid companies you would like to hold for years. Another list could contain small-caps if you are so inclined. The easiest way to monitor these lists is set price alerts at a financial website like GlobeInvestor. You can have the alerts texted or emailed so that you can use some dry powder.

I can tell you from personal experience that there is much 'comfort' in being paid regular dividends while waiting for stock prices to rise. In fact if you invest principally for dividends/distributions than you shoold not care too much what the stock price is doing at any time.

I personally do not discount a large correction or even new lows which would be great.


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## twiga (Apr 3, 2009)

*Twiga*

This is my first post so please forgive any mistakes. I am a dividend investor, not so much a trader, but I have bought a number of stocks in this rally that are now trading at a bit or more below the level at which I bought them. Having heard a number of guests on Market Call and Market Call tonight advise taking money off the table, my question to other members is whether you would take the loss of between $20 and in one case about $200, or hold on. And the other question is whether for such 'solid' stocks as the telecoms and banks, REITs and financials such as PWF, do you hold regardless for the dividend or also liquidate. I was burned badly in the meltdown (no calls from our advisor during the whole time so we "broke up") and have spent the last 5 months educating myself on dividend and income investing, but I lack experience in how to judge "stop loss" placements. Any ideas where to read up on such topics?


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## Spidey (May 11, 2009)

On balance, I've been selling into the rally (although I have made some buys). I see it as a positive sign that everyone is questioning whether this is a true rally or a bear trap. It shows there is still a fair amount of caution out there. I even see it as positive that the market is taking several pauses on the way up.

That being said, May is a typical high point and there is reason to the saying, "Sell in May and go away". I guess this is all a round about way to say that its really hard to know which way the market will go in the short run. Think long term.


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## tojo (Apr 20, 2009)

nash said:


> Given that the TSX is currently up around the 10K mark, which is up about 1/3 from its levels in March (it was around 7.5K), do you think now is a good time to invest, or are things headed for a correction.
> 
> Any thoughts?


I believe that we will not see those lows again back in early March....the unprecedented fear of a total world-wide banking collapse has subsided for now. Recall back in early March, US banks like Citigroup declared that they will actually turn in profits moving forward was like music to investor’s ears ... this has alleviated some of the fear for the time being. We are certainly not out of this mess by any means. As they say, the market pendulum swings from fear to greed and back again...it was no wonder that financial stocks, which were the first ones to drop in the midst of the crisis were also the first to rebound – and sharply. 

I’m generally not a market timer as well, but by looking at this crisis with a bit of common sense, I was able to make up for most of my losses by aggressively loading up during the rebound. However, I don’t believe now is the time to stay aggressive. I would certainly not add to anymore financial stocks. In fact, I’ve unloaded most of my Lifecos commons and swapped them for an equivalent amount of debt (i.e. prefs.). Defensive stocks would be my pick for the next little while – utilities, energy (midstream players instead of upstream and certainly not downstream energy) and debt would be my “3 picks”. I guess the short answer to your question is yes, now is still a good time to invest, but be careful and stay defensive. Good luck and proceed with cautious optimism!


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## mfd (Apr 3, 2009)

twiga said:


> This is my first post so please forgive any mistakes. I am a dividend investor, not so much a trader, but I have bought a number of stocks in this rally that are now trading at a bit or more below the level at which I bought them. Having heard a number of guests on Market Call and Market Call tonight advise taking money off the table, my question to other members is whether you would take the loss of between $20 and in one case about $200, or hold on. And the other question is whether for such 'solid' stocks as the telecoms and banks, REITs and financials such as PWF, do you hold regardless for the dividend or also liquidate. I was burned badly in the meltdown (no calls from our advisor during the whole time so we "broke up") and have spent the last 5 months educating myself on dividend and income investing, but I lack experience in how to judge "stop loss" placements. Any ideas where to read up on such topics?


Generally speaking you, as a dividend investor should have bought these stocks at their current price because you saw value and the dividend was at a decent level and fairly secure (with potential for growth). That being said you shouldn't be concerned about selling since the dividend will provide the desired income...or at least that's the theory.


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## tojo (Apr 20, 2009)

twiga said:


> Having heard a number of guests on Market Call and Market Call tonight advise taking money off the table, my question to other members is whether you would take the loss of between $20 and in one case about $200, or hold on.


Don't make any investment decisions based solely on what these Market Call analysts proclaim... although many have interesting and informative info, do your own research before investing. 

I was watching Ross Healey on Market Call tonight. This guy is the eternal cynic when things are bad. He was on the show back in early March, just before the huge run-up, declaring that the TSX had another major downturn and that he was minimum 50% cash for his clients. Well, tonight he let everyone know that did well in the rally and had "switched views on the financials". Well, I don't know how you can be bearish, in cash, and still made money on the rally. No one gets it right everytime, but at least own up to it and admit you wrong on that call.


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## takingprofits (Apr 13, 2009)

I am underwater with a few recent recent purchases as well and my view is that the market is correcting - but it is not going down to the March lows - probably just back to the 50 day MA at worst. So, I am holding as here is sure to be better times to sell ahead.

I have been taking profits in the past few days in stocks where there are profits and am holding those where there are no profits.



twiga said:


> This is my first post so please forgive any mistakes. I am a dividend investor, not so much a trader, but I have bought a number of stocks in this rally that are now trading at a bit or more below the level at which I bought them. Having heard a number of guests on Market Call and Market Call tonight advise taking money off the table, my question to other members is whether you would take the loss of between $20 and in one case about $200, or hold on. And the other question is whether for such 'solid' stocks as the telecoms and banks, REITs and financials such as PWF, do you hold regardless for the dividend or also liquidate. I was burned badly in the meltdown (no calls from our advisor during the whole time so we "broke up") and have spent the last 5 months educating myself on dividend and income investing, but I lack experience in how to judge "stop loss" placements. Any ideas where to read up on such topics?


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## moneymusing (Apr 3, 2009)

I'm up to 50% cash in my Tax-Free "Trading" Account now. Waiting for a couple of down days in a row then trying to find some buys. 

Futures pointing higher today though.


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## Jon Chevreau (Apr 4, 2009)

Not sure where the "makets" are headed and equally not sure where the stock "markets" are headed. Is there not a consensus that these things are unpredictable in the short term but over the long haul -- shown by the Andex charts -- equities tend to rise? In the short term, I like the phrase used by American personal finance writer Jason Zweig: "I don't know and I don't care." 

www.wealthyboomer.ca


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## CanadianCapitalist (Mar 31, 2009)

moneymusing said:


> I'm up to 50% cash in my Tax-Free "Trading" Account now. Waiting for a couple of down days in a row then trying to find some buys.
> 
> Futures pointing higher today though.


This is a very hard game to play. With apologies to market timers out there, it is almost impossible to predict short-term trends. Stocks are "reasonably" priced now; so it may be a good time to buy them compared to the main alternative: bonds.


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## Rickson9 (Apr 9, 2009)

nash said:


> Hi everyone, I have been following your forums for a few weeks now and I have learned alot.
> 
> I have a question about investing now.
> 
> ...


My thoughts are:
1) The future is not knowable so it is a waste of time to think about it.
2) The best time to buy is when you find a company you understand, with strong historical financial statements, selling at an inexpensive price.


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## tojo (Apr 20, 2009)

Jon Chevreau said:


> Not sure where the "makets" are headed and equally not sure where the stock "markets" are headed. Is there not a consensus that these things are unpredictable in the short term but over the long haul -- shown by the Andex charts -- equities tend to rise? In the short term, I like the phrase used by American personal finance writer Jason Zweig: "I don't know and I don't care."
> 
> www.wealthyboomer.ca


I've been investing longer than I care to admit...in the last ten years, the S&P has gone sideways to the point that you can almost do better with money under your mattress. Many may not consider this a "long haul", but it has been long enough for me. I can't see things getting better with the unbelievable amount of debt the United States is carrying. In my mind, the States is going down the toilet fast...I just hope that Canada and other countries can somehow detach themselves from them and prosper despite what is happening there. 

My point is that we should care, and understand what is happening around us, and adjust your finances accordingly...


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## twiga (Apr 3, 2009)

Thanks for the comments. In keeping with my strategy, I am hanging in with the solid dividend-payers in my diversified portfolio, with the preferreds and Claymore's Corporate Bond ETF as the outer defences, sort of like a vegetable garden!

One thing I've noticed is how successive guests on Market Call and Market Call Tonight will have diametrically oppposed positions. The first loves Telus and Shaw, for instance, while the next goes for BCE and Rogers, and on and one. It makes my head spin.....

I subscribe to the Post and read the Globe Investment pages online or at the library. Anyone have further resources that they like?


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## ThickenMyWallet (May 20, 2009)

If your investing horizon is 20 years plus and your investing strategy is fundamentally sound (proper asset allocation etc etc), you should not worry about perfectly timing entry or exit. 

I would re-direct the question from "when" to execute to "what" are you executing?


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## Rickson9 (Apr 9, 2009)

Jon Chevreau said:


> Not sure where the "makets" are headed and equally not sure where the stock "markets" are headed. Is there not a consensus that these things are unpredictable in the short term but over the long haul -- shown by the Andex charts -- equities tend to rise? In the short term, I like the phrase used by American personal finance writer Jason Zweig: "I don't know and I don't care."
> 
> www.wealthyboomer.ca


Good quote. Strongly agree.


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## Rickson9 (Apr 9, 2009)

twiga said:


> Thanks for the comments. In keeping with my strategy, I am hanging in with the solid dividend-payers in my diversified portfolio, with the preferreds and Claymore's Corporate Bond ETF as the outer defences, sort of like a vegetable garden!
> 
> One thing I've noticed is how successive guests on Market Call and Market Call Tonight will have diametrically oppposed positions. The first loves Telus and Shaw, for instance, while the next goes for BCE and Rogers, and on and one. It makes my head spin.....
> 
> I subscribe to the Post and read the Globe Investment pages online or at the library. Anyone have further resources that they like?


In order to differentiate between opinions, I use Morningstar (they have 10 years of historical financial statements), Yahoo! (they have a free stock screener), and I also look at the SEC Form 4 submissions (showing insider buys/sells).

In this economic environment we are buying buying buying. No dividend. No GICs. No bonds. No short-term savings. Stocks. There is absolutely no way we are going to let an opportunity of a lifetime just pass.


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## tojo (Apr 20, 2009)

Rickson9 said:


> In this economic environment we are buying buying buying. No dividend. No GICs. No bonds. No short-term savings. Stocks. There is absolutely no way we are going to let an opportunity of a lifetime just pass.


Hey, if this strategy works for you, my hats off to you. Definitely not for the faint-of-heart. Did you use the same strategy going into the crash? If so, you must have taken a massive haircut, if not then let me borrow some of your horseshoes .


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## takingprofits (Apr 13, 2009)

Watching BNN yesterday I caught a headline but missed the story - regarding a new study that concluded that buy and hold works if you have a time horizon of 43 years. Did anyone catch the story?

Even Benjamin Graham who is oft quoted by those committed to buy and hold says in "The Intelligent Investor" - That the intelligent investor should endeavour to buy stocks when they are quoted below fair market value and SELL them when they rise above such value.

Stocks are not meant to be held forever...


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## Rickson9 (Apr 9, 2009)

tojo said:


> Hey, if this strategy works for you, my hats off to you. Definitely not for the faint-of-heart. Did you use the same strategy going into the crash? If so, you must have taken a massive haircut, if not then let me borrow some of your horseshoes .


During the last stock market run-up during the late 90s we piled up cash as there was very few inexpensive stocks. When the bottom fell out we bought. We never sold those stocks.

As the stock market recovered and started climb again, cash piled up as there was nothing inexpensive to buy. Now that the bottom has fallen out (again) we are buying (again). We don't plan to sell these stocks either.

You can view our performance at the link in my sig.

The cycle of boom and bust is well-documented but most people can't seem to build wealth because only 1% believe in value investing and portfolio concentration; and those 1% are genetically determined (since the belief can't be taught). In other words, 99% of the population creates opportunities for the 1% on a fairly predictable schedule. There are no horseshoes involved. Investors like myself depend on the population as a whole to create wealth for ourselves.


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## tojo (Apr 20, 2009)

Rickson9 said:


> During the last stock market run-up during the late 90s we piled up cash as there was very few inexpensive stocks. When the bottom fell out we bought. We never sold those stocks.
> 
> As the stock market recovered and started climbinb again, cash piled up as there was nothing inexpensive to buy. Now that the bottom has fallen out (again) we are buying (again). We don't plan to sell these stocks either.
> 
> ...


Well to each their own I suppose...I'm in a similar financial situation as you, but arrived at it using plain old discipline, dividends and compounding. I don't consider myself genetically gifted and was never comfortable with the term "millionaire". These are values that I make sure my children understand and live with. 

Anyways, I agree with you that there are no horseshoes involved...to get to this stage takes alot of will-power, restraint and self- confidence to stay on course....

BTW, your link is broken.


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## dogcom (May 23, 2009)

I also think like spidey that after the run we have had that sell in May and go away sounds good.

Having said that we have to ask ourselves if the world can seperate from what is going on in the US. The US is going down like Japan at this time, so can the world ignore it as easily as Japan. 

Another thought is we have never seen such a situation and decline in the markets like this since the depression. If this is true then even a rally of 50 percent off the low could still be a bear market rally.


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## FinancialJungle (Apr 22, 2009)

tojo said:


> BTW, your link is broken.


It's back online now. One suggestion I'd make is to add dividends to the S&P 500 benchmark. Not enough to tilt the scale, but it'd be more apple-to-apple.


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## Rickson9 (Apr 9, 2009)

tojo said:


> I don't consider myself genetically gifted...


Genetically "determined". Not "gifted". I am far far from gifted!


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## tojo (Apr 20, 2009)

dogcom said:


> Having said that we have to ask ourselves if the world can seperate from what is going on in the US. The US is going down like Japan at this time, so can the world ignore it as easily as Japan.
> 
> Another thought is we have never seen such a situation and decline in the markets like this since the depression. If this is true then even a rally of 50 percent off the low could still be a bear market rally.


The analogy to Japan is accurate, and scary. If any of you subscribe to Canadian MoneySaver, have a look at the May 2009 issue, page 16, Wynn Quon's column. He spins an analogy between the US and Japan and present a somewhat doomsday but plausible argument that what happened in Japan (and still happening there for that matter), is a very possible scenario for the States. Japan experienced a bubble economy crash from the 80's built on unsustainable debt that took the Nikkei from 39,000 in 1989 all the way to 7088 in March of this year. An 80% drop. The similarities are downright scary - The Nikkei peaked on Dec. 29, 1989, then the crash of Japan’s commercial real estate market, followed by banking system collapse and then massive government borrowing to build the economy back to shape. As Quon explains, common sense says that the economy will eventually turn around after the bust, ie. the stock market should have risen with the recovering economy. Well, Japan's economy is actually 35% bigger now than in was in 1989, but the Japanese are so busy paying off their debts that 20 years have passed and they are still rebuilding. 

The US component of my portfolio has been decimated...I haven't made one red cent from the US index funds, dividend funds and stocks I own. I've sold all my Japan index funds long ago, and will do the same with my US holdings. Luckily I was no more than 15% in the US and all my gains have been made in Canadian securities and bonds. However, if the States goes down like Japan, I can't see how we can be completely insulated.

Again, you are advised to do your own research and draw your own conclusions. My point is to pay attention to what is happening out there...


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## frdsmth9 (May 24, 2009)

I can't recall a world with so many disparate geopolitical dangers: North Korea, Latin America, the Middle East -- the list is daunting. And oil prices are a drag on the world economy.


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