The Case for Dumping Everything Now

By now, you must be tired of hearing about how, after witnessing the worst stock market losses in generations, you should simply have faith and keep investing. Common sense says it's ridiculous. Why should you throw good money into the market right now, when no one has a clue what the future will look like mere weeks from now, let alone in the years to come?

You don't need me to come up with reasons why you should get out now. Just take a look at the latest news:

  • All the government action we've seen over the past six months just seems to have made a bad situation worse, shaking the foundations of our capitalist system to the core.
  • Even after all the damage we've seen in the housing market, home prices could easily keep falling further than they have already.
  • Stocks fell Monday to their lowest levels in 12 years, and with November's lows broken, some believe that's just the start of another major downturn that could lop another 40% off the major indexes.

Given all that, the argument in favor of selling everything for whatever you can get basically boils down to three points:

  1. The cyclical nature of the economy has ended, and there's no hope that businesses can grow or even come close to their past glory.
  2. Everything that everyone has done to try to support the economy will ultimately fail.
  3. Once everyone figures out that the only thing holding up this house of cards is unsustainable government spending, people will abandon the current economic system, and all the financial assets that previously held so much value will become worthless.

Sounds reasonable. Sign me up.

Oh, come on!
As a skeptic and a lover of conspiracy theories, part of me really sympathizes with this train of thought. Having dropped so far so quickly, there's no apparent reason why the market couldn't drop more. Plenty of investors have lost so much already that they may well not be able to afford to take any more risk with their life savings. Whether mere greed or a simple failure to understand the risk of the stock market got them into stocks, it's unfortunate that so many people have gotten hurt by these declines.

But all this pessimism really just looks like an amplified version of what you always see at market extremes. When stocks are flying, as they were in 2007, no one thinks they'll ever stop. Once they've crashed and burned, as they did in 1982 and 2002, people think they'll never come back.

Change does happen
That's not to say that every stock will survive. Countless firms went under during the Great Depression. Among the Nifty 50 stocks of the 1960s and 1970s, companies like Polaroid saw their huge rises turn to declines. Polaroid went nowhere for decades before eventually declaring bankruptcy.

Similarly, this time around, many companies will never see their former strength restored. I don't know whether big financial firms such as Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) will share Polaroid's fate. They might.

But like so many times in the past, they may well recover from the abyss and deliver great returns. Consider how some of these Nifty 50 stocks -- the same ones that did so badly in the 1973-74 bear market -- did when they finally bounced back:

Nifty 50 Stock

Return 1/1/1973 to 12/31/1974

Return 1/1/1975 to 3/2/2009

Coca-Cola (NYSE: KO  )

(62.8%)

9,350%

IBM (NYSE: IBM  )

(45.6%)

2,046%

3M (NYSE: MMM  )

(44.4%)

2,216%

Procter & Gamble (NYSE: PG  )

(24.2%)

4,732%

Disney (NYSE: DIS  )

(82.2%)

4,621%

Source: Yahoo! Finance.

These stocks may again prove to be tomorrow's leaders -- or get replaced by others. But the important thing for investors is that some companies will survive to see their stocks flourish.

As attractive as the case for dumping everything now may seem, it's not the right move. Unless you truly believe the end of everything is nigh, betting on the long-term recovery of the world economy is the best choice -- and it's likely to pay off, given enough time.

For more on getting your portfolio back on track, read about:

Today's best bargains could become tomorrow's top performers. To uncover bargain stocks with big potential, check out our Motley Fool Inside Value newsletter, where you'll find smart picks with a margin of safety. Take a free peek on us with a 30-day trial.

Fool contributor Dan Caplinger is willing to go down with the ship -- at least with some of his money. He doesn't own shares of the companies mentioned in this article. 3M, Coca-Cola, and Disney are Motley Fool Inside Value selections. Disney is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy will never dump you.


Read/Post Comments (32) | Recommend This Article (70)

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 March 03, 2009, at 12:24 PM, abepaul wrote:

    Something is way off on chart above - I think the start date for recent returns is 01/01/1975, not 2005!

  • Report this Comment On March 03, 2009, at 12:28 PM, Slipswitch wrote:

    What about selling to cut losses? The choices are not just selling and staying our forever or holding forever. How can you say selling is not the right move? None of us know that answer yet.

  • Report this Comment On March 03, 2009, at 12:40 PM, lolafan wrote:

    Don't get the math on this - Coke closed on Jan 1. 1975 at $55/shr and it's 39.70 now and the dividends were miniscule until the last couple of years. Looks like you would have been better of in CDs.

  • Report this Comment On March 03, 2009, at 12:50 PM, Alexhorntoad wrote:

    IBM's stock price on Jan 2, 1975 (Jan 1 is a holiday every year) was $10.555. Today, it's at $88.22. That's a 736% increase, not 2,046%.

    Inflation during the same period of time was 304%. So, after inflation, that's 432% in 34.1 years or 5.02% per year.

    So, if you timed it just right, you'd have made 5% per year over inflation. That's not that bad really.

    Now, say you had those share on Jan 2, 1973 and didn't sell (this is what the article is suggesting you do). In 36 years, you're return would have been ZERO (321% minus 322% inflation).

  • Report this Comment On March 03, 2009, at 1:05 PM, TMFMarlowe wrote:

    Alexhorntoad, are you accounting for reinvested dividends and any splits that might have happened? I bet Dan did. Makes a BIG difference...

    John Rosevear

  • Report this Comment On March 03, 2009, at 1:20 PM, SteveTheInvestor wrote:

    Let's expand and define "enough time". I'm guessing 10 - 20 years, then maybe break even on anything held over the last 2 years. I'm so far down on the Stock Advisor stocks I have left, it will be many years before I can say the investment was profitable (if the companies don't just fold up). I'm talking VDSI, DBTK, OXPS, NTGR, AEO. They are all down 50-85%. Wanna guess how long it takes to recover from an 85% loss? It will likely never happen for me since I'm in my 50's, but there is so little left it doesn't matter any more.

    My portfolio is down about 20% in total. Had I listened to the general consensus of the articles around here, it would be closer to 50 or 60%. Fortunately I sold out of several other larger MF recommendations before the crash (BAC, CSE, WM, ETP). Excuse me if I'm having a hard time being enthused about the "long haul" and holding on to these flaming piles of dung. If I can gain a few hundred bucks on these losers, I'm taking it.

    Here's an example of what happens when you "believe":

    I bought VDSI, and it dropped 40%, quickly. My comment on the boards was that any stock that could drop that far / that fast could easily drop another 40%. Oh, but of course I was rebuffed and was advised that my attitude wasn't suitable to being a stock investor (and of course, the pollyanna post received many recs). It was suggested that I just buy index funds (yeah, right).

    Oh, so I held (stupid me). Now I'm down 80%. I was wrong.... it didn't drop an additional 40%.... it dropped an additional 60% (or so). I guess it will be awhile before I ever again ignore my own intellect and listen to the "wise" around here.

    "betting on the long-term recovery of the world economy is the best choice -- and it's likely to pay off, given enough time."

  • Report this Comment On March 03, 2009, at 1:45 PM, ceb25 wrote:

    When you research current stock prices to compare as stated for the dates above you may want to check on how their value has been affected by the many split adjustments that occurred for the stocks listed.

  • Report this Comment On March 03, 2009, at 2:42 PM, ByrneShill wrote:

    "The cyclical nature of the economy has ended..."

    "Unless you truly believe the end of everything is nigh..."

    That's BS and I'm fairly certain you knew it when you wrote it. Those of us who are bearish simply don't agree with you on where we are in the economic cycle.

    Some of us simply believe that no matter where a stock ends, if you bought it 1$ instead of 2$, then you end up with twice as many shares and are twice as rich.

    And I'm also with Steve. Buy and hold should be renamed buy and hope. I've seen enough blue chips crash and burn (BAC, C, PFE, GM, anyone?) to stop believing. I'm luckier than Steve, being young and having a small portfolio (compared to my earning power), I'll do just fine. The lesson was learned for quite a small price. But the lesson sure as heck wasn't "buy and hope".

  • Report this Comment On March 03, 2009, at 2:43 PM, ByrneShill wrote:

    "But the important thing for investors is that some companies will survive to see their stocks flourish..."

    Yeah, thanks, I'll wait for the laggards to die and buy the survivors. I'll probably miss some upside, but it's better than making sure I lose money.

  • Report this Comment On March 03, 2009, at 2:53 PM, TMFGalagan wrote:

    Hi all --

    Thanks for your comments. For historical prices, I use Yahoo's historical quote provider, which automatically adjusts for splits and dividends paid in the interim.

    For instance, Lolafan, here's the information for Coke:

    http://finance.yahoo.com/q/hp?s=KO&a=00&b=2&c=19...

    You're right that it closed at $55 that day, but adjusted for splits and dividends, that's equivalent to a price of $0.42 today.

    Similarly, the adjusted price for IBM was $4.15.

    hope that helps,

    dan

  • Report this Comment On March 03, 2009, at 3:20 PM, esxokm wrote:

    This is a very complicated issue. But there are some objective elements that cannot be contradicted:

    --Those who sold everything several months ago were correct (especially if they locked in profits)

    --This is one hell of a bad recession, and anything can happen (and by that I mean we can go to Dow 3000)

    Look, all you need to do to realize that selling may not be such a bad idea is consider what happened to GE. Seriously: who would have thought it?

    I own KO, and am confident about its prospects as an effective yield play over time. But a big growth stock? It might be a nice trade (if you hedge with options), but please check the chart from 1998 until now. Great dividend increaser, but lousy price action.

    Selling isn't a bad thing. Holding isn't a bad thing, either. But I'd love to meet the person who doesn't take profits after a 20%, 30%, 50% run in a stock. Sure, holding for the long term is the best way to make a large amount of money. But it's risky. And it's psychologically difficult. I'd love to meet the person who held Amazon from IPO to today. Would you consider that person smart? Lazy?

    Consider: if you are confident in your stock-picking abilities, shouldn't you also be confident about your selling abilities and your aptitude for re-investing into a fresh opportunity? And, what about your ability to stay on the sidelines when we're on the brink of a depression -- is that being fearful, or being disciplined?

    I bought MSFT a few weeks at $19-something. After much, much consideration, it was the first stock I purchased in a while, mainly because I thought it was holding up well after its bad earnings report. Check out the price now. Seriously, we are in irrational, fearful times. If you've got the money, and you've got the time horizon (and, please understand, you may need, at the very least, a decade at this point for a holding to distribute a good risk-adjusted return), sure, you'll probably make decent money. Please, however, read "probably" with unreserved emphasis...

  • Report this Comment On March 03, 2009, at 3:50 PM, drchemy wrote:

    Then why are all the "smart" analysts on the sideline in cash. The argument for cashing out is that the market is so oversold now that you might as well try to guess where the bottom is. Even if you are wrong you will make a bundle in the long run.

    The analysts are waiitng for good news to jump in. There is no good news and even if the market takes off before the good news appears the analysts will still make a lot of money because the MARKET IS OVERSOLD.

  • Report this Comment On March 03, 2009, at 4:05 PM, ByrneShill wrote:

    And btw, cherry-picking a few companies that did well doesn't convince anyone. Out of all the NYSE-listed companies of 1975, a lot went out of buisness, and a lot growed less than government bonds.

    Also, a lot of people who were invested in Coca-cola or IBM are dead toady, they didn't exactly reap the big rewards.

  • Report this Comment On March 03, 2009, at 5:40 PM, Roxx wrote:

    I did sell everything and saved me a mint. Your argument is a little late.

    rxx

  • Report this Comment On March 03, 2009, at 6:22 PM, MotleyOne1 wrote:

    Mr. Caplinger wrote: "Whether mere greed or a simple failure to understand the risk of the stock market got them into stocks, it's unfortunate that so many people have gotten hurt by these declines."

    Are those really the only two reasons??? "Greed" or "failure to understand the risk"?

    Let me offer a possible third possibility. Perhaps "so many people have gotten hurt", not because of greed or failure to understand the risk, but because they were advised that stocks were the most prudent investment, that only stocks would assuredly outpace inflation "over time" (formerly defined as 5 to 10 years, now defined as 15 to 20 years, soon to be defined as 25-30 years?), that putting your money in the bank, not stocks, was the real risk because of the cumulative effects of inflation.

    We were all sold a bill of goods that a buy and hold was the most certain path to financial security. It was not about greed or failure to comprehend risk, it was about (what we thought was) simple prudence, based on what all the experts advised us.

  • Report this Comment On March 03, 2009, at 7:01 PM, MORK000 wrote:

    Quit calling it a RECESSION! This is a DEPRESSION! DUMMIES

  • Report this Comment On March 03, 2009, at 7:17 PM, AtlasAynRand wrote:

    MORK000 is right....lets quick trying to dance around the reality at hand: This is not a RECESSION; it is a frigging DEPRESSION YOU STUPID FOOLS.

  • Report this Comment On March 03, 2009, at 8:32 PM, Rasbold wrote:

    FOR GOD'S SAKE, MAN. DON'T DUMP NOW!!!

    It is terrible!, it IS a depression! It WILL end!

    Even if the sky does fall, it won't bankrupt the nation! Hold on to it! This is the great battle in the struggle for financial evolution. Times are changing, but hang on! If you cash out now, you not only lose the battle, but you LOSE THE WAR!!

    It will return. Pour your money in now, through the bottom and Your Dow Will Never Jones!!

    www.whatwouldwarrendo.com

  • Report this Comment On March 03, 2009, at 11:25 PM, halftide wrote:

    I want to believe that we aren't in real society changing trouble from which there will be no return.

    This video was made in 1985, it was sent to me and it reflects a similar conversatioin I had personally in Sudan in 1976 with a Russian political officer attached to a geological survey.

    Given where we are today it is worth listening for a moment, to a KGB defector.

    http://www.dailymotion.com/video/x32cxf_yuri-bezmenov

  • Report this Comment On March 03, 2009, at 11:34 PM, BKellyS wrote:

    I think it's all a crap shoot. You see time and time again how "experts" rarely consistently beat the S&P500. Sometimes they make the right call and sometimes they make the wrong call. Its a flip of the coin. So if you got out before losing 50% or so up to now, maybe you're smart, or maybe you're just lucky. Either way, as a long term investor, I have faith that it will come back so I'm staying the course.

  • Report this Comment On March 04, 2009, at 12:14 AM, jhh3000 wrote:

    This is not a buy and hold market. The best advice I've ever heard from anyone is to sell now, move into cash or an UltraShort position, and wait out the panic. If you are one year late to re-enter the market when it turns into a bull market again, you will probably break even with your positions if you had held on. Or even be above.

    Bottom line is, stop telling people to hold. I'm down about 40% in all my positions because of buy and hold. Forget it. There is no end in sight right now, 7000 was a major resistance level for the Dow. Now look where we are.

  • Report this Comment On March 04, 2009, at 2:33 AM, mingusmonk wrote:

    The negative and dour tone of most of these comments are exactly right for forming a bottom. Buy and hold is least popular at bottoms and most popular at tops.

  • Report this Comment On March 04, 2009, at 5:46 AM, slumdogg wrote:

    We were already in a Recession when most analysts said we were heading towards a recession. Now when most analysts say that we are in a recession, we are actually in a Depression.

    I'm not sure where the bottom is but I'm pretty sure its going to get worse. This is not a cynical view, but simply a realistic analysis of where we are in the cycle.

    I don't plan on selling because I've already lost about 75% of the value of my portfolio from its peak. I do believe some of the blue chips will bounce back in 5 or 10 years, and I'm not sure where else I would want to put that money. I have already put enough in the real estate market and in my own business.

    For those who are concerned that they are too old to live through this Depression, that is a valid concern. My only suggestion is to pass on the shares to your children or anyone you care about that can carry on your legacy. After all, that's what shares are all about. If we were only in this for our short term gains then there are better options which bring in better returns.

    When thinking long term, I think the best approach is long term in the sense of 2 or 3 generations.

  • Report this Comment On March 04, 2009, at 11:23 AM, kartha1 wrote:

    Fools are no exception to "Buy, Hold in perilous times". That is the wisdom of the so-called "rational investors". Can someone come up with the cost of the Fools financial products and how they are doing? From time to time, foolish executivese are interviewed to talk up their profitable enterprise (e.g. Satyam).

    As much as they proclaim to be rational, irrational behavior and greed are the chief motive of many of the investing professionals. Is it any surprise that Swiss bank helped thousands of US-based clients to sock away money evading taxes?

    I'm not being pessimistic or cynical. I have no faith in what the corporate boards have to offer. Only, this time, it is truly global to find the crooks from boardroom to your bedroom.

  • Report this Comment On March 04, 2009, at 1:48 PM, VintageCat wrote:

    Fortunately for us, the bulk of our 401K portfolios were pulled from the market and rolled over to federal bond funds with zero principal risk in 2007 in anticipation of retirement. One of our IRAs is down 40%, cash is available in the form of Series EE bonds (I'm very risk averse) and a small savings fund down 25%, and a couple of CDs as well as our personal accounts. We are sitting on several real estate holdings that may or may not be salable without severe discounting in a year when we are fully ready to retire.

    The news is not good. I feel a general sense of unease about this market having reached a bottom but rather another little plateau with a bottom somewhere below this point, my gut saying another 1000 points, but it could be catastrophically lower if people start to panic, which could realistically happen if the employment situation get too much worse.

    I am liquidating a debt free retail business (which two years ago I had hoped to sell) now before others in my location topple or are forced by insolvency to close, flooding the market with goods and things can't even be given away in anticipation of worse before better.

    I am definitely concerned about people that are in their last two or three decades of life. Even if they were prudent, planned, saved, were cautious and conservative, there will be negative effects for all of us. Certainly holding a position might be doable, depending upon what that position is for someone in their 20s, 30s or even 40s but those of my generation and older with great sums of money in 401Ks/IRAs intended to finance their retirement have seen half or more of their nest eggs essentially disappear overnight.

    Can they recoup this enough to retire without a decent defined benefit plan with a stable company or government pension? Unlikely. Many of my friends and customers are telling me that they will have no option of retirement, ever. A very sad situation indeed. I suspect all the conventional wisdom is being turned on it's ear with this depression. Good luck to us all.

  • Report this Comment On March 04, 2009, at 4:11 PM, gdaven wrote:

    The key phrase in this article is the last three words - "given enough time". Does anyone want to bet how long that will be?

  • Report this Comment On March 04, 2009, at 11:37 PM, TTLump wrote:

    I bailed out of the market last September, down about 25% from my initial entry in 1996 (mostly mutual funds). I had been having an on-going weekly shouting session with my financial advisor since about June or July. I wanted to get out and he kept telling me to stay in, because "we were either AT or NEAR the bottom, and I would miss the gains on the way back up". He would say stuff like, "You're down 20%, are you sure you want to lock in your losses?"

    I was getting really concerned about what was happening in the derivative and CDS markets, and he gave me some story about how some French bank had just written off $2 Billion of bad debt and still posted a record profit and this was "how the so called debt bubble is going to unravel - no serious consequences".

    Finally in September, I put everything into T-bills, AGAINST his advice. He almost convinced me to jump back in December to catch what turned out to be a minor bounce, but I resisted.

    As we all now know, the unravelling of the debt mess DID have serious consequences, and is STILL having MORE serious consequences, with new revelations and shocks almost daily. Job losses continue to accelerate. Credit is still very tight. Home prices are still in free fall. The Americans who still HAVE money are saving it, NOT spending it. Stock prices are STILL too high when you calculate P/E ratios based on realistic future earnings estimates. Based on what objective measure would I have any rational reason to re-enter the market now or even hold positions that are almost certain to fall even further?

    So how do we know when we have reached the bottom? Nobody knows for sure, but I think it is a pretty safe bet that we are NOT THERE YET.

    I forgot to mention something - My "financial advisor" CALLS himself a "financial advisor", but he is REALLY a mutual fund salesman / stock broker. He makes his money by selling mutual funds and stocks, not T-bills. TMF on the other hand has no such obvious conflict of interest and since I find that most of what they have to say is very well thought out, and their picks DO consistently beat the market averages, I find it puzzling that they would recommend a general HOLD strategy at the present time, given all the current indicators ... and it is somewhat comforting to know that while David's picks are down only 10% and the S&P is down 30%, I would MUCH rather be down 0%, wouldn't you?

    I believe in capitalism and free enterprise and hard work and rewarding intellectual capital and the intelligent use of financial capital, but "BUY and HOLD" is for lazy investors who want their meal handed to them on a silver platter. To be fair I don't think the original author of that strategy intended it to be interpreted in such a literal manner and the way most professional advisors implement it today is better described as "BUY and FORGET"!

    "BUY VALUE, BUY LOW, SELL HIGH" is the only strategy that makes sense - the major problem with it is that it requires a lot of effort and careful analysis to recognize bargain-priced value and to know when a company is over-priced and to evaluate how sensitive the stock price is to external factors such as overall market trends, sector trends, economic realities, etc. I think the characteristics of the perfect investor would combine the talents of a Warren Buffet and a George Soros.

    I WILL get back into the market some day, but I am in no rush. When we DO eventually hit bottom, I think it will be in the 4,000 range and it will be L-shaped, not V-shaped, because it will take years to repair the massive structural damage which the economy has suffered and continues to suffer.

    Another VERY SCARY possibility is massive devaluation of the dollar and rampant inflation, in fact it is hard to see how this can be prevented. There is so much money being printed right now, inflation is like a huge spring being wound up, held back only because the world still sees the US dollar as a safe haven, and once that bubble bursts ,,, actually BEFORE it bursts, ... like right now for example, ... BUY GOLD.

    Terry

  • Report this Comment On March 05, 2009, at 1:27 AM, pivonka571 wrote:

    If he were so clever, the RoveCheneyBush would be gloating at having put paid, through deregulation and derivitaves manipulation, to the boomer generation, for their opposition to the Viet Nam war and support (by and large) of Obama. What a marvelous capacity for creating chaos and entropy these guys have demonstrated.

    So, a generation which depended upon a 60 years and more of relative prosperity and value accumulation to cover their old age is to be left as penniless as Russian Pensioners in the '90's -- a new theme: Boomers - the Russian Pensioners of the (twenty)'teens.

    The US equity markets may have substantial capacity for further sharp decline. This market seems likely to be dominated by negative expectations about future earnings and further reductions in price/earnings ratios. The combination of those two factors could savage valuations for months into the future.

    However, the general trend of charts seems to show heavy trading, volatility, and general price decline until late October, 2008. This is followed by a period of lower volume and lower volatility - trading in a settled range with a "dead cat bounce"at the end of October, followed by the Nov. 20 low, followed by continuing (low volume and moderate volatility) decline in valuation to the March 3 low. This looks like "scraping the bottom".

    Commodity stocks in non-US markets did somewhat better than the S&P 500. The decline to March 3 hit those as well. March 4 was, to my mind, a psychologically significant rebound for both.

    The high volumes and volatility before mid October, I infer, were driven by large traders - institutions. Institutional panic seems to have passed. These questions remain: How much can a further panic by individual investors drive equity prices down, how likely is it to happen, and how long would the impact persist? Perhaps the key question is the last - and I think the answer is not long - months, not years.

    I view current valuations, overall, as a bottom, with sharp drops (even to 50%) below current levels possible but likely to be of short duration. Unfortunately, in a context of declining overall economic conditions, individual companies may fail completely under such stress, and choosing the right horses will be difficult and unusually important - there will be no "rising tide lifts all boats" in this one, many boats will turn out to have rotten bottoms.

    I'll be looking at commodity (iron, oil, cement, production equipment) companies with good numbers. I'd also like to see technologies which are truly revolutionary in energy production and conservation and in digital tech, become available as investment opportunities.

  • Report this Comment On March 05, 2009, at 8:49 PM, pedorrero wrote:

    I'm a long term pessimist and -- you'll like this -- usually wrong. I'm a captive customer of a retirement fund that is invested in the usual stocks, bond mix. Like everyone else in a similar boat, I've suffered a lot recently. What I do have control over is where I put my own savings. For many years, substantially all of my non-house wealth has been in gold bullion. The last big buy was five years ago, when I cashed out an IRA, penalty and all. Being in gold, at least in retrospect, seems like an excellent idea. I plan to continue accumulating "hard assets," but I am a special case because the bulk of my retirement money will remain in stocks & bonds -- as long as they hold any value, at least. I think the bottom has not been found yet ... but then, I really don't have any funds to put in or pull out.

  • Report this Comment On March 05, 2009, at 8:57 PM, kryotex wrote:

    Email me if you need a case for dumping everything now. Only gold, treasuries, silver, insured cash deposits, guaranteed investment certificates and other government-backed investment vehicles will keep your capital safe. INVESTMENT = SAVING , not risking the loss of your entire life savings. Sell now; the Dow's potential bottom according to economists and Jim Cramer and others is $0!!! That's right, 0. 65xx today is just a median number between 0 and the high of 15000; there's no news to increase stocks now, except hope based on psychological hope, but there's lots of bad news yet ahead (joblessness, corrupt public companies, corrupt financials, overvalued stocks, etc.) to push the market much further down.

    If you want stocks in your portfolio, wait until Obama's finished setting the rules for small and large business; wait until he's finished stating the tax hikes for the average person; wait until he's finished pushing the multi-trillion dollar budget deficits down your throats before considering wall-street. I know they are.

  • Report this Comment On March 07, 2009, at 5:51 AM, Ironbob wrote:

    Good grief. I'm buying as fast as I can. I've waited 20 years for Chicken Little to finally find Wall Street and now that he has, I just keep hoping he'll squack more. One thing for sure, not one person on the face of the earth knows if or when the stock market will come back but I do know this, "buy low, sell high" still rules.

  • Report this Comment On March 07, 2009, at 11:58 AM, DCraigJones wrote:

    "Buy Low and Sell High" sounds great until you realize that the $80 stock that you've seen fall to $10 and is now a "raging buy" can very easily continue its descent to $5, a 50% loss on your money. A "buy and holder" could then say, "Geez, it surely can't go much lower." A week later, it's at $2.50 and another 50% loss has occurred! The old "saw" that trying to pick a bottom is like trying to catch a falling knife is particularly appropriate in this current market environment. What is "low" in this market environment? Nobody knows because they've never experienced this kind of market before!

    My thought is that "locking in losses" is actually saving investment capital for the buy of a lifetime within the next few years!

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