# how is it that anyone would buy stocks today?



## bh23 (Apr 16, 2010)

From what I see in the US...and knowing that the US market is highly linked to ours...how could people be buying stocks right now?

Interest rates are still at zero...and money is not being lent. Money supply in the US is contracting...home values still going down...artificial stimulus is likely propping up the market. Market is grinding higher, but the volume is historically low. Bullish sentiment is approaching all time highs...

Is it just me or is this thing out of control now? It is a serious house of cards..and I would imagine as risky as any point in history.

WHo would think I was crazy if I put everything in short term US treasuries? I could buy an etf or mutual fund and just wait out what seems to me to be a definite drop in the market to a more reasonable level. I have no fear of huge inflation in the US...I think deflation is more of a trend than inflation...thus my interest in capital preservation and US treasuries.


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## andrewf (Mar 1, 2010)

I'm owning equity until the market tells me not to.


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## CanadianCapitalist (Mar 31, 2009)

bh23 said:


> WHo would think I was crazy if I put everything in short term US treasuries? I could buy an etf or mutual fund and just wait out what seems to me to be a definite drop in the market to a more reasonable level. I have no fear of huge inflation in the US...I think deflation is more of a trend than inflation...thus my interest in capital preservation and US treasuries.


You might very well be right. That's why I keep a portion of the portfolio in bonds even though I'm investing for the long-term. However, I'm not willing to make all-or-nothing bets on this scenario panning out. So I'm keeping my current stock holdings. But considering stocks are not screaming values anymore, I'm building up savings in cash and short-term bonds.


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## MoneyMaker (Jun 1, 2009)

Theres always going to be effiencies in the market and its your job to find the areas and exploit it.

Its must easier to predict and forecast an individual company's direction/result than the entire market's.


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## bh23 (Apr 16, 2010)

I have no doubt that I will likely be a horrible market timer like many others before me...I just cannot see a reason to buy in right now.

I suppose I see a sideways market and a likely rise in treasury yields...couple that with a dollar at partity and that's why I was thinking short term treasuries for a while....


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## bean438 (Jul 18, 2009)

As long as people continue to drink Coke, shave, use soap, laundry detergent, smoke, drink, use electricity, and natural gas, use a bank, and credit cards I will continue to buy stocks, and enjoy a growing income via dividends.

I do have cash right now, but not because I think stocks are bad, or asset allocation is a good idea, but rather things I want to buy are not priced right for me.


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## dogcom (May 23, 2009)

I believe this is a very bad time to buy if you plan to just buy and hold. The best way to play it if you are in cash and don't like to trade is to buy in slowly a month at a time and possibly buy more if we get a real sell off like we did in 2008. People say go all in all the time, but that seems crazy when prices are so high.


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## osc (Oct 17, 2009)

The economy has just recovered and we are out of recession. The bull market has just started. There is no way it will reverse in a few weeks/months. Probably DJIA will get to 17000 before pulling back. Of course we still could have 4-5% swings that don't mean nothing.


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## bh23 (Apr 16, 2010)

if you think a bull market is underway...I think you may have lost your mind. The US is propped up on stimulus money and still trying to avert a depression...the only thing driving the market is the stimulus and record low interest rates. You think the economy has the fundamentals to start a new bull market?? 

I guess that's why every trade has a buyer and seller


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## ChrisR (Jul 13, 2009)

The question is, if you're not buying stocks, where are you going to put your money?

Stocks... overpriced.
Real estate... overpriced.
Gold... overpriced.
Bonds... overpriced.
Oil... after a huge dip, its once again overpriced.

There is way too much money in the system right now, and inflation is on its way. This month? This year? This decade? Who knows when, but cash and bonds aren't the place to be when it spirals out of control.

Sure you can take a bet on real return bonds (which are also, coincidentally, overpriced), but then you're pretty much taking a zero real return in order to sleep at night.


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## SkepticalInvestor (Apr 4, 2009)

Interesting thread. I've been struggling with this since I'm sitting on some cash and it does look like the market will dip by the end of the year. I'm going back to making monthly contributions to low cost/index funds, which is the only thing that works for me - I'm not great at buying when there's 'blood in the streets'.


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## dogcom (May 23, 2009)

Bh23 is right and I believe the maximum amount of people will be sucked into this market which will take a little more time so the maximum pain can be administered. We are in a secular bear market so expect things to go south until we eventually see PE's under 10 and dividend yields close to that PE.

On the way there we will get these cyclical bull markets which you can play until we get to the bottom. The only thing I can see that will change things is if money and lots of it can get into the hands of the consumers to compete for the higher prices. Right now that money has found its way into stock prices so maybe if the Fed can print the money to continue to prop up stocks and nail the shorts this can work.

If you don't believe the Fed would print money to buy and manipulate stocks higher then how does it get higher. I suppose it can be done by buying the US debt so money can be sent to stocks that would have gone to bonds. But if bonds collapse because people do not except this sort of crap then it is game over. High interest rates will kill everything so how will they stay down if no one wants to take in all that debt.


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## osc (Oct 17, 2009)

bh23 said:


> if you think a bull market is underway...I think you may have lost your mind. The US is propped up on stimulus money and still trying to avert a depression...the only thing driving the market is the stimulus and record low interest rates. You think the economy has the fundamentals to start a new bull market??
> 
> I guess that's why every trade has a buyer and seller


Apparently you don't know the definition of a bull market. It is related to stock prices. S&P500 is more than 80% above the March 2009 low, we definitely are in a bull market.
Anyway, I'm glad that so many people are still bearish, this is a good sign for the strength of the bull market.


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## bh23 (Apr 16, 2010)

just because the market goes up doesn't mean it's a bull market...ever hear of a bear market rally?? That is what this is...one fundamental of a true bull market is volume...this rally is built on historically low volume. It is built to sucker people like you into thinking it's a new bull market. I hope everyone turns bullish...a sign that the market is about to tank.

WHat fundamental driver is there for this to be a bull market in any way? The US is still fighting depression..that is a fact. Keeping rates at zero is the only thing the gov't can do to try and stave off depression...and even at that, I don't think they will. I believe deflation will take over...but of course, maybe it won't. 

Housing is about to take another leg down...the loss of value in housing is also deflationary. People are losing their wealth at an astronomical rate. 

Look at the charts for 1929 and the mid 30's...many people thought a new bull market was underway then. Some people will never learn.


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## el oro (Jun 16, 2009)

One year definitely doesn't make a bull market. The Japanese market has had 7 or so ~50% rallies in ~1 year periods over the last 2 decades. What is the net result after twenty years? A loss of 70%.


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## Spidey (May 11, 2009)

I'm not currently buying anything new, but I'm rebalancing at every opportunity.
Mostly from Canadian stocks to short-term bond, a little gold, a little Nasdaq index and a little emerging markets. The short term bond is the largest portion of rebalancing, by far, and IMO makes up for a little extra risk in the other categories.

There are positive signs for the market, including the amount of negativity in this thread. Usually the most dangerous times are when everyone is positive. For example, just before the 2008 crash, much of the talk on forums was about leveraging. Additionally domestic employment is picking up and China may be in the process of developing a significant middle-class who will have insatiable demand for our resources. Be prepared for everything - including a significant bull run or a significant crash.


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## bh23 (Apr 16, 2010)

I'll consider leveraging...when the market corrects and becomes a good buy.

Sentiment is largely bullish...one thread has no bearing on overall sentiment.

I wouldn't be surprised to see some similar behaviour to what has happened in Japan...but no way will it go on as long as it did in Japan.


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## financeguru (Jan 18, 2010)

wow, so much skepticism. I'm firmly in the camp that believes we are in the middle of a bull market and will continue to see the stock market trending upwards with corrections. This is not a bear market and the market will definitely not retest its lows of 2009. Yes there will be corrections that present great buying opportunities, but the economic/market sentiment is no where near that of 2008-9. Those who are sitting our right now, proabably missed the gains in 2009, will miss the gains in 2010 and finally when they get invested, the market will actually be overpriced - ripe for correction.

Reasons why i'm optimistic.
1. ISM manufacturing index @ 59 its most bullish reading since 2004, indicating that manufacturing activity is rapidly expanding.
2. S&P P/E ratio of 21, lower than any other time in the 2000s (apart from 2008-9) and way off freakish highs of 40s in 2000-2001. 
3. Most companies beating Earnings estimates, with increasingly optimistic outlooks for the future, specially from economic bellweather stocks like intel, GE.
4. Unemployment finally starting to reverse with the U.S adding 160000 jobs in March and more importantly the private sector contributing to most of these job gains. Interestingly enough despite all the doomsday scenarios, at the peak of the recession we didn't see the same percentage of job losses as we did in previous recessions
5. Consumers starting to spend, and so are companies...the longer consumer and industrial consumption remains muted, the more rapid the fire will be when they actually do start spending. Companies need to buy computers, consumers need to buy cars etc....its only a matter of time
6. Case-Shiller index suggesting that the worst hit R/E markets in the U.S are stabilizing with a lot of the deleveraging complete - people who could not afford to keep houses have sold by now.
7. Financial sector showing that major banks are well capitalized, enough that the U.S government has sold its stake in these companies at a sizeable profit. There is no impetus to cause a crash in the markets the way lehman did. (granted that one lurking danger left is soverign debt and specially U.S defecit)
8. Bernanke signalling generationally low interest rates for the conceivable future, which will put economic expansion on an even firmer footing

Japan or 1930 recession is not a proxy for what will happen in this recession, both are very different scenarios.....U.S monetary policy in this recession has been very different from the 1930s.


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## bh23 (Apr 16, 2010)

I appreciate your view...but I totally disagree. Only just over a year ago did the US avoid a depression. So, throw some money into the fire and watch the v recovery? I'm not buying it...not at all.

March retail sales included easter this year....as well as a rush of canadians going down there to get deals. 

There is no reason for this market to ride so high for so long on low volume...maybe you're right and this is a bull market...maybe you're not.


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## humble_pie (Jun 7, 2009)

i cannot think of a single recovery in which there have not been overwhelming, mind-numbing negatives.


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## humble_pie (Jun 7, 2009)

20 minutes ago
another positive story.
corporate tech spending has been on the uplift for months.


NEW YORK (AP) -- IBM Corp.'s first-quarter results show signs that the recovery in corporate technology spending is picking up speed.

IBM said Monday its earnings for the first three months jumped 13 percent to $2.6 billion, or $1.97 per share. In the same period of 2009 it earned $2.3 billion, or $1.70 per share.

The improvement came not just from cost cutting, which IBM relied on much of last year to raise profits. Revenue climbed 5 percent to $22.9 billion.


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## dogcom (May 23, 2009)

Actually since last summer the market has become mind-numbing possitive and I don't see any wall of worry. All that huge pile of debt that is out there is being ignored for the most part. 

At some point the bond and debt markets will destroy the stock market.


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## humble_pie (Jun 7, 2009)

ooh granny what big debts you have
_all the better to destroy your inheritance my dear _

ooh granny what big bonds you have
_all the better to strap you down with my dear_

ooh granny what big teeth you have
_all the better to eat you with my dear_


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## el oro (Jun 16, 2009)

dogcom said:


> Actually since last summer the market has become mind-numbing possitive and I don't see any wall of worry. All that huge pile of debt that is out there is being ignored for the most part.
> 
> At some point the bond and debt markets will destroy the stock market.


Not necessarily. Imo, the debt problems will cause stocks, commodities and interest rates to rise in unison.


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## bh23 (Apr 16, 2010)

how is it that debt problems will cause all those things to rise? Is that what happened in the 30's?


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## el oro (Jun 16, 2009)

Let's take the US as an example. As you may know, the US has a bit of a debt problem. One of the ways they will continue to address the debt is to issue debt. But as debt levels increase, foreign investors will demand a higher interest rate before even considering purchasing anymore. Then there's the fact that interest rates have more upside then down.

As for stocks and commodities, capital will be diverted from sovereign debt. Private sector equity will be a beneficiary of all the big money looking for a place to go. However, some investments will lag others so there is a risk of making money while simultaneously losing buying power.

Just my opinion. If there is a way for the debt crisis to crash the stock market, I'm all ears.


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## bh23 (Apr 16, 2010)

you don't think that sovereign debt concerns could bring the stock market backwards?? Greece was a concern...until it was bailed out. How many more bailouts can happen? Greece is likely the tip of the iceberg with sovereign debt...likely to see more crisis in the near future.

Have you seen how the market has performed in debt ridden Japan?? And if interest rates rise...look out.


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## MoneyMaker (Jun 1, 2009)

After searching for a while and having a few potential opportunities run up 20-30%, finally found a company that is trading below its liquidation value while still generating increasing owner earnings thus giving me a rather large margin of safety! 

There are deals to be found if you look hard enough


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## el oro (Jun 16, 2009)

Greece WAS just the berg tip, and their bailout was expected. As these issues continue to surface, bailouts can happen to infite in order to defer problems into the future. And it can continue until inflation/hyerinflation renders the fiat currency worthless. In doing that, debts would be easily paid off. This appears to be the route our world leaders are taking rather than having debt ridden countries default one after the other. 

The US is the biggest contributor to the IMF so the they are going to be doing the heavy lifting of the bailouts.

Agreed Moneymaker. Just like at any other point in time, yes there are deals to be found if you look hard enough!


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## Potato (Apr 3, 2009)

MoneyMaker said:


> After searching for a while and having a few potential opportunities run up 20-30%, finally found a company that is trading below its liquidation value while still generating increasing owner earnings thus giving me a rather large margin of safety!
> 
> There are deals to be found if you look hard enough



Going to share?


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## davext (Apr 11, 2010)

Having cash or low yielding investments is a major problem. The best time to invest is during this uncertain period, is it a bear market, is it a bull market?? Is it a V shaped recovery? W? If you're afraid to jump in now, then you probably won't have the balls to ride the roller coaster but "Fear" should not even be part of investing. Buy good stocks, set reasonable sell stops and then sleep well at night knowing that your losses are limited and your gains are unlimited. Take some of your gains when they make sense to, and then slowly and surely you'll be happy that you've made more money than holding cash or those high yield savings accounts/GICS would have ever done for you.


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## Toronto.gal (Jan 8, 2010)

bh23 said:


> From what I see in the US...and knowing that the US market is highly linked to ours...how could people be buying stocks right now?


I stayed out for most of 09 & this was a huge mistake, not doing it again! As the saying goes, "the best defense is a good offense". I'm now "greedy when others are fearful". Some of the best companies here and abroad are still trading at great prices.


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## dogcom (May 23, 2009)

Toronto.gal why does it seem better to be in now rather then last year. I am hearing a lot of people talking this way right now so I believe everyone is greedy right now when you should feel fearful. Having said that I don't think we are in for any sort of huge decline right now so play the trend up but be ready to jump ship.

I am thinking if the long bond market gets beyond the Feds control then watch out, or the problems in Europe cause the debt problems to get out of control then watch out. You should also know we are in a huge experiment in quantitative easing so no one knows how this will play out and watching the stock market go straight up without a normal step back makes me very uneasy.


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## osc (Oct 17, 2009)

dogcom said:


> watching the stock market go straight up without a normal step back makes me very uneasy.


You're not watching very well. We had a huge 10% correction in Jan-Feb this year and we are barely 5% up for the year. This looks like a classic bull run so far, like all the others.


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## Toronto.gal (Jan 8, 2010)

dogcom said:


> Toronto.gal why does it seem better to be in now rather then last year. I am hearing a lot of people talking this way right now so I believe everyone is greedy right now when you should feel fearful. Having said that I don't think we are in for any sort of huge decline right now so play the trend up but be ready to jump ship.
> 
> I am thinking if the long bond market gets beyond the Feds control then watch out, or the problems in Europe cause the debt problems to get out of control then watch out. You should also know we are in a huge experiment in quantitative easing so no one knows how this will play out and watching the stock market go straight up without a normal step back makes me very uneasy.


Oh no, I did not say that it is better now, it certainly was better last year, but I missed the boat, another words, I was fearful, but not anymore, now I am a little greedy, a little fearful and cautious too.  I am also more educated about investments than I was a year or two ago; I wish I knew then what I know now.

And yes, you're right, always be ready to jump ship because these are very different times indeed!


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## dogcom (May 23, 2009)

We are in a classic bear market like the 1970's and we are in a cyclical bull market within that which could end this fall or extend into 2011. If you look at the chart since 2009 it is straight up except for the small pull back here and there. Osc be carefull and make your money on this momentum trend but be ready for disaster.


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## dogcom (May 23, 2009)

Toronto.gal I think someone or the Fed is very nervous about a real stock market correction because it could cause the house of cards to really fall down. This is just an opinion but I am pretty sure manipulation is at play. Again the trend is up so play along, and it seems you are on the sell trigger just in case.


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## Toronto.gal (Jan 8, 2010)

dogcom said:


> be ready for disaster.


Don't scare me dogcom, I prefer the word 'crash'.


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## MoneyMaker (Jun 1, 2009)

I would love a huge meltdown, it would allow me to double down on everything I own


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## Toronto.gal (Jan 8, 2010)

Quote:

"If a stock is trading at a lower valuation than its peers, has a good dividend and has solid fundamentals, like a Telus, Manulife and Tim's, why are you not buying?"
[email protected]

Well, I did, but I'm losing patience with Manulife; has been sitting at $19/$20 for over 6 months. What to do with Manulife??!!


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## osc (Oct 17, 2009)

dogcom said:


> We are in a classic bear market like the 1970's and we are in a cyclical bull market within that which could end this fall or extend into 2011. If you look at the chart since 2009 it is straight up except for the small pull back here and there. Osc be carefull and make your money on this momentum trend but be ready for disaster.


I wouldn't call a 60% dip a disaster, but a great opportunity, like the last one.
It would be great if we'd get another 60% once-in-a-century kind of dip, but I am very skeptical we'll get it that soon. My bets are for a normal bull run for the next 3-5 years with SP500 returns of 10-15%/year.

We already had a repeat of the 70s in the 00s. For a better prediction of this decade I would check the 80s.


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## andrewf (Mar 1, 2010)

Toronto.gal said:


> Quote:
> 
> "If a stock is trading at a lower valuation than its peers, has a good dividend and has solid fundamentals, like a Telus, Manulife and Tim's, why are you not buying?"
> [email protected]
> ...


My guess is that the market is cautious about new capital requirements for insurance, which would necessitate more dilution for current shareholders. I'm owning MFC as a long-term investment.


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## dogcom (May 23, 2009)

Osc if it was like the 80's then I would be in long bonds and expecting rates to keep dropping. But if the Fed and so on can keep up huge quantative easing with bond holders not caring and also squeezing the shorts at every good opportunity then we could go on for 3-5 years. I for one do not think this fraud can go on that long but we will see.


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## andrewf (Mar 1, 2010)

dogcom said:


> Osc if it was like the 80's then I would be in long bonds and expecting rates to keep dropping. But if the Fed and so on can keep up huge quantative easing with bond holders not caring and also squeezing the shorts at every good opportunity then we could go on for 3-5 years. I for one do not think this fraud can go on that long but we will see.


Bonds are bumping up against a hard limit. Rates can't go to zero.


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## Leading Edge Boomer (Apr 5, 2009)

> My guess is that the market is cautious about new capital requirements for insurance, which would necessitate more dilution for current shareholders. I'm owning MFC as a long-term investment.


I bought MFC when the market crashed and financials were depressed. Sold 60% of my holdings for a 65% capital gain on them. Holding the rest for the long term as a steady dividend payer.

I did the same with BMO and sold some for 96% capital gains recently. Holding the rest for a long term dividend payer.

Depressed markets can be a great time to buy , if you can!


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## Toronto.gal (Jan 8, 2010)

andrewf said:


> I'm owning MFC as a long-term investment.


Yes, me too, but I invested a large amount of money in this company, which could have been earning me a profit elsewhere until this stock decided to move in more than just the negative direction. Might just get rid of 1/2 the stock because it does not make sense to me, in a recovery period, to have large amounts of money doing nothing. I guess I did not listen to Kevin O'Leary's 5% rule. 

Btw, I quite enjoy the Lang & O'Leary Exchange.

http://www.cbc.ca/money/story/2010/02/23/f-lolx-show-information-page.html


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## MoneyMaker (Jun 1, 2009)

Toronto.gal said:


> Quote:
> 
> "If a stock is trading at a lower valuation than its peers, has a good dividend and has solid fundamentals, like a Telus, Manulife and Tim's, why are you not buying?"
> [email protected]
> ...


What do you have Manulife valued at? and has there been any fundamental changes to its operations since your last valuation of the business?


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## OptsyEagle (Nov 29, 2009)

_Well, I did, but I'm losing patience with Manulife; has been sitting at $19/$20 for over 6 months. What to do with Manulife??!!_

Now if it was trading at $40, would you want to keep it, since you state that you would like to sell it because it is still at $19/$20.

Might want to articulate your investing strategy a little more so that you don't let your emotions take control of it.


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## Toronto.gal (Jan 8, 2010)

*@MoneyMaker:* I'm not sure that it classifies as fundamental changes, but this company is doing things that have never been done before, at least I don't think they have. For example, they are now seeking growth in urban as well as rural areas, I'm specifically referring to their expansion in China & Vietnam & their introduction of 'micro-insurance'. I'm sure they wouldn't be doing this if there wasn't profit to be made, but the premiums of these policies are micro in size indeed, so I'm having a hard time grasping this concept. 

*@OptsyEagle:* if it was trading at $40, I would have made 110%, so yes, I would have sold some. I just feel uncomfortable that it has been my only stock that has been stuck at almost the same price for over 6 months. I still believe in this company long term however & despite share price performance of 3.1%, -48.7% and -7.1% in 2007, 2008 and 2009 respectively. Not surprisingly, the 50% dividend cut is still in place.

Thank you both for your comments!.


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## Doug Out West (Apr 25, 2010)

have been selling for last 3 months though have bought some lately

XOM, SUN-T, state street -N, FMO-UN foremost as should do well with new oil sands projects

have buys in on Agrium below $60

shorted Imax which isn't going that well


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## bh23 (Apr 16, 2010)

where's the guy who proclaimed we were in a bull market?? I wonder if he has changed his tune...


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## dogcom (May 23, 2009)

We are in a gamblers market which claims bulls and bears at this time, but for sure we are not in a secular bull market.


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