Friday, January 18, 2008

Sage advice for those who invest

"The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."

-- Ben Graham


  1. By the time the market starts down it is too late to do anything but ride it out anyhow. This is what I have done with my Fidelity Mutual Funds and always before within a year they were back up to the starting point and on the rise again.

    I guess my philosophy has always been with investing that the only money that was actually mine was my original investment and any earnings were gravy and not mine until I withdraw them. With this I keep my perspective.

  2. "With this I keep my perspective." long as you ignore the Doom and Gloom elements in the media, and ESPECIALLY in the local blogosphere.

  3. I was in cash at the beginning of 2008 and continue to be. I am looking within my mutual fund choices for funds that I believe are undervalued at today's values.

    Good Post.

  4. Are you willing to trade speculative gain for secure gain for a specified period of time on a portion of your funds?

  5. Try again Bubba....I am not sure I understand your question.

  6. How much liquidity would you be willing to give up on some (or all?) funds in return for a guaranteed gain over a 3, 5, 7 year period?

  7. That would depend on the rate of return. At 4% or less...none.
    At 10% or greater...probably all.

    I have been doing what I do since late 2000 with acceptable success.

    What are you thinking about?

  8. Consider putting some money into a fixed annuity for a three, five, or seven year term. Find one that bonuses at a significant percent, and has a periodical withdrawal privilege with no surrender charge.

  9. Good idea. I have looked at ideas like this and currently 5 to 6% seems to be rate of return...with the element of risk that principal may not be 100% at end of period of time.

    My goal is to earn 10% or greater annual and not less than zero in any year.

    As an example by being in cash currently I am not down 7 to 10% for 2008. If I were to reenter and the market returns to zero then I will yield 7 to 10% for 2008.

    Currently I see a choppy 2008 with a downward trend. I am concerned about the reasons behind the current tax I see this a negative and not quite fully priced in yet. Along with the newest rebate....weak dollar, subprime blah blah and more causes me to think a downward trend.

    No investment advice intended...just opinions.

  10. I left this at Ed's blog---


    S&P 500 futures are currently off about 4 to 5% since Friday's close. (down 65 points)

    My guess is the bond rating you pointed to and the tax rebate are the primary reasons. I will leave the if we are in a recession question to others. Certainly the bond news does not appear to have been priced into our markets.

    This came in email from the NYT earlier---

    Stock Markets in Europe Plunge 7 Percent

    Stocks fell steeply in Europe on Monday after sharp overnight declines in Asia, reacting to fears that an American recession was unavoidable and would crimp global growth. The DAX index in Germany closed off 7.16 percent and the CAC 40 in France lost 6.83 percent. British stocks fared slightly less badly; the FTSE 100 lost 5.48 percent. United States financial markets are closed today; Canadian and Mexican stocks were off sharply at midday.