The Deipnosophist

Where the science of investing becomes an art of living

My Photo
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!

17 March 2010

This moment

This particular, peculiar moment in market history is among the most difficult of all for investors -- but especially for intermediate to long term investors. This occurs because the moment is fraught with peril (are they not all?), but also because it encourages investors to shift priorities, to change their strategy.

What change? Primarily time frame. You think, and I believe, the markets are headed for a swoon. So you sell off holdings, raise cash, stand aside, and watch all the ups and downs of the market's squiggles. "Look, I could have owned that one! I could buy that today and sell for a profit tomorrow." But the effort rarely works so perfectly. I used to attempt these 'little' trades, thinking I would be out quickly only to moan because the position took longer than I thought... or, worse, declines. And my preferred long term investments rise... without me aboard. Frustrating. After many years of misbegotten trades, though, I learned finally that I prefer long-term investment opportunities. Always be on the right side of the primary trend.

Sometimes a short to intermediate term opportunity comes along too good to allow slip by. Although almost everything points to a break lower, I truly do not know which way the market will break. My doubt occurs due to the fact that I monitor the best of the best, so these stocks tend to be stronger than the overall market; they mask the market's weakness. I must always remind myself of this perceptual fact to retain an objective perspective.

Let's assume me to be correct: the market declines for the next ~6-8 months (and likely begins within the next few weeks); the low of that decline could prove the low of the entire high level consolidation I mention repeatedly. Unless the March 2009 low proves to be THE low. This coming low (again, assuming me correct) might be analogous to the December 1974 low, but remember the market during that last secular, high level consolidation required another 8 years of base trading -- albeit with an upward tilt -- before finally breaching the 1966 highs in 1982.

Obviously I have a scenario, a vision, in mind. Strategy and tactics follow that vision, and those bases also are covered. Tactically, you purchase the new leaders at an advantageous moment. One company that appears especially promising, at this moment, is...

This post continues, with discussion, on InvestmentPoetry. See you there!
-- David M Gordon / The Deipnosophist


who's online