# Is now a good time to buy?



## dubmac (Jan 9, 2011)

In this forum, we have threads devoted to "what are you buying" and "what are you selling", and I am wondering whether the forum has an interest in following market sentiment - which is a vague reference to "Are we at the bottom yet?" 

I found this site, which calculates the VIX and posts the results chronologically. 
http://www.marketwatch.com/investing/index/vix
When one evaluates the VIX over a year, we hit 50 in August 2011, and 100 in March 2009.
Today, the VIX is at 26 (not terribly high, but gained 10 pts and rising.

For a DIY investor, I am wondering whether this "barometer" of investor sentiment, along with some indictor of trading volumes (ie: when trades start to increase dramatically). I'm reading/researching more on it, but wonder what your thoughts are in using this measure. Does anyone use this? Is this something to share on a regular basis?


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## andrewf (Mar 1, 2010)

I'm holding off. Timing the bottom is a fool's errand. It is easier to get in after the recover begins.

I like Yahoo Finance for historical VIX info. Try ticker ^VIX. I don't think VIX will tell you the bottom, but it gives a sense of how concerned the market is.


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## Belguy (May 24, 2010)

The VIX is now at it's highest point in 5 months as fear rises.


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## Cal (Jun 17, 2009)

I tend to pick my buy price and stick with it. If the marekt drops enough for my low price targets to get hit great.

I am buying...but for the same reason as andrew. Timing the market is a fools game. Happy to buy on sale, whether I get the best deal doesn't concern me too much.


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## Mike59 (May 22, 2010)

dubmac said:


> In this forum, we have threads devoted to "what are you buying" and "what are you selling", and I am wondering whether the forum has an interest in following market sentiment - which is a vague reference to "Are we at the bottom yet?"
> .....
> For a DIY investor, I am wondering whether this "barometer" of investor sentiment, along with some indictor of trading volumes (ie: when trades start to increase dramatically). I'm reading/researching more on it, but wonder what your thoughts are in using this measure. Does anyone use this? Is this something to share on a regular basis?


I agree with others who say the bottom is very hard to time...
I start to get excited as the VIX rises and begin dollar cost averaging into funds that are beaten up, and prefer to do the opposite of what most investors are doing.

If we look at the TSX and compare to the early 2000's or 2008, it's not bloody enough yet. I like using moving averages, the MACD and RSI as indicators of how weak things are, IMHO we're getting close to a good time to start dollar cost averaging in but I'm sitting on the sidelines before buying any new equities. Mean reversion can be a very powerful force, but the downturn looks like it's just getting started.


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## kcowan (Jul 1, 2010)

Mike59 said:


> Mean reversion can be a very powerful force, but the downturn looks like it's just getting started.


That is what I believe as well.


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## ddkay (Nov 20, 2010)

I think this is a good time to start accumulating again and sell on the way up. I expect ES to turn up here or around 1250 and reach for 1500. Could be wrong though. Waiting for ES to get above 1330 may be a safer way to play the long side. CNBC is starting their loony 'markets in turmoil' specials again so I think markets are due to see another bail out/stimulus/cocaine fix. As usual the effects will wear off in a few months time and we'll be back where we started.


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## dubmac (Jan 9, 2011)

Mike59 said:


> I like using moving averages, the MACD and RSI as indicators of how weak things are, IMHO we're getting close to a good time to start dollar cost averaging in but I'm sitting on the sidelines before buying any new equities.


Where do I find / learn more about the indicators that you refer to above? The MACD & RSI indicators. Having learned some things in the past about trading, several on the forum watch for sigificant changes in volume - Is there an indicator (on the TSX) that is significant in establishing a turn in market sentiment wrt the volume of shares traded on the market?


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## blin10 (Jun 27, 2011)

don't go all in, but picking up nice divi companies on a way down slowly is what I'm doing... you will never catch bottom


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## Mike59 (May 22, 2010)

dubmac said:


> Where do I find / learn more about the indicators that you refer to above? The MACD & RSI indicators. Having learned some things in the past about trading, several on the forum watch for sigificant changes in volume - Is there an indicator (on the TSX) that is significant in establishing a turn in market sentiment wrt the volume of shares traded on the market?


http://www.investopedia.com/terms/m/macd.asp should be a good starting point

The most useful indicator IMHO to gauge the turnaround would be the "margin debt" statistic from the NYSE if you dig deeper to learn how that works. The only problem is that the figures are reported 1-2 months after the fact. But in the macro, it tells us that the market likely peaked a couple of months ago. Cyclical bears can last many months like it did in '08, so I would be very skeptical of anyone telling you the bottom is in. 

I buy every single month and spread it out over at least once per week, so I don't pay attention to volume at all, but try to time my purchases based on some of the technicals. 

I believe that the TSX is essentially a slave, subservient to the US market. So aside from the technicals I would still carefully watch the US economy, S&P and Dow carefully when purchasing the TSX.


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## Toronto.gal (Jan 8, 2010)

blin10 said:


> don't go all in, but picking up nice divi companies on a way down slowly is what I'm doing... you will never catch bottom


Your posts normally make me laugh [because of your sarcastic humour]. :rolleyes2: 

But there is nothing funny in above comment; it's spot-on! 

I would add to not go all out either [there are always exceptions of course]. I know it's tempting in certain market conditions to do either one, or both, but a mistake in most cases, so balancing one's risk & reward is always key!

Buying/selling in trAnches, ie: spread betting [in standard trading], is also more flexible in not only entering, but exiting part of one's positions as well. I never used to sell below my ACB until I starting using this method, which has worked very well for me.


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## Belguy (May 24, 2010)

Buy on negative news and make money.


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## Miser (Apr 24, 2011)

andrewf said:


> I'm holding off. *Timing the bottom is a fool's errand. It is easier to get in after the recover begins*.
> 
> I like Yahoo Finance for historical VIX info. Try ticker ^VIX. I don't think VIX will tell you the bottom, but it gives a sense of how concerned the market is.


Perfect answer.
I see more doom and gloom in the short term until QE3
Then more gloom.


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## Belguy (May 24, 2010)

So, how long will the market carnage last and when and where will it bottom out? Are we talking months or years? Should retired persons be liquidating their equity holdings?

This time, it does seem to be different.


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## Jungle (Feb 17, 2010)

Nobody knows those answers, but ride it out for the time being ( do not sell all of it to cash out!) and start rebalancing more towards fixed income or safer investments. If you are 70, I would suggest being 70% fixed income rest equity.


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## dubmac (Jan 9, 2011)

When one looks at the 3-5 yr chart of the VIX (in the OP), this downturn seems like "just another yearly downturn". As a matter of fact - it kinda looks like a cardiologists electrocardiogram (ECG)! My point is that the VIX never seems to stay high for very long!


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## doctrine (Sep 30, 2011)

I'll be buying some stocks shortly..on my monthly DCA which is in about 2 weeks. Hopefully things don't get better by then :-/ Lots on sale.


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## fatcat (Nov 11, 2009)

i am waiting to hear from the greeks, if that goes decisively one way or the other (i fervently hope it does), then perhaps we might break the game of chicken being played out in europe ... even if the economic outlook is poor, there still is an outlook, and the world is awash in money that can only park itself at 1.4% for 10 years for just so long ... stocks are looking cheap but incipient panic trumps all common sense when it comes to investing


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## Miser (Apr 24, 2011)

Spain is a much bigger player in this game.
25% youth unemployment and rising.
Bonds not doing do well.

I'd sit this thing out until ya see a turn.

Keep the powder dry, I say. Yarrrrrrr


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## Spidey (May 11, 2009)

^ Actually that's 25% general unemployment. Youth unemployment in Spain is near 50%. :disillusionment:


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## Toronto.gal (Jan 8, 2010)

Spidey said:


> Youth unemployment in Spain is near 50%. :disillusionment:


A staggering number & Portugal is not far behind at 35%.

This chart says it all.










Check out the 'debt' chart.
http://www.economist.com/blogs/dailychart/2010/12/europes_economies

The growth prospects in eastern Europe is interesting, with Poland being the 'leader of the pack'.

*Unemployment spike sets Portugal up for second bailout.*
http://www.reuters.com/article/2012/06/05/portugal-economy-unemployment-idUSL5E8H1IQO20120605


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## jet powder (May 29, 2012)

In the poker game the money works its way to the strongest players. When your sittng @ the table & you cant figure out who the sucker is you better wonder if its you. 

Yesterday @ safe haven website ( the wave trading) put up a chart of the 30yr bond showing a diagonal triangle. I dont think it is complete yet but ending diagonal triangles indicate sharp refersal ahead & occure @ end of moves. This fall could put in a major top in bonds. But since I am often wrong if I put money on the table to short it will be small to limit my risk.


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## peterk (May 16, 2010)

I think I made a similar post last year when the markets tanked, but.... All this waiting for the bottom/scared of europe talk is just fearfulness and herd mentality IMO. It seems when the market is up nobody worries about the very real possibility that things could plunge 40% at any moment. But when things are down and dangerous everyone is paralyzed with fear that they might lose another 10% if they jump in now. It mathematically doesn't makes sense and should be indentified as illogical thinking.

All the bad things going on in the world, and all the predicted bad things for the future aswell, are already priced into the market already, and it is _only_ the unexpected future, either worse or better, that will move the market.

All that we can possibly say about the market is that right now it is lower than it was not long ago, so by definition it is cheap, and a "good time to buy".


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## Toronto.gal (Jan 8, 2010)

Good post *peterK!*

And when certain solid stocks [of unbroken] companies have actually plunged 60% & 70%+ already, at what discounted prices are people expecting to buy at, at -98%? Only Greek banks at that level.


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## HaroldCrump (Jun 10, 2009)

Toronto.gal said:


> at what discounted prices are people expecting to buy at, at -98%? Only Greek banks at that level.


In the last couple of years a few Canadian stalwart stocks have fallen -95% too.
RIM and YLO come to mind.


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## Toronto.gal (Jan 8, 2010)

HaroldCrump said:


> RIM and YLO come to mind.


Yabut, I said 'unbroken' companies.


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## kcowan (Jul 1, 2010)

Can you give us some examples of 60% and 70+% off companies, say starting at their 2009 trough?


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## HaroldCrump (Jun 10, 2009)

kcowan said:


> Can you give us some examples of 60% and 70+% off companies, say starting at their 2009 trough?


Many large cap energy stocks are down 60% from their summer '08 highs, including Suncor, Husky, etc.


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## Toronto.gal (Jan 8, 2010)

kcowan said:


> Can you give us some examples of 60% and 70+% off companies, say starting at their 2009 trough?


And how much will you pay me for my research, LOL.

I'm comparing prices from when I first started buying stocks in 09 [after the crash], as for me, for buying purposes, there is no point in going further back [as when do you think we'll see those prices again?].

Just to name a couple:

- ECA: $63+ in Sep/09; $92+ May/08 [currently trading @ $20+]
- MFC: $26+ in July/09; $40+ May/08 [currently trading @ $10.75].

The ones Harold mentioned and many, many more that you can find out from Pacific latitude 20/49.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> - MFC: $26+ in July/09; $40+ May/08 [currently trading @ $10.75].


Are you sure MFC is unbroken?


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## Toronto.gal (Jan 8, 2010)

Four Pillars said:


> Are you sure MFC is unbroken?


What is your definition of broken?

How about SLF, is it broken in your opinion? $50+/$30+/$20+ [08/09/12 respectively].

Have the companies made mistakes? Sure, especially MFC. But how responsible are they for the low interest rates?


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> What is your definition of broken?
> 
> How about SLF, is it broken in your opinion? $50+/$30+/$20+ [08/09/12 respectively].
> 
> Have the companies made mistakes? Sure, especially MFC. But how responsible are they for the low interest rates?


'unbroken' is your term - what is your definition?

Both companies are responsible for risk management. Low interest rates are not a 100 year storm.


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## Sampson (Apr 3, 2009)

Are you trading ECA now T.Gal?

I own this stock and it's on my watchlist so I see all the swings, but over the past month, there have easily been half a dozen days where this thing has swung up or down by 5%.

This must be a dream trading stock.


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## riseofamillionaire (Feb 23, 2012)

Since you can't really predict the future, I stay fully invested and add more cash every few weeks. 

At times, the market can turn up very fast - missing that move could mean years of underperformance and catch up. I don't like having much cash in my investment portfolio.

I think the time to buy is right now, always.


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## Toronto.gal (Jan 8, 2010)

Four Pillars said:


> 1. 'unbroken' is your term
> 2. what is your definition?


1. Not really.
2. Opposite of broken. :rolleyes2:

You asked me whether I'm sure MFC is unbroken, so accordingly, you must have your own understanding of the word.

There is a difference between a broken stock and a broken company and IMHO, MFC is a broken stock, so have I answered your question?


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## Toronto.gal (Jan 8, 2010)

Sampson said:


> Are you trading ECA now T.Gal?
> 
> I own this stock and it's on my watchlist so I see all the swings, but over the past month, there have easily been half a dozen days where this thing has swung up or down by 5%.
> 
> This must be a dream trading stock.


Not today, but I often trade it [and use the profits to add to my long-term position; why don't you do the same?].

Today, I traded 3 others [need another pair of hands to trade them all]. :chuncky:

If you own ECA for long-term, you should take advantage of days like today [don't you like free shares?].


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## Sampson (Apr 3, 2009)

Toronto.gal said:


> [why don't you do the same?].


I'm starting to feel tempted, that's why I ask 
Although it's a big step for me. I'm a tried and true, religious passive investor, mostly an indexer... well... except for those dividend paying stocks...

Trading seems so intimidating. :hopelessness:


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## Toronto.gal (Jan 8, 2010)

Sampson said:


> Trading seems so intimidating. :hopelessness:


I felt like that in the beginning. 

If you're interested, I suggest you try virtual trading [that will soon tell you whether it's your cup of tea or not]. :greedy_dollars:


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## andrewf (Mar 1, 2010)

Trading feels too much like a coin toss to me. Short-run price activity seems essentially random.


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## Eder (Feb 16, 2011)

Sampson said:


> Are you trading ECA now T.Gal?
> 
> 
> 
> This must be a dream trading stock.


I sold 500 ECA today to lock in a sweet return but still hold 500 and think it will be a good time to buy it again at ~$17. I think its a good time to start buying the usual suspects, but we can probably buy on the way down till late September (election should light things up)


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> 1. Not really.
> 2. Opposite of broken. :rolleyes2:
> 
> You asked me whether I'm sure MFC is unbroken, so accordingly, you must have your own understanding of the word.
> ...


My understanding of YOUR definition is that unbroken means the company is still good, but just beaten down.

I don't know if MFC is broken or not, but they've had a rough ride for quite a while.


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## Beaver101 (Nov 14, 2011)

Toronto.gal said:


> 1. Not really.
> 2. *Opposite of broken*. :rolleyes2:
> 
> ...
> ...


 ... lol. Presume broken stocks such as MFC are great to trade. each:


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## kcowan (Jul 1, 2010)

Toronto.gal said:


> And how much will you pay me for my research, LOL.
> 
> I'm comparing prices from when I first started buying stocks in 09 [after the crash], as for me, for buying purposes, there is no point in going further back [as when do you think we'll see those prices again?].
> 
> ...


Thanks TG. I just wanted to see what you were thinking. i am not interested in MFC yet. But then I am not a trader. ECA I will have a look. I am interested in why you consider MFC unbroken and RIM broken. I agree that YLO is broken.


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## Toronto.gal (Jan 8, 2010)

kcowan said:


> 1. i am not interested in MFC yet. But then I am not a trader.
> 2. I am interested in why you consider MFC unbroken and RIM broken.


1. Neither was I when I first bought in 09 [I now hold as well as trade them]. 
2. I consider RIM, semi-broken.

A company that is down 93% of its value [since just 2008], can't be considered fundamentally sound, but I still have hopes that this Canadian company might recover.


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## OptsyEagle (Nov 29, 2009)

I consider MFC broken and consequently paid for. It does appear that investors are going to want to see that it will not get more broke but I would say it's glass that was half empty is now in a billion pieces and as I said, has been paid for. 

It's going to be hard to break it much further. Where interest rates are now, gets paid for at the end of each quarter. Are rates really going to go that much lower?


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## OptsyEagle (Nov 29, 2009)

Just as I finished posting the above comment, I received this notice from Manulife in my inbox. I cannot post a link but I have highlighted the interesting points. This is a notice I believe they send out to the brokers and agents that sell their insurance:


> 1. What changes are being made?
> 
> Effective June 16, 2012, we are changing rates for Universal
> Life (UL) level cost of insurance (COI), YRT 85/15, Term-Life
> ...


I guess they don't like being broken and feel it would be better if they fixed it.


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## riseofamillionaire (Feb 23, 2012)

andrewf said:


> Trading feels too much like a coin toss to me. Short-run price activity seems essentially random.


Totally agree with this. With the way most people trade, better off going to a casino almost.


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## KaeJS (Sep 28, 2010)

RIM is about as broken as it gets.

Dead company.


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## rknigh2 (Jun 5, 2012)

KaeJS said:


> RIM is about as broken as it gets.
> 
> Dead company.




RIM looks like an early 90's Apple at this point. They still produce a fantastic product, marketing got very complacent, and in a terrified global market. Apple and Google have become the trendy new picks. No debt, $4-6B, and a solid (superior?) mobile product. I'll be willing to buy in the $7-9 range.


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## Toronto.gal (Jan 8, 2010)

Four Pillars said:


> 1. My understanding of YOUR definition is that unbroken means the company is still good, but just beaten down.
> 2. I don't know if MFC is broken or not, but they've had a rough ride for quite a while.


Sorry, I didn't mean to ignore you, I just missed this post yesterday.

1. That's right.
2. Thanks to Mr. Dominic Alessandro, who apparently did not believe in hedging [how could an accountant by training not believe in this?]. :rolleyes2:

Mr. D'Alessandro was also made a Fellow of the Institute of Chartered Accountants in 1993.
http://en.wikipedia.org/wiki/Dominic_D'Alessandro

Problems started for the company about 2 or 3 years before the market crash due to MFC's high exposure to the stock markets via their segregated variable annuity business. 

Anyway, IMHO, I do not believe that MFC is a broken company.


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## jet powder (May 29, 2012)

Is now a good time to buy ?

What does your method say?


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## buhhy (Nov 23, 2011)

rknigh2 said:


> RIM looks like an early 90's Apple at this point. They still produce a fantastic product, marketing got very complacent, and in a terrified global market. Apple and Google have become the trendy new picks. No debt, $4-6B, and a solid (superior?) mobile product. I'll be willing to buy in the $7-9 range.


I'd rather bet on Nokia and WP as the third ecosystem. At least Nokia has recently produced a phone line people want, unlike RIM. BB10 has to impress with both hardware AND software at this point. They have not shown any vision in their upcoming products, BB7 is fragmented, Playbook launched horribly, and still has no apps, and their brand is crap currently. Remember the BB Storm? LOL.

BB10 has to not only catch up, but leapfrog the competition to have any chance of stopping the slide.


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## kcowan (Jul 1, 2010)

OptsyEagle said:


> I guess they don't like being broken and feel it would be better if they fixed it.


Or they are now not competitive in their retail offerings owing ot financial mismanagement!


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## ddkay (Nov 20, 2010)

ddkay said:


> CNBC is starting their loony 'markets in turmoil' specials again


lol looks like CNBC bottom ticked extreme sentiment again


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## rknigh2 (Jun 5, 2012)

TP at 11.15 from 10.35 on RIM.TO. A cool 8% for the week. Will wait for more bad news to buy again under $10.


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## rassmy (May 7, 2010)

I don't time the market and I don't trade, I have my watch list and the buy price for every stock (based on earning and valuation), whenever a stock meets my buy price, so I buy it


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