I'm glad to see that Warren Buffett has finally come around to my opinion that the time is ripe to invest in the stock market.
http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&oref=slogin
Showing posts with label stocks. Show all posts
Showing posts with label stocks. Show all posts
Saturday, October 18, 2008
Wednesday, October 8, 2008
Sturm und Drang
On the way home today I filled my car's tank with gas at $3.16 a gallon. Slowly and stealthily gas prices have dropped by almost 25% from their peak over the past couple of months and yet nobody seems to have noticed. I certainly noticed today.
After I got home Linda and I had to eat a hasty light dinner because we were due for our second in the series of six weekly Rumba lessons up at the Ballroom on High Street. As usual Jas and Kathy put on a great lesson for the twenty or so in the class; and this time we guaranteed that we'll retain what we learned by practicing for about a half hour after we got home. We've pledged ourselves that tomorrow night we'll run through our Waltz, Foxtrot and Rumba routines instead of walking.
Those were the good sides of the day. The bad side was that the stock market tanked again today, with the DOW going down another 180 points. All told the market is off almost 40% from last year's high. The first of the 401K statements for the third quarter arrived in today's mail; but I hate the thought of opening it. The most annoying thing is that Linda and I are already pretty fully invested in stocks and real estate; so I can't see any way of freeing up enough cash to take proper advantage of what may soon be a truly phenomenal buying opportunity.
Here's a free investment tip which is certainly worth no less than it's costing you. The idea is to buy low so that later you can sell high. Going further, the idea is to be one of the few who are smart enough to buy when everybody else is totally sunk in doom and gloom. If you have a access to a 401K plan at work now is the time to maximize your monthly deductions. If you don't have access to such a plan now is the time, if there ever was a time, to cut back on your spending and free up some money to buy as many shares as you can each month in a broad no-load, low fee mutual fund. With the market as low as it now is, and perhaps going lower, it's as close to a sure thing as you will ever be able to place a bet on.
The U.S. has easily the most free and vibrant large scale economy in the world; and it will retain enough freedom and vibrancy to continue to dominate the world even if Barry and Joe and their buddies get control of all three branches of government and thus have the opportunity to run wild and establish a bunch of new government boondoggle programs. Also, there are a host of new technologies being worked on which promise even more amazing developments than we've seen in the recent past. The stock market indexes are now going down, and they may go down or stay flat for an extended period, years even; but in the long run, the five or ten or fifteen year run, the market is going to make back all of its declines and go on to peak much, much higher.
Yes there are problems, just as there have always been problems. But in the long run the problems we currently face are essentially trivial next to the opportunities. We live in by far the very best country, and we live at by far the very best time to be alive in the history of the world. And tomorrow, or the day after tomorrow, will be an even better day to be alive for the vast majority of us.
Anyone who doubts that this is the very best time to be alive should comment on this post and I'll recommend a couple of very readable history books.
After I got home Linda and I had to eat a hasty light dinner because we were due for our second in the series of six weekly Rumba lessons up at the Ballroom on High Street. As usual Jas and Kathy put on a great lesson for the twenty or so in the class; and this time we guaranteed that we'll retain what we learned by practicing for about a half hour after we got home. We've pledged ourselves that tomorrow night we'll run through our Waltz, Foxtrot and Rumba routines instead of walking.
Those were the good sides of the day. The bad side was that the stock market tanked again today, with the DOW going down another 180 points. All told the market is off almost 40% from last year's high. The first of the 401K statements for the third quarter arrived in today's mail; but I hate the thought of opening it. The most annoying thing is that Linda and I are already pretty fully invested in stocks and real estate; so I can't see any way of freeing up enough cash to take proper advantage of what may soon be a truly phenomenal buying opportunity.
Here's a free investment tip which is certainly worth no less than it's costing you. The idea is to buy low so that later you can sell high. Going further, the idea is to be one of the few who are smart enough to buy when everybody else is totally sunk in doom and gloom. If you have a access to a 401K plan at work now is the time to maximize your monthly deductions. If you don't have access to such a plan now is the time, if there ever was a time, to cut back on your spending and free up some money to buy as many shares as you can each month in a broad no-load, low fee mutual fund. With the market as low as it now is, and perhaps going lower, it's as close to a sure thing as you will ever be able to place a bet on.
The U.S. has easily the most free and vibrant large scale economy in the world; and it will retain enough freedom and vibrancy to continue to dominate the world even if Barry and Joe and their buddies get control of all three branches of government and thus have the opportunity to run wild and establish a bunch of new government boondoggle programs. Also, there are a host of new technologies being worked on which promise even more amazing developments than we've seen in the recent past. The stock market indexes are now going down, and they may go down or stay flat for an extended period, years even; but in the long run, the five or ten or fifteen year run, the market is going to make back all of its declines and go on to peak much, much higher.
Yes there are problems, just as there have always been problems. But in the long run the problems we currently face are essentially trivial next to the opportunities. We live in by far the very best country, and we live at by far the very best time to be alive in the history of the world. And tomorrow, or the day after tomorrow, will be an even better day to be alive for the vast majority of us.
Anyone who doubts that this is the very best time to be alive should comment on this post and I'll recommend a couple of very readable history books.
Wednesday, October 1, 2008
If the banks are short of cash to lend why. . .
If the banks are so short of cash to lend why have I continued to ger the usual mailings offering cheap credit over the past couple of weeks?
One bank sent me a letter saying we're pre-qualified for a second morgage of up to $150,000 at a 4.5% rate which can't be adjusted for two years. Several others have sent me their usual envelopes of pre-printed checks offering loans at zero interest for the next six months. One offered to double the limit on our present credit card with them, and offered to guarantee an interest rate of 4.9% for the life of the loan if it's used to pay off another credit card. Reading them carefully, as I always do, I find, that most of the loans are not really at zero interest because there is a 3% processing charge up front, but one of them offered the old sweet deal of a flat maximum $75 up front processing charge.
Are these offers the last trumpetings of rampaging brain shot elephants? Are they the last reflexive tail twitchings of headless snakes?
I'm looking at an offer of up to $30,000 that just came yesterday, a day after congress failed to pass the bailout bill that the banks supposedly need to keep the financial system from collapsing. It's from Capital One, which proclaims that "As of 09/23/08, our records show you've earned this offer for a 0% APR on balance transfers and 0% APR on purchases until January 2010." Capital One is one of the greedy ones that charge 3% up front, so I'll probably throw their offer away eventually; but then again maybe I'll save it for a few days against the possibility that I don't get a better offer and the stock market really tanks, tanks to a level which makes it irresistible. After all, somebody has to patriotically support the market when the whole world is fully in insane panic mode and well run companies in recession resistant industries are selling for five or eight times solid earnings. Just for comparison the S&P average is now at about 20 times trailing earnings.
Sometimes the banks make kiting credit so cheap that it makes sense; but don't even think about trying this at home unless you're very disciplined about promptly paying the minimum amount monthly, and you also have another safety valve line of credit available in the event the mail gets lost or something else like that. This is a game that needs both a belt and suspenders because such offers always carry the threat of reverting to something like Capital One's 24.9% rate if you miss or are late with two payments.
One bank sent me a letter saying we're pre-qualified for a second morgage of up to $150,000 at a 4.5% rate which can't be adjusted for two years. Several others have sent me their usual envelopes of pre-printed checks offering loans at zero interest for the next six months. One offered to double the limit on our present credit card with them, and offered to guarantee an interest rate of 4.9% for the life of the loan if it's used to pay off another credit card. Reading them carefully, as I always do, I find, that most of the loans are not really at zero interest because there is a 3% processing charge up front, but one of them offered the old sweet deal of a flat maximum $75 up front processing charge.
Are these offers the last trumpetings of rampaging brain shot elephants? Are they the last reflexive tail twitchings of headless snakes?
I'm looking at an offer of up to $30,000 that just came yesterday, a day after congress failed to pass the bailout bill that the banks supposedly need to keep the financial system from collapsing. It's from Capital One, which proclaims that "As of 09/23/08, our records show you've earned this offer for a 0% APR on balance transfers and 0% APR on purchases until January 2010." Capital One is one of the greedy ones that charge 3% up front, so I'll probably throw their offer away eventually; but then again maybe I'll save it for a few days against the possibility that I don't get a better offer and the stock market really tanks, tanks to a level which makes it irresistible. After all, somebody has to patriotically support the market when the whole world is fully in insane panic mode and well run companies in recession resistant industries are selling for five or eight times solid earnings. Just for comparison the S&P average is now at about 20 times trailing earnings.
Sometimes the banks make kiting credit so cheap that it makes sense; but don't even think about trying this at home unless you're very disciplined about promptly paying the minimum amount monthly, and you also have another safety valve line of credit available in the event the mail gets lost or something else like that. This is a game that needs both a belt and suspenders because such offers always carry the threat of reverting to something like Capital One's 24.9% rate if you miss or are late with two payments.
Tuesday, September 30, 2008
We interrupt this panic for a little humor
The stock market is going down faster than the Hindenburg after that fellow lit his cigarette. The supposedly staid and sober bankers now seem to be about as solvent and judicious as drunken sailors. The economy is collapsing around our ears. Congress is running around in circles screaming and shouting. And somehow it's no longer quite so amusing that President Bush looks a lot like Alfred E. Newman.
But enough of all this doom and gloom!
We interrupt this panic for a little humor. . . but not right away.
It turns out P.J. O'Rourke has cancer. . . pause, drumbeat, rising volume. . .the big C!
That kind of puts all that economics gloom in perspective don't it? Even though P.J. has a relatively survivable form of cancer.
But I promised humor. And P.J. O'Rourke wouldn't be P.J. O'Rourke if he didn't still have his sense of humor. So, in his inimitable way he has made lemonade out of the great big lemon life has dealt him.
His latest column is an interesting example of bitter sweet humor.
http://www.latimes.com/news/opinion/la-oe-orourke28-2008sep28,0,3317114.story
But enough of all this doom and gloom!
We interrupt this panic for a little humor. . . but not right away.
It turns out P.J. O'Rourke has cancer. . . pause, drumbeat, rising volume. . .the big C!
That kind of puts all that economics gloom in perspective don't it? Even though P.J. has a relatively survivable form of cancer.
But I promised humor. And P.J. O'Rourke wouldn't be P.J. O'Rourke if he didn't still have his sense of humor. So, in his inimitable way he has made lemonade out of the great big lemon life has dealt him.
His latest column is an interesting example of bitter sweet humor.
http://www.latimes.com/news/opinion/la-oe-orourke28-2008sep28,0,3317114.story
Monday, September 15, 2008
For what it's worth
If you own stocks or mutual funds DO NOT SELL into a panic.
http://online.wsj.com/home/us
If you have cash to spare, BUY stocks or mutual funds gradually and steadily during panics. Actually, you should be doing that in good times and bad times. The difference it that it's really advantageous to buy during bad times. The problem is that neither you nor anyone else knows precisely how long the bad times will last.
Split your spare cash into 12 or 24 or 36 or 48 chunks depending on how conservative you want to be and buy some stocks each month in a disciplined fashion. Or increase the deduction that's going to your 401K plan if you work for a company that has such a plan. That's always a good idea if you can spare the money, but when the market is falling it is an especially good idea.
If you're under about 50 years old all of your investment dollars (except for your house) should be invested in stock mutual funds except for the amount of cash you need to live on for six months or so in the event you lose your job. If you're 60 years old you still should have almost all of your investment dollars invested in stock mutual funds.
We're almost surely not going into a new great depression. The government is stupid (nearly all governments are stupid nearly all the time), but the government is not that stupid, and the economy has changed a lot since the 1930's. Now, in 2008, almost half of the economy is supported by federal, state and local government spending of one sort or another. That's a bad thing for growth almost all the time, but it's a good thing if the world economy really falls apart because it means demand in the US cannot collapse completely as it did in the 1930's.
http://online.wsj.com/home/us
If you have cash to spare, BUY stocks or mutual funds gradually and steadily during panics. Actually, you should be doing that in good times and bad times. The difference it that it's really advantageous to buy during bad times. The problem is that neither you nor anyone else knows precisely how long the bad times will last.
Split your spare cash into 12 or 24 or 36 or 48 chunks depending on how conservative you want to be and buy some stocks each month in a disciplined fashion. Or increase the deduction that's going to your 401K plan if you work for a company that has such a plan. That's always a good idea if you can spare the money, but when the market is falling it is an especially good idea.
If you're under about 50 years old all of your investment dollars (except for your house) should be invested in stock mutual funds except for the amount of cash you need to live on for six months or so in the event you lose your job. If you're 60 years old you still should have almost all of your investment dollars invested in stock mutual funds.
We're almost surely not going into a new great depression. The government is stupid (nearly all governments are stupid nearly all the time), but the government is not that stupid, and the economy has changed a lot since the 1930's. Now, in 2008, almost half of the economy is supported by federal, state and local government spending of one sort or another. That's a bad thing for growth almost all the time, but it's a good thing if the world economy really falls apart because it means demand in the US cannot collapse completely as it did in the 1930's.
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