In case anyone thinks it's time to get back into the market again

[ez1]

Of course, many of you on here probably don't touch your retirement accounts and stick to your asset allocation models. But for those of you who, like me, believe in a more active approach with some tactical modifications, this article is a good read. It discusses how, even though stocks have been battered for the last several months, you shouldn't fall into the trap of believing they are so cheap that it's time to buy again:

Bearish Sentiment Abounds

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Bearish sentiment abounds = great time to buy

Op-Ed Contributor - Warren Buffett - Buy American. I Am. - NYTimes.com

Still holds true today.


IMO: Warren Buffett (most successful investor of all time) > Lance Roberts (talk show host)

[ez1]

IMO: Warren Buffett (most successful investor of all time) > Lance Roberts (talk show host)

jpg, I certainly don't want to go on record as saying that Warren Buffett is wrong. Clearly, he's done something very right to get to where he is. One thing that I do want to emphasize is my preference for the substance of what someone says, not just who says it. I couldn't stand it in medical school when doctors would ignore what a med student, nurse, or pharmacist would say just because of they're not doctors - even though WHAT they were saying was very correct.

Has Warren Buffett ever been wrong? Certainly. From Jun 2008 to Feb 2010, Berkshire lost nearly 37% of its value while the S&P500 gained about 22%. It isn't preposterous to suggest he might be wrong at a particular time again.

Roberts' comments are based on data and historical evidence, just as your opinion of Warren Buffett is. Roberts could be wrong, but I enjoy reading such articles.

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jpg, I certainly don't want to go on record as saying that Warren Buffett is wrong. Clearly, he's done something very right to get to where he is. One thing that I do want to emphasize is my preference for the substance of what someone says, not just who says it. I couldn't stand it in medical school when doctors would ignore what a med student, nurse, or pharmacist would say just because of they're not doctors - even though WHAT they were saying was very correct.

So you're saying that you would rather listen to a med student instead of the world's leading authority on cancer treatment?

Has Warren Buffett ever been wrong? Certainly. From Jun 2008 to Feb 2010, Berkshire lost nearly 37% of its value while the S&P500 gained about 22%. It isn't preposterous to suggest he might be wrong at a particular time again.

Roberts' comments are based on data and historical evidence, just as your opinion of Warren Buffett is. Roberts could be wrong, but I enjoy reading such articles.

People who have to cherry pick timeframes to suit their argument, usually have a poor argument. And you have picked a very specific timeframe to make this evaluation over. May I ask how you chose that timeframe?

Warren Buffett's Berkshire Blasts Benchmark S&P Over Decade

You can't expect to always beat the market over every timeframe possible. That is unrealistic. So even if you don't beat the market over a short time frame that doesn't mean your strategy is wrong.

Don't use short term timeframes to evaluate long term strategies.


Roberts makes statements based on the same data Buffett saw. So if I had to choose a strategy based on that data, I'd choose the listen to the world's leading authority on investments. It's great that you want to listen to the radio host and find it entertaining, I just disagree with him.

You didn't really expect to write a post about how everyone should 'think again about getting in the market' and not have anyone disagree with you, did you?

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One thing is for certain: the very best time to buy can only be ascertained after the fact.

I'm not in the financial industry, and the time and energy required for my level of comfort for individual investment of stocks is way too high, so with only a very few exceptions, I don't buy and trade. Some people (I'm not implying anyone here) don't take into account all the expenses and tax consequences of frequent trading.

I do have what most financial advisors would argue is way too much in cash, but generally, I don't touch my long-term investments much. So far, so good, but I'm always learning.

[ez1]

So you're saying that you would rather listen to a med student instead of the world's leading authority on cancer treatment?


People who have to cherry pick timeframes to suit their argument, usually have a poor argument. And you have picked a very specific timeframe to make this evaluation over. May I ask how you chose that timeframe?

You can't expect to always beat the market over every timeframe possible. That is unrealistic. So even if you don't beat the market over a short time frame that doesn't mean your strategy is wrong.

Don't use short term timeframes to evaluate long term strategies.


Roberts makes statements based on the same data Buffett saw. So if I had to choose a strategy based on that data, I'd choose the listen to the world's leading authority on investments. It's great that you want to listen to the radio host and find it entertaining, I just disagree with him.

You didn't really expect to write a post about how everyone should 'think again about getting in the market' and not have anyone disagree with you, did you?

jpg, I fully admit (and realized I should have said it as I was thinking about it on my drive later in the day) that I cherry picked that timeframe. But I did so because my argument wasn't that Roberts' strategy is superior to Buffett's. My point was that it's possible that what Roberts is saying here, THIS TIME, could be correct. Back to my analogy for the med student ... I would never want to be in the care of a med student versus a licensed physician. However, it is possible that a comment made by a med student regarding something the physician may have overlooked one time could be correct, especially in the face of other confirming evidence.

The fact that you keep bringing up Roberts' gig on radio reminds me of exactly the situation I'm describing. Unless someone is purely making a statement based on opinion, the argument should be judged on merit, not just who is saying it. Buffett's article on buying American now describes his general philosophy on being greedy when others are fearful. It doesn't really go into a great amount of detail about his analysis. You have to take him at his word, which I admit is an extremely credible one - perhaps the most credible considering his record. But it's also possible that stocks aren't quite at their lows for this cycle.

If anything, I should have stated that your original reply wasn't mutually exclusive of what Roberts has said. Buying now, as Buffett suggests, could well be a profitable decision, since it is very likely that stocks will be higher than they are now in the next 5-10-15 years. Roberts' argument (and he's not alone) is that if you wait longer, stocks may be dropping even more, making you more money if you wait.

I'm not sure why I am defending Roberts. I never said he's a better investor than Buffett. I think I'm just defending the fact that an analysis such as the one Roberts presents should be judged by its merits, not the fact that it's being written by a radio host.

Lastly, I re-read my original post ... I presented the article as a good read, not as the "correct answer." There should be no worry about anyone "disagreeing" with me, as it was never my analysis or position being presented.

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However, it is possible that a comment made by a med student regarding something the physician may have overlooked one time could be correct, especially in the face of other confirming evidence.

While I understand the analogy you're trying to make, it's no comparison. It's one thing to accidentally state that a muscle was sprained when it should have been strained. Or that the 2nd rib was fractured when it was the 4th - or something like that. That Roberts wrote a report when it was actually Lewis. To make a wrong diagnosis once or twice. A mental mistake or an oversight. People are human, they make mistakes.

But when your med student starts saying that the leading authority on cancer's entire approach to medicine is backwards, that's another thing altogether.

Buffett's strategy in times like this is that when things look bleak, prices are more likely to be trading below where they should. The worse everyone is saying it is, the lower the prices will go. The lower prices go, the lower your risk, and the higher your potential return. Therefore making it a great time to buy when everyone else is saying that things will just get worse.

It's not just some momentary lapse of judgement, it's his approach to investing.

The article is saying that maybe prices are low, but everything's just getting worse. That future earnings will just be worse and worse. For all the charts and technical words he uses, the moral of his story is - wait for things to get better.

Buying now, as Buffett suggests, could well be a profitable decision, since it is very likely that stocks will be higher than they are now in the next 5-10-15 years. Roberts' argument (and he's not alone) is that if you wait longer, stocks may be dropping even more, making you more money if you wait.

That's like saying that if someone walks up to you on the street offering you a free $20, you should pass because someone else may offer you $25.

If you have a sound decision in front of you, why gamble on the unknown opportunities ahead?

Lastly, I re-read my original post ... I presented the article as a good read, not as the "correct answer." There should be no worry about anyone "disagreeing" with me, as it was never my analysis or position being presented.

Did you re-read your chosen title for this thread?

The implication being that, "in case you thought it was a good time to get in, think again." <-- That's what I'm disagreeing with.


If you've been sitting on the sidelines of the market in cash waiting for the market to rebound, you should really review your time horizon and risk tolerance and discuss if 100% cash is really right for you.

[disneysteve]

it's also possible that stocks aren't quite at their lows for this cycle.

Roberts' argument (and he's not alone) is that if you wait longer, stocks may be dropping even more, making you more money if you wait.

These statements are both true. Prices may have farther to fall and you might make even more if you wait before buying. Of course, just the opposite could be true, too. You and I and Roberts and Buffet and everyone else in the world have absolutely no way to know or predict what will actually happen. That's why market timing doesn't work.

What should people be doing? The same thing they should always be doing. Investing over time. Dollar cost averaging. Buy some now, buy some next month, buy some the following month, etc. If prices are lower next month, you'll buy more. If prices are higher, you'll buy less.

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People should also ignore the media and the "experts" that always crop up when the markets are in a volatile cycle.

[ez1]

I guess I'll just wrap up my view on this thread by first thanking you all for your comments. I appreciate hearing everyone's perspectives on what matters and what may or may not work. That's why I like posting on message boards - the back and forth.

I do want to clarify that my title may read like I'm saying "think again" but I didn't actually type that - because I know the common way of interpreting that would be that I'm saying it'd be wrong to get back in. But the technical meaning of "think again" is really that you should take some new info into consideration. What you do with it is up to you. It's always hard to know what people mean on a message board when we can't see body language or hear the tone. My original intent was to share an article for those who are active investors. I fully realize that the end result is different for different people.

One thing we can all agree on is that if anyone knew the true secret to timing the market, they wouldn't share it with any of us. And you certainly wouldn't see that person posting on a message board of any kind ... unless it was about "How to protect your thoughts from being stolen in your sleep"

Have a nice weekend, all.