Why Now Is Not the Time to Sell

Two weeks ago, Vanguard founder Jack Bogle -- who Fortune magazine named one of the four investing giants of the 20th century -- visited Fool Global Headquarters to talk about the collapse of the stock market.

Bear markets, he believes, separate the speculators from the true investors. Your average speculator is three times more interested in the price of a stock than the merits of underlying businesses -- and bear markets can shake these speculators out of stocks, sometimes forever.

The real investor, by contrast, obsesses over the long-term potential of a business and tries to create true wealth over rolling 10-year periods.

Are you an investor, or are you a speculator?
According to Mr. Bogle, that single distinction makes all the difference in investment returns over a lifetime. True investors -- those who do not try to time the market -- take home most of the rewards of the market.

That's tough to accept after the second-worst year for stocks in the last century -- because we're all hurting, speculators and investors alike. But Bogle's right. When you factor in frictional costs and short-term tax rates, it's extremely difficult for speculators to make long-term money by trying to time their way into and out of bull and bear markets.

Just look at the decline from annual highs of these five truly great American companies:

  • Berkshire Hathaway (NYSE: BRK-B  ) , down 38%
  • IBM (NYSE: IBM  ) , down 38%
  • FedEx (NYSE: FDX  ) , down 38%
  • Disney (NYSE: DIS  ) , down 37%
  • Microsoft (Nasdaq: MSFT  ) , down 47%

These are companies with multidecade histories of success. They're five of the greatest businesses in American history. Yet in a matter of just months, their value has been nearly cut in half. And you don't have to dig to find greater calamities. Gannett (NYSE: GCI  ) , the publisher of USA Today, is down 80% from its highs. Bank of America (NYSE: BAC  ) is down more than 70%.

The world's stock markets right now are a graveyard of broken dreams. And yet, on average, had you attempted to sell these stocks near their highs, to pay the commission costs, to pay the tax penalties, and then to try to time your way back into them, you'd almost certainly have failed. Jack Bogle has proven this over his 60 years of investment scholarship and application.

Investors, on the other hand, suffer along with everyone else when the bear market hits, but let time and compounding work their magic. Just look back on history -- master investors like Charlie Munger and Shelby Davis suffered big losses during the 1973-74 bear market en route to growing portfolios valued in the millions (or, rather, the hundreds of millions).

Your million-dollar portfolio
We think you can do the same -- no matter how much you've lost. And we've returned to the world of publishing in the belief that now is not the time to sell your stocks. If anything, it's the time to scrabble together cash to buy more.

In our first book in more than five years, The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio, we present the investing playbook we believe will help you amass that million-dollar portfolio. The book (on sale today) presents the strategies -- value, growth, small, large, domestic, international -- we preach and practice every day here at The Motley Fool. But it goes one step further: It shows you how to put them all together.

Order a copy today and you'll also get some of our advisors' favorite stock ideas. Interested? Just click here for more information.

Good luck in 2009 -- and Fool on!

Tom Gardner is co-founder and CEO of The Motley Fool. Tom owns shares of Microsoft, but no other companies mentioned in this article. Disney, FedEx, and Berkshire Hathaway are Motley Fool Stock Advisor recommendations. Disney, Berkshire, and Microsoft are Inside Value selections. Bank of America is an Income Investor recommendation. The Motley Fool owns shares of Berkshire Hathaway and is investors writing for investors.


Read/Post Comments (64) | Recommend This Article (218)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 30, 2008, at 5:08 PM, WasANichelender wrote:

    The headline should have been 'Why to buy our new book'! But riddle me this, if 4 months ago you liquidated all of your stocks and mutual funds, tell me why I should jump back in TODAY to potentially lose what I saved by timing it right? Yes, even a blind squirrel finds a nut!

  • Report this Comment On December 30, 2008, at 5:49 PM, flyingdutchmanjr wrote:

    How to have a million dollar portfolio :

    Start with a two million dollar portfolio and stay fully invested: It was always "no time to sell"

  • Report this Comment On December 30, 2008, at 6:08 PM, Retlew wrote:

    Smart investors sold a long time ago. I sold all of my holdings exactly a year ago. Only fools stayed with the market. The way it looks, by late spring/early summer, I will be back in the game again. My losses have been about 5%. My gains will be huge. The market can be timed. I also timed the market successfully in 2001. To gain in the stock market, a person needs an exit strategy. Without one, a person is nearly certain to lose money in the stock market now and in the future. Mr. Bogle is a business man whose business is running funds. Of course, he wants people to stay in the market, always. That's how he makes money.

  • Report this Comment On December 30, 2008, at 6:12 PM, ClarkeDiann wrote:

    Yes master investors like Charlie Munger and Shelby Davis in 73 -74 had one advantage that is

    being over looked today. The Up Tic rule isn't

    being enforced by the SEC today and I believe is

    allowing Speculators to short a stock down quicker

    and futher than it has in the past time frame. Please let me know if I'm not correct on this one point in my

    thinking and understanding.

  • Report this Comment On December 30, 2008, at 6:31 PM, kayakmastr wrote:

    The dogma is that you can't time the market. Where does this dogma come from? From those who run mutual funds and investment services. Of course, they don't want you to bail out when prices are going down. After 25 years experience, it is clear to me that a downward trend is down, and SELL is the order of the day. And when it is clear that the trend is UP, then TMF recommendations will help us identify the best places to put our $$$.

  • Report this Comment On December 30, 2008, at 7:37 PM, ZD wrote:

    "Why Now Is Not the Time to Sell" but it is the time to close failing investment newsletters that Tom G himself opened at the hight of the bull market. Walk the walk...

  • Report this Comment On December 30, 2008, at 10:08 PM, breaktrack wrote:

    Retlow,

    I wish you would share your secret on how to successfully time the market like you did a year ago and in 2001! You should be on Wall Street making gazillions.

  • Report this Comment On December 30, 2008, at 11:48 PM, simonkathrein wrote:

    I am actually quite concerned with the possibility that this is not really a recession, but a depression. If you are 30 years old and can just buy more shares every year in these great companies for the next 30 years... then great, but if someone who is 63 reads this article... it's very dangerous. A 63 year old doesn't have 15 years for this to recover, and in my humble opinion they should be in GUARENTEED investments at that age. If they are a trader, with knowledge, then they can trade 20% of their portfolio with different strategies playing both sides of the market... but If they are not then it is very dangerous to be invested at this time.

    One of the economists I respect has an interesting point... there may be an Obama rally to mid 09, but after that it is very probable that the next leg of the downturn will happen.

    Click the link, scroll down to the bottom and watch the 2 youtube videos. Then read the article.

    http://stockcapitalist.com/2008/12/harry-s-dent-jr-new-book-...

  • Report this Comment On December 31, 2008, at 4:11 AM, wuff3t wrote:

    "The dogma is that you can't time the market. Where does this dogma come from?"

    All the great investors. I can't think of one who advocates timing the market. I can think of plenty of wannabe great investors who say they know how to do this, but when I think about the really great, really wealthy investors, they all buy for the long-term.

    ""Why Now Is Not the Time to Sell" but it is the time to close failing investment newsletters that Tom G himself opened at the hight of the bull market."

    Tom opened Stock Advisor during the last Bear Market in 2002.

    "I am actually quite concerned with the possibility that this is not really a recession, but a depression...One of the economists I respect has an interesting point... there may be an Obama rally to mid 09, but after that it is very probable that the next leg of the downturn will happen."

    And perhaps he's right. But bear in mind that economists are dreadful at predicting market downturns. How many predicted the current recession? They use data modelling techniques that simply don't allow for unpredictable events.

    You're getting carried away worrying about a depression. We're nowhere near that (the most common definition I can find works on a 10% drop in GDP, which at this point is pure speculation).

  • Report this Comment On December 31, 2008, at 4:18 AM, dividendgrowth wrote:

    What a round of merciless bashing of poor Tom!

    Although I enjoy bashing certain clueless TMF writers these days, I think Tom G should deserve lots of respect for going into asset management business at this time.

    The thing with the market is that the more retails disagree with you. the more likely you are right.

    The latest mutual fund statistics show that for the first time since 1992, assets in money market funds have exceeded that in equity mutual funds.

  • Report this Comment On December 31, 2008, at 10:25 AM, oneilldp wrote:

    No one got out of the market in October 2007 at its height. I got out of the market in August 2007 because of the credit market crash and knew some of it would spill over to the stock market. I had know idea how bad it would get. I began to tip toe into the market in late September 2008. I put a large portion of my wealth in October 10th thinking it was the market bottom and buying BRKA at $105,500. I've got all of the equity exposure I want back into the market, but my equity portfolio is still down about 15%. My sales in August 2007 averaged around when the DOW was at about 13,000 overall and my re-entry averaged around 9,000. BRKA was a large weighting of that and that is why I am down around 15% from my entry point. Anyone who says they perfectly timed the market is lying. Yes, I am calling Retlew out.

  • Report this Comment On December 31, 2008, at 6:24 PM, dividendgrowth wrote:

    I dumped most of my stocks in the first two weeks of 2008. But I tried to pick the bottoms too early in the week of Oct 6, and that cost 8% of my portfolio.

    Overall I'm down about 14% this year, after gains of 33% in 2007 and 21% in 2006.

    For small investors, you either time the market or you dollar cost average. There is no other way.

  • Report this Comment On January 01, 2009, at 2:01 AM, jerseyjac wrote:

    people who can time the market are as accurate as a broken clock at least twice a day they are balls on accurate.As this market twitters away the high and the mighty have had they"re comeupence, fault finding nor pontificating are counter productive to solving a problem. Throughout the above threads there is a demand to come save us from the real world.the mothers milk of investing in todays market and for EVERY stock you own----buy a covered call for 10% more than the price of your stock with an expiration of jan2010.you will not pay 15% cap gains until 2010 on the cash premium you are paid for the covered call.take the premium and try one of the alternate investment proposals I've read in the above posts.the key to this is the option will never move up or down farther than the underlying stock if the sock does not move the time decay will EARN you the premium upon expiration.Think of this as car insurance when is the last time you got a premium back from them.if your car(stock) crashes so to the buyer of your option is out the premium that you sold you still have a crashed stock but cash in your pocket although not all of the lose,already thought of that rewrite covered call at 10% above and collect cash should be more than enough to make up for paper loss of stock continue to collect dividends while protecting asset.investment strategy recognizes capital presrevation,income from investment at nominal tax consequnce with ability to tax plan 2yrs in advance,dividend and covered call reinvestment will accelerate as compound interest doe to simple interest.see simple problem solved no one to blame now but yourself

  • Report this Comment On January 01, 2009, at 1:15 PM, davsleep1 wrote:

    If you held the S&P for the last 10 years you lost money!!

  • Report this Comment On January 02, 2009, at 1:19 AM, courtneTHEgreat wrote:

    Hello AMERICA! Are we forgetting the baby boomers? In 1929, what did the baby-boomer types do to show us today that that trend will be the trend of today??? This market may recover in ten years to the level of 2007.... But baby boomers and other factors have to be counted. Now IS THE TIME TO GET OUT. Invest in things that will support the old babies which are retiring and call it a day. Prices will flutter, but fall until we see a real support. This is a depression... after the recession idea burns out.... Good Morning America.

  • Report this Comment On January 02, 2009, at 11:47 AM, oneilldp wrote:

    Jerseyjac,

    What are the tax consequences for long puts and long calls (more than 12 months)? Also, aren't short ETFs automatically a short term capital gain regardless of how long they are held? Please correct me if I'm wrong. I know shorting is a short term capital gain regardless of how long they are kept. Please let me know. Thanks.

    -Dan

  • Report this Comment On January 02, 2009, at 1:43 PM, meche007 wrote:

    I agree with TomG's assessment, and so am individually investing for the first time now (whatever I can afford). Not all companies will recover; the trick is finding good companies that will weather this recession and come out stronger.

    Of course, my 401(k) has taken quite a battering... oh well.

  • Report this Comment On January 02, 2009, at 3:03 PM, blakelyken wrote:

    I have been 80% in cash all of 2008 and traded the other 20% periodically. I'm up 0.85% total for the year. Compared to Munger and Buffet, I'm a genius.

    In October when Warren said he was buying US stocks with both hands, I almost threw in the towel and bought BRKB at $4000.00. It is now $3100.00

  • Report this Comment On January 02, 2009, at 3:29 PM, JAYBOSLIN wrote:

    You are kidding! If you wrote this two months ago it would make sense. Who is even talking about selling now? Not even the media pundits are "answering" the public's questions now about whether they should sell.

    It is time buy!

  • Report this Comment On January 02, 2009, at 3:43 PM, PnmiK1 wrote:

    "now is not the time to sell your stocks. If anything, it's the time to scrabble together cash to buy more."

    Tom G., pray tell how will most investors "scrabble together cash to buy more" when they followed the financial advice of 'experts' such as yourself to 'stay in the market'?

    Before the 'crash' I rolled my 401(k) into the money market 'temporarily' while making up my mind what to do next. That bundle is still sitting there.

    Thru this quirk of circumstance I am seeing gains, while poor suckers all around me are cursing their 'expert' advisors!

  • Report this Comment On January 02, 2009, at 4:28 PM, richardrollo wrote:

    Time to sell? No, it's too late. Time to buy? Maybe, depending on how long you think it will take to recover. But, after the 2000 downdraft and now this, I'm no longer buying into Bogle's favorite vehicle, the S&P 500 Index fund. I think it's the financial version of the Myth of Sisyphus. Some of the stocks I bought in the old Drip Portfolio did a whole lot better than 500 Index, both on the upside and the downside After the 2000 downdraft, I bought electric utilities and natural gas pipeline stocks. Those stocks have held steady. So, the 500 Index turned out to be my biggest loser. Clearly, purely mechanical or "rational" investment strategies are a bust. Yet, Madoff shows that trusting "professionals" with your money is an even bigger bust. Anyone know what Randy Bethumo is doing these days?

  • Report this Comment On January 02, 2009, at 4:29 PM, wtcccoach wrote:

    I think it is easy to be a result player and mention the obvious things about the market today. Yes the market has had a terrible run; yes if you got out in time you saved alot of money. I've always thought of investing as a fight between the amount of risk you are willing to take compared to the reward you might get. The problem with many investors is that they aren't investors but gamblers. Do you think that microsoft will be selling at today's prices in 3 years? If the answer is no then put your money in microsoft. If your not sure then you should not be investing. From my experience each individual has a time horizon that they look for. I believe that you shouldn't put money in the market unless you can sit on it for at least 5 years. This is no guarantee for success but I can say that I've been buying good companies recenlty with the hope that they will be much stronger in 3-5 years than they are now. I heard this from a friend of mine that is one of the great investing ideas. If you bought ABC company at 50 dollars a share and you thought it was a good investment. If the stock is down to 25 dollars and the fundamentals haven't changed it is now a great company at 25.

  • Report this Comment On January 02, 2009, at 4:31 PM, JOBOROAL wrote:

    Every knowledgeable person I know in the financial community locally pulled out of the market and was in treasuries and gold early in the year. This includes people who made their fortunes selling financial advice to pension funds. That was enough handwriting on the wall for me to bail in the first quarter. I believe that the market has a long way to go on the down side.

  • Report this Comment On January 02, 2009, at 4:35 PM, Jibsail wrote:

    Come on, hawking a book a this time, more appropriate during the up beat days, long past. I would judge most who held till now will like find your book gratuitous at best, and self serving at worst. Sure, I stuck it out and will though I am down 33% on Stock Advisor recommendations. Sell now? What and lock in those losses? No, I will hold, and not because Motely thinks one should. Too late to bail unless you buy the doomsayers words of worse to cmoe.

    Yes, Tom the market will be back one day, but at 66 tender years,will it be in time, except to pay the funeral expenses? Motely writes for the youngesters who have the time. I follow an asset allocation plan-- 55% in bonds, 30% in dividend stocks, not from Income Advisor, by the way, but from Morning Star (more conservative and timely with sell recommendation), the balance I place in recommended stock by the Stock Advisor. Anyone who did otherwise was/is, well, unwise. Keep you book, Tom; you missed last call unless you have cash, but, if you held, where is the cash?

  • Report this Comment On January 02, 2009, at 5:07 PM, lerej wrote:

    America the beautiful! Let's just all argue, and cast blame for as long as we can. Let's sit in a room and point our fingers until we all wither and die, because we argued who was at fault for not feeding us. Buy, Sell, so long as you don't claim responsibility for your own actions it's ok. Greed caused this.

    Will the market come back, of course it will, why? The entire world isn't going to start farming, mining, smelting, drilling, manufacturing, insert your verb here, in their back yards now are they?

    People are still starving, while banks cash multi billion dollar checks, while I can't find a single soul that will dig a ditch for $20 an hour.

    Most of these responses are like joining the military then getting shot while you were disregarding your orders.

    Slow and steady wins the race. Optimistically down 30% (started investing 8-07) Greed doesn't pay well at all.

    Constructive advice would be fantastic, for haters of market players, there's always vegas, atlantic city, the internet, for the rest of us there's sound unbiased financial advice...

  • Report this Comment On January 02, 2009, at 5:54 PM, sjr1210 wrote:

    If you are a Baby Boomer, you should be mostly out of the stock market anyway. All those crying about the Boomers losing money have no real idea on how to invest. Any diversified portfolio manager would warn you that you should be only about 25% (and that's even high) in stocks 10 years from retirement to minimize crises like these. The money should be more secure and earning a steady interest rate, not gambling on the iffy markets. I'm not trying to sound like a know-it-all, but my generation (GenY) has to learn on our own about how to save for retirement because we won't be getting that fabulous supplemental income known as social security by the time my retirement rolls around. If we can manage to handle student loans payments, lower wages, and saving for retirement, I don't want to hear about how rough it is for BB's to retire in 10 years from now.

  • Report this Comment On January 02, 2009, at 5:56 PM, bossmanhoss wrote:

    Well now. Listen to an expert. This is not a depression and will not be. A depresion has 20% plus unemployment to be a depression. Have we hit that? No of course not. I lost money in this one too. I did not consider the panic sell-off of good stocks. I stayed in and am still in.They are all underpriced now and by 6 months to a year. The ones that say they can time the market are in for a suprise. No one can. Not even the great Bob Brinker can. He too missed this one.....One more thing. If the ones that say they can time the market is true. Then 2 days ago they all got back in. right.(:-)))))

  • Report this Comment On January 02, 2009, at 6:45 PM, Fisherwon wrote:

    Microsoft down 47%. For this stock to make

    any comeback it will have to perform some

    near miracles. The largest shareholder (Mr Bill),

    is selling so many of his shares, each quarter,

    that I can’t possible see how the market

    could absorb those new shares and the price go

    up much without something pretty spectacular

    happening at Microsoft.

  • Report this Comment On January 02, 2009, at 6:55 PM, wagnermr14 wrote:

    Just more garbage from the Fool.

  • Report this Comment On January 02, 2009, at 7:01 PM, Eeyor9 wrote:

    Stay the Course, thats what brokers told their clients in 1928. The Virus of deflation has infected our economy. The Market will up tick with the New Year and the Inauguration. Then get out. Fixed annuities earn good interest and avoid market risk. Next year I predict Dow 4000, food riots, job marches, and revolution

  • Report this Comment On January 02, 2009, at 7:16 PM, SCinCO wrote:

    Eeyor9 .... you are smart.

    through New Year and Inauguration will be good.

    After that...down.

    but common, riots; revolution?

  • Report this Comment On January 02, 2009, at 7:28 PM, 90669156 wrote:

    Generation X calling.

    For those of us who have already lived through 2 housing crashes, I remember 11% unemployment, a nasty stock market crash etc etc. In hindsight I wish I had had the spare cash to by property and stocks back then.

    Hold tight, if you are not a marketeer you can drip feed for the next 20 years. We should be beyond Dents depression by then. Because if you were aint out by July 2008 you are in for the long haul!

  • Report this Comment On January 02, 2009, at 7:41 PM, JoeJoeBubbaJr wrote:

    I'm amused by all the folks who have timed their way out of this market, and who now think they are smarter than John Bogle and Warren Buffett. As someone who has been a professional investor since 1978, I'll simply state the obvious. I don't know what your day jobs are, but as investors you are NOT smarter than Bogle and Buffett. You are certainly dumber.

    Given that fact, ask yourselves why they are arguing for buy-and-hold when it seems so obvious to you that you can successfully time?

    I remember back in 1999 when all the techies were telling me how much smarter they were than Buffett. We know where they ended up.

    Timing is in the long run a fool's game. (Not a Fool's game, which implies a greater amount of smarts.) At some point you miss the market, and in my experience that is simply irrecoverable.

    Who is it that said fixed annuities offer good rates? Another fool. Fixed annuity economic returns are based on Treasuries, and are about 2% right now. The cash flow yield is greater because you are spending your principal. If you live twenty years, inflation will destroy you.

  • Report this Comment On January 02, 2009, at 7:49 PM, JoeJoeBubbaJr wrote:

    One of the economists I respect has an interesting point... there may be an Obama rally to mid 09, but after that it is very probable that the next leg of the downturn will happen.

    Click the link, scroll down to the bottom and watch the 2 youtube videos. Then read the article.

    http://stockcapitalist.com/2008/12/harry-s-dent-jr-new-book-...

    Puh-lease! If you value your financial future, NEVER pay attention to Harry Dent. He did interesting work in the mid-1990s, then blew it all with one wacky prediction after another, trying to keep his $50,000 speaking fees going as the market blew past his earlier predictions.

    He was so immensely popular a fund company gave him a mutual fund to manage. He lost so much money so quickly they pulled the plug.

    Buffett, yes. Bogle, yes, Gardner, maybe. Dent, absolutely not.

  • Report this Comment On January 02, 2009, at 8:06 PM, lucindacmt wrote:

    I'm not a huge investor. I don't follow every day of the market. I can see the obvious...that now is not the time to sell great stock. Trying to time the market is for thrills. Why else? I am bumed this article is another sales pitch.

  • Report this Comment On January 02, 2009, at 8:13 PM, NotJesseL wrote:

    I tried to time the market once back in 1987. After it crashed, I figured it had some more legs down to go so stayed in cash for I don't recall maybe a year or two. That cost me big time.

    I like what Cramer says about investing. Buy and homework. Each company is different. Technical analysis may be relevant in the short run, but long run, its about the value.

    I don't agree that boomers should be all out of the market. After all, if you are going to live another 30 years (say you are 60-65 or so), then you don't want to be 100% in cash, gold, and treasuries. (but maybe its time to stop playing the longshots).

  • Report this Comment On January 02, 2009, at 9:15 PM, MotleyGulibles wrote:

    Tom Garner, if you are so smart why don't you make your fortune off your own advice not off the measly subscriptions of the rotten services and follow up books you tout? At one point MDP was down 40% + (-400k) you fellows invested your cash pos.+ 250K in SPDR and lost 33% + on that position alone when you had to liquidate it to raise cash. Bad move considering that was supposed to be your liquidity war chest to pick up basement bargains. Some of your positions were down more than 80% ( and you had travelled to Ireland to make sure the ol' bank was safe and sound) and I can go on. Sure those subscribing today will find the MDP picks at a 45% + discount compared to what MDP subscribers paid a year ago after the MDP was touted as MF 's ultimate financial service. Today, as one poster rightly said, a blind squirrel could find a good nut in this mess no need to have the Garner bros come in to the rescue.

    If own dares to trust them, common sense and intuition are often the best advice.

  • Report this Comment On January 02, 2009, at 9:29 PM, MotleyGulibles wrote:

    T.Garner "Together, we really can turn Panic 2008 into PROFIT 2009. And look back warmly on this once-in-a-lifetime buying opportunity!"

    What do you tell those who followed your MDP advice in Nov. 2007 and are down 45%? Sure words are easy, now is the time to buy etc .. will you guys front your early subscriber the cash? No. Its easier to start the hype again with fresh investors, as long as the sliding ruler of events and opportunities offers new subscribers a chance you fellows are in business, the others who bit the dust will just have to understand that some events are beyond the MF's control, right? And the hype goes on...

  • Report this Comment On January 02, 2009, at 10:41 PM, engineer8 wrote:

    The time to sell was a year ago, when the house of cards was coming down. The technical guys got that one right. Selling now seems pretty foolish. If you don't want to jump into a bunch of stocks, try a good fund from a manager with a great track record. FAIRX is one.

    Now is when the stock pickers can shine.

  • Report this Comment On January 02, 2009, at 10:57 PM, notbuyingit wrote:

    With all due respect to the Fools' staff, i have gone from thinking this is a special organization with smart people who really want to help people while they make money to a special organization with really smart people who really want to help themselves. It all just comes across as a sales pitch now; you're losing your brand identity. Are you harvesting the business?

  • Report this Comment On January 02, 2009, at 11:22 PM, Jimmy2008 wrote:

    Some investors have so many equities in their portfolio that they can not sleep at night. They shall sell into the current rally to change asset allocation for their risk tolerance.

    Some investors might sell into the rally to buy other asset class like commodities, international bond funds, investment grade and junk bond funds etc.

    I am an amateur investor, so please don't laugh at me. My portfolio gained 5% last 12 months as I ovweweighed in cash in the first 10 months and movewd into equities in the last month, fairly lucky. Just my 2 cents.

  • Report this Comment On January 03, 2009, at 12:18 AM, baldmandave wrote:

    what you need is a well balanced portfoilio. For those who can time the market, more power to you. You are 1 in 10 million. I've been doing this for years, and other than a few good guesses, I can't even come close. What I did do (I'm 56 years old) is put together a balanced portfolio with individual dividend paying stocks, mutual funds, corporate and municipal bonds, fixed annuities, variable annuities (by the way Prudential's APEXII guaranty's a minimum 7% per year return for income), non traded REIT's (6% for a 3 year REIT), CD's and cash. I'm down for the year about 2.5%. My average return since 2000 is 9.8% AND I don't have to be a timing expert. By the way, I do have a financial advisor and he gets a Christmas present from me!!

  • Report this Comment On January 03, 2009, at 1:53 AM, detroitme wrote:

    Please tell us, how did you find this financial advisor? Does he want any more clients?

  • Report this Comment On January 03, 2009, at 4:07 AM, simonkathrein wrote:

    Concerning the idea's on Harry Dent from JoeJoeBubbaJr above, i guess you just have to realize where Dent is strong in his knowledge... and where he isn't. His exact numbers may have been off, but his logic is accurate. One thing is certain... 90 million baby boomers are going to have to retire within the next 15 years. That is going to have it's toll on the economy in ways i don't even think we've imagined yet.

    With that in mind... i'll heed his words of caution.

  • Report this Comment On January 03, 2009, at 7:09 AM, TicoHombre wrote:

    What are they going to retire with? They will not be exiting the market in droves because more than ever before they need the returns from the market to be able to retire in the future.

    For all those taking money out, there will be an increasing population putting money back in.

    Again, I ask...Where else will they protect against ever increasing inflation?

    All the doomsday talk is frightening. I have become a more conservative investor having now invested mostly before the tech bubble and the recent crash. I lost big both times, but I've paid my "learning fees," "stupid tax" or whatever you want to call it. I'm in. I'm trying to be smarter and wiser this time. I have no non-mortgage debt. I have rental real estate that is and has been cash flow positive after vacancy, maintenance & rental management allocations since purchased in 2004/05. I maintain 4 mortgages and don't need any government handouts to save my houses. I am self-employed and weathering this recession well (at least for the time being).

    What else should I be doing? Not sure. I just keep reading and developing an equities portfolio that should survive and hopefully thrive even during down times. I have oil/gas/wind/ and a pharma. Those are diversified in 3 continents and half pay dividends. So far I am up 11.44% since starting over late last year (2008) and that is .46% over the S&P 500, for the same period. However, expect to widen this gap considerably going forward.

    The hardest part for me has been staying disciplined and sticking to the plan. Buffet has been a huge help and the Fool (while certainly not perfect) has helped me to appreciate Warren Buffet as an investing mentor.

    That's it in a nutshell.

    I wish everyone balance, discipline & successful investing going forward.

    TicoHombre

  • Report this Comment On January 03, 2009, at 8:00 AM, danzinn wrote:

    I am starting to believe that subscribing to this news letter is a bit foolish. So far 90% of what I read are sales pitches. The current one is to buy a book. Of the several articles they all say the same thing.

  • Report this Comment On January 03, 2009, at 11:17 AM, snakeflake wrote:

    Now is the time to quit listening to the FOOL! That is if you ever did. They are a bunch of flip floppers who generally tell you what you already know. I didnt sell my stocks during the downturn because I did not own any. I did however convert all my 401K holdings into the plans monsy market acct. before things got bad. I have been waiting for the opportune moment to get into stocks, and its here. I read the Fool for laughs, especially the comments, but act on their advice, hah. Do your own homework. It would be nicew if had a nifty advice website to hawk my books. Note to self: write a book on who to invest in and sell it on a website.

  • Report this Comment On January 03, 2009, at 11:36 AM, gmckinn49 wrote:

    Tom and Dave,

    do you still believe in the stocks you have suggested in the Motley Fool and the Motley Hidden Gems.

    I have been following and purchasing most since late 2006.

    My portfolio is down 40%+ with all of these purchases. I am just 59 and should I sell these to buy the new picks in the last two to three months.

    Do these new picks have more upside then the previous picks?

    Please help as I was to retire at 62 but now it looks like 66 (full SS).

    Your thoughts!!!!!

  • Report this Comment On January 03, 2009, at 11:39 AM, sunnyintexas wrote:

    I want to say that I appreciate all of your comments. I am a neophyte investor, putting my savings from the last year into the market on October 13, 2008, and adding to it each paycheck. I am a small investor - to date I have deposited $13,200. I read the Fool's book, the orange one with the brother's wearing Fool's caps on the cover.

    Against their advice, I borrow on margin to increase my investment. I followed their advice and study the financial statements before I invest in a company.

    As of the close of the market yesterday, my $13,200 is worth $16,861.

    I have already admitted that I am a beginner, so for what it is worth, this has been my strategy. Naturally I buy stocks that I think are good investments; most pay good dividends. I sell some covered calls at an exercise price that will give me a good return. I have sold cash covered puts, if it is for a stock that I would buy at that price anyway. All but one of the options have expired. The one, AT&T, was assigned at 14 cents above the exercise price, but I sold the call for $1.49, so it was still a profitable decision.

    I have done this thinking it is a good strategy in a volatile market. So far it seems to be working. When the market becomes less volatile, I will change my approach, an "in for the long run" kind of investor.

    I have also followed the advice of The Fool's, and don't pay for investment newsletters, including theirs.

  • Report this Comment On January 03, 2009, at 11:51 AM, Jimmy2008 wrote:

    To: baldmandave,

    Some people thought that they had high risk tolerance when time was good. However, they don't have the type of risk tolerance required when time is bad. For these people, it is probably good time to rebalabce portfolio now (like selling in the rally).

    I can not time markets. However, buy and hold has noy paid off for the last 10 years. Investing without looking at macroeconomic data is unlikely a good idea. Many star fund managers overweigh or underweigh in certain sectors. Many funds have over 30% stock turnover rates. That seems to be market timing to me.

    I lost quite some money in the last 10 years from investing in mutual funds. However, I gained about 25% on the money I managed myself in the last 7 weeks. I am determined to learn to invest myself, from Fool, seekingalpha, books etc.

    Thanks to all the help from this website!

  • Report this Comment On January 03, 2009, at 11:59 AM, Jimmy2008 wrote:

    I once read something like this (written by a well known investor): don't subscribe investment newsletter, write one!

    There are a lot of excellent free resources available, like seekingalpha.com, this site, FT.com, some videos on youtube.com etc. Sometimes I check investment newsletter written by Hussman etc (they are good and free).

  • Report this Comment On January 03, 2009, at 12:12 PM, palaceplace wrote:

    oncd again the paid touts are out in full force, jan.5 marks the beginning of the new year. just because markets lost 40% in 08, doesn't mean they can't lose 40% again in 09, THEY WILL. the fool really, honestly does suck. nothiong but a bunch of paid touts. see u in sept., with dow at 4,000.

    SRS,TWM,DXD,SDS,andQID. BUY THE CALL OPTIONS.. IT WORKED IN O8. IT WILL WORK IN 09. as b bonus, DZZ OR GLL, AND WATCH GOLD GO TO $300.

  • Report this Comment On January 03, 2009, at 12:25 PM, pric6760 wrote:

    A comment that I heard a stockbroker make in the 80's and that's ever really made sense to me in the investing world...that my Dad used to live by...was...Rule #1...Don't loose money and Rule #2...Don't forget Rule #1.

    Randy from Odessa, Tx.

  • Report this Comment On January 03, 2009, at 12:44 PM, DLweld wrote:

    There seems to be 2 general rules that seasoned market advisors always give: "Don't try to time the market" and "don't panic". I've certainly followed these golden rules as I'm sure these fellows know best. I bought Nortel in early 2004 at about $100 per share - it started to dip, but thank goodness I followed the good advice and didn't panic or try to time an exit - I now have a tidy postion at $.35 per share but I'm sure it'll come back and these gurus will be proved right once again.

  • Report this Comment On January 03, 2009, at 12:54 PM, DLweld wrote:

    Seems to me there's a problem here - "never try to time stocks", and "now is not the time to sell stocks" - hmmm - is it just me, or do these two simultaneous nuggets we've just got from the Fool seem monumentally useless - contradictory even?

  • Report this Comment On January 03, 2009, at 1:23 PM, ThePedestrian wrote:

    Hmm...

    I have never commented before because I saw no reason. Nor have I ever even realized that there were so many comments. But then I happened to notice that an article I had just finished reading had something added 2 minutes ago. But now, having read this long list of comments, I am tempted to go back to work as a psychologist and start a new therapy group for folks addicted to playing the market.

    Now before you get angry, let me admit that I would be one of the first members. However, I don't want the cure. You see, as a "BOOMER", a term which appeared often in the above comments, I would respectfully say that "I would never leave my future in the hands of a force I had no control over". When they came around with the 401k's I was nothing but suspicious. I knew that the speakers were sales- persons and nothing more. I asked hard questions and was nearly asked to leave. But if I've learned one thing over the years it's that people are differant and no common solutions will ever exist. What if I need the money I asked? What if things go south? In any event, I am retired at 58 with a steady income that I receive because I earned it. And though some may say that my house is worth 30% less now, when I walk around looking at it, other than needing some paint, it hasn't changed at all. It isn't an investment, it's a home for me and my family. And even if it were worth 30% more, so would the next house I would be trying to buy. I guess what I'm saying is that there is no prescription for boomers or anyone else.

    But back to the group: The first time I even payed any real attention to the market was this past spring.

    My wife and I had put some money in a fund which had done fairly nicely, and even more so when we had allocated a larger portion to "emerging countys". But by this spring things seem to be going down rather than up. So I learned about the coming crisis which was written about long and hard. The realty bubble, the subprime problem, it was all right there. So I took our money and earnings out. Suppose the roof blew off or some other unexpected event occured, I couldn't leave our safety cushion in peril. And since that time I have watched things unfold in dramatic fashion. But back to the group...

    After the crash I heard about how things would go up very quickly and in the" great drama" which was so riviting, I invested a small bit of money. I have since learned about shorting, dirivitives, leverage, hedging, credit default swaps, and a whole number of other practices that are not only unethical, but they stop the home investor from having as reasonable, let alone an equal, chance as the insiders. Yet here I was with this money invested which was far less than I started with because I invested on the first bounce when the market was above 9,200. But I'd be damned if I'll bet against these companies and economies which are affecting real people in terrible ways. It was these "make money at any cost" practices that brought the world to it's knees and I'll not take advantage of them.

    But, yesterday I moved into Profit, even though I paid out tons in "FEES" and so often watched my investments being siphered off in the "black ponds" of "off hours" dealings.

    So I did it...and I did it fairly...and I've learned an incredable amount of information. From "cups with handles" to "value vs. earnings". And Monday I should pull all my money out and be done with this

    stuff. But I can't...I love this stuff...it's the biggest casino I have ever visited and unlike the smaller ones, your IQ can (but not always) help you play the game. That's why I should start a group. Because this stuff is as addicting as any other compulsive behavior. I go to the supermarket and wonder how their doing finacally Each product has a number of companies attached to it, from the farmers who grew the product and the equitment they use to the metals which hold it and the mines and processors that make them.

    I really should start a group and write a book. I'll leave it to decide whether to attend or invest in my enterprise. Until then, see you in the market .

  • Report this Comment On January 03, 2009, at 8:01 PM, makura77 wrote:

    Nearly every advisor / expert (not the hosts) I see on CNBC say there will be financial recovery in the second half of '09

    They were all saying the same thing in the beginning of '08 after the relatively small dip in the last few months of '07

    So as a contrarian, I will stay fully invested now and expect a dive in the markets in the second half.

    That's probably when people/institutions will be losing billions in their 'safe' Treasury investments.

    As far as timing goes, I suggested to my girlfriend that she move into cash from equities in Sept 07. She did not do so and lost over $100,000 of her $240,000 retirement savings. She turns 65 in February. As for myself, I waited and put my own money back in the market in Sept 08 and lost 35% in a month.

    As a note, the immense drop in stock value is due in large part in them being overvalued in terms of historical P/E not just the real estate bubble, bank overleveraging and effective GDP slowing due to high oil prices. If people expect prices to bounce back up a lot, I doubt it. It will be slow and steady growth as companies are more efficient after laying off the deadwood in their organizations. I think the equity market is FAIRLY priced right now, despite the fact trillions have been lost in market cap.

  • Report this Comment On January 03, 2009, at 9:46 PM, bish4FNMFRE wrote:

    I don't like the market at all for the short hall. HOWEVER, that being said, I have to believe for going long FNM/FRE are going to move and move big. I believe this not for ANY of the financial reasons you would normally investigate/select from a stock. Meaning, FNM/FRE Stock, it is no longer about the balance sheet on these two particular stocks. It is no longer about the debt. It's no longer about getting a dividend. These two stocks will recover their value because they are important - FNM & FRE are pivotal keystone foundation stocks that are EXTENSIVELY woven through the entire heartbeat of the U.S. economy and one of, if not the most important stocks necessary to be restored to near prior values if the U.S. is going to get out of this economic catrastrophy. From their take-over actions, the U.S. government is fully aware of the importance of FNM/FRE stock value and it's perception/confidence and value issues based on the following; FRE/FNM is the largest vehicle securing the largest amount of real estate borrowed on within in the U.S. Simply stated, it not only represents the physical property that makes up the United states but represents some of the biggest collateral pledged in the U.S used for all different purposes/business. That said property has been used for generations, to collateralize operations, ventures, banking institutions and etc, and the spin off of businesses and the wealth of all - rich, poor, middle class. Remember, the stock of FNM/FRE has been HEAVILY vested within for years by 401K's, retirement programs and incentives by employers/businesses and individuals for generations as well. These two stocks are some of the heaviest invested stocks for banks/business/investment firms, funds & etc and have been used/pledged for collateral to borrow and do their business. Seeing it tied to the future for business, retirement, property and etc, you begin to see how FNM/FRE STOCK is a major keystone factor in recovering the U.S. ecomomy. The U.S. government doesn't care about the balance sheet, they will do what ever they need to correct FNM/FRE stock value as retirement proceeds, fincial institutions, and etc, stand to be wiped out if they don't. The government knows this - that is why instead of just throwing money at FNM/FRE like they did with AIG, banks, GM, Ford, etc, THEY TOOK OVER FNM/FRE to keep such from happening. If either were to fail - for the stock price to devalue so low and not to recover, would be the final & fatal death blow to COMPLETELY ruin and disband the U.S. economy, no if's ands or buts. The U.S. is aware of the importance restoring the value of FNM & FRE stock price/value because if they re-establish the value of FRE & FNM, they restore the retirement accounts previously wiped out loaded with years of investing in FNM/FRE as well as restoring the value of collateral of lending institutions/business and etc. Being real, knowing your retirement account is devestated, results in you tightening your belt. You stop all unnecessary spending. Banks who lost their asset postion due to the stock fall, now scramble to reduce liability and refuse loans and relational as they are now vulnerable. Government knows this, that is why they have done what they have and will HAVE to take action to increase the value of FNM FRE stock down the road as the economy cannot recover without it. SO as I said originally, these two stocks are probably on of the few where you don't look at the numbers, you look at the necessity and know it will eventually come back fully. My opinion! Best to all......

  • Report this Comment On January 03, 2009, at 11:24 PM, wtcccoach wrote:

    I'm a subscriber to the Motley Fool. I admit that I'm dissapointed in the results so far. That being said the portfolio that I have isn't down any worse that the dow or sp. There are many good points on the posts that have been listed. For those who are bashing the Motley Fool, that really is a waste of time and energy. The best way to vent is to not subscribe to their publications. I will give them some more time to make my conclusion. If they are doing far worse than the dow or sp then I'll dump them and they will lose their investment. On the other hand they hopefully understand that poor performance leads to a loss of revenue. Many people have mentioned the issue of diversification. I can't agree more! Even if you are in your 20's you still shouldn't have all your money in equities. In the best case scenario I suggest about 60 percent in stocks, 20 percent in bonds and 20 percent in cash. Obviously this depends on your tolerance for risk. As for the issue of timing. I recently bought a Motley Fool suggestion. In the past month it is up 20 percent. Am I going to base my opinion on the Motley Fool on that particular pick? Ofcourse not! When the market is up then companies have a tendency to rise. The key to investing is do your investments beat the averages on the way up and do they loss less than the averages on the way down. So far the Motley Fool is slightly behind for ahead of the SP but behind the Dow.

  • Report this Comment On January 04, 2009, at 3:11 AM, Volunteer508 wrote:

    You think you guys have it bad. I just inherited almost 2 mil last year in February. First mistake I made was listening to JPM wealth management while they let me lose about 50,000 and UBS was trying to clean my plow too. Needless to say I dumped them and went to Fidelity and managed my own money. At least I can say that no one else lost money for me. I managed to do it on my own and did not have to pay any management fees to do it. No fund of funds. No Madoffs to hassle with. I managed to slow the bleeding down by jumping in and out of the market but slow bleeded out another 45,000. The only good thing I can say is that I have a new Mercedes Benz CLK350 and my son has a new car. My wife got new hardwood floors and had a good time spending money. I just want to write the stock market off after this year but I know I have to press ahead or else what I have left won't last 30 years or until I die. You know one thing I have learned in this year of participating in one of the worst stock markets of the last 100 years is that the only person you should count on to steer you right is you. You don't have to worry about brokers withholding information you need to take care of yourself. Just read all you can and glean the best information from it. Try the best you can and take what you can get from the market whether you invest in money markets, investment grade corporates or General Obligation Munis. Only two stocks that I followed stayed above water and I ran many through watchlists to find them. XOM and MCD. The rest were the pits. I had others that would do good for about two months and tank. I think the mutual funds and hedge funds were pumping them up and once they got the returns they were looking for they would pull out and those stocks would deflate. The only good thing I can say about these guys in a down market is that a lot of them will be gone next year. I figure they will resurrect in another form to try to take me off course. I wish you all well for this year and wish you all good returns. Any good advice for the newb from non professional investors is appreciated. As for the pros I have had quite enough help from you. Have a great year....

  • Report this Comment On January 05, 2009, at 3:58 AM, kayakmastr wrote:

    In response to wuff3t, who said, "All great investors [say you can't time the market]. I can't think of one who advocates timing the market." There exists a whole class of technical analysts and momentum investors who time the market. And another group trying to emulate the technology Jim Simons and his associates at Renaissance Technologies uses for this purpose. Just Google Jim Simons or go to www.turtletrader.com/trader-simons.html.

  • Report this Comment On January 05, 2009, at 4:58 AM, Redrik wrote:

    There are so many comments I don't expect anyone will get down to mine, but for those who have persevered long enough to get here, I have a different comment to make.

    When I started trading in 1986 I was told that the market is like a horse race except you can choose when to end the race.

    My mistake was a compulsion to stay in to keep the adrenalin pumping, albeit with more conservative selections. This caused me to lose more AFTER the 1987 crash than as a direct result of it, and I thought I was buying value, not just speculating as before.

    I didn't pick this latest crash but I didn't lose anything because it was long overdue, according to my analysis, so I've been out for a while.

    It seems to me that timing is 50% analysis and 50% luck.

    At least part of the reason is that we only get to see published accounts. They are rendered unreliable by dishonesty but also legitimate window dressing (which is much to big a topic to go into here).

    In my opinion, analysis must include direct contact with the company directors and key operatives (not just the top guys) because without effective and honest management the financials have limited value.

    There again, the best con men are those everyone trusts.

    That's where luck comes into so strongly.

    Nevertheless, if you don't have direct access to the company you must have access to some you trust who does and then hope they haven't been snowed.

    So where is the Motley? I would say doing the best they can. Remember, however, that they are in the sales business so everything is a sales pitch with all that entails. You just have to get good at ignoring the crap and weighing the substance.

    The other selection method is with a pin. See how you go. You may be surprised!!

  • Report this Comment On January 06, 2009, at 1:26 PM, hkneen wrote:

    I have made my share of foolish investments over the past years. Among them is surely the money I spent to purchase the Fool's Stock Advisory service.

    Every time I get an email from the Motley Fool I know I am getting a sales pitch to buy for some report or other.

    To add insult to injury the Advisory has stopped coming to me for some reason.

  • Report this Comment On January 21, 2009, at 4:20 PM, basquet57 wrote:

    I am thoroughly disappointed with TMF. I cancelled my subscription last month.

    Their million dollar portfolio is now worth half of that., 60% at best.

    The "best buy first" recommendations I did purchase with them went something like this:

    - down 50%

    - down 98% (not kidding, lost it all)

    - Their winners (1 or two from all their different picks are up like 10%, their losers, as the examples you can see above, are completely painfully going away.

    To add to the insult they have been preaching NOW IS NOT THE TIME TO SELL since last year. I wish I had taken my losses out last year, instead of listening to them...

    I sold today with the little upswing. I rather save my money, invest next year, and with the suggestions of some other firm.

    All TMF services are down since their inseption 3-6 years ago. Imagine that. You would have more money right now if you had put your $ in CDs back in 2002, than spreading it around all TMF stock picks.

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