The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

24 January 2010

The Market Decline of 2010 - A recap of my expectations

Confusion reigns re my market perspective and expectation; this occurs because readers (and my site's aggregator) do not bind my separate posts into one distinct thesis. This all is my fault, though. Please view this post as both a re-cap and FAQ (of sorts).

1) The general market should decline and base through the first 6-9 months of 2010;
2) Initial thrust down should carry to ~875 (S&P); the possibility exists for a deeper decline. (Ominous tops prevail, across all the periodicities.);
3) This particular oscillation (decline) is part of a (long-articulated) high level consolidation, now ~12 years old with 5-10 years left to run;
4) None of this action should qualify as a surprise; it is a part of the markets' omni-present oscillations;
5) Individual stocks, groups, and sectors should rise during the decline, even to new all time highs;
6) Sector analysis and timing should prove of paramount importance. Purchase the strongest sectors, the true leaders, during declines to short and intermediate term support;
7) Expect a positive (bullish) resolution later this year; possibly calendar Q3, probably calendar Q4.
8) Own the leaders, the best of the best, the crème de la crème.
9) Make money from your long investments.
10) Look back and smile at the balance in your life the decline created. You need not swing at every pitch, invest in all market environments.

These separate threads make up one giant tapestry; none stands alone and apart. Price vs value; risk vs opportunity; sector opportunity vs buy & hold. As an investor, I always seek investment opportunities; they always exist.

My comments re the markets, though, could become less frequent while I monitor market behavior. I anticipate few if any long side purchases in the coming weeks -- especially during February, which I expect will prove especially hellacious (difficult, tough... down hard). Nonetheless, I have articulated many investment ideas, and continue to favor several of them. One theme recently discussed is the notion of large cap multi-nationals: Colgate-Palmolive/CL and McDonalds/MCD are two excellent long term investment opportunities; each remains in its primary, long term up trend. Investors should expect a difficult row to hoe in the short and intermediate term.

Which means now is the time to perform due diligence on all those exciting investment opportunities... which is precisely what I plan to do in the coming weeks and months.

(This post continues with specific investment opportunities, timing, and conversation on Investment Poetry. Hope to see you there.)

Full Disclosure: Long Colgate-Palmolive/CL and McDonalds/MCD.
-- David M Gordon / The Deipnosophist


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