Hobo Predicts Monday Stock Market Drop
After reading your blog for a while, I have realized how intelligent you are. It took me a while to get past the improper grammar, but you are more knowledgeable about the stock market and the direction society is moving in than most people I know.
So I don't let the word "hobo" affect my perception of you. :)
Hi Mr. Andy,
Looks like you keep abreast of things while sitting in your corner of the world. Youre so right about the real estate situation. Im in my humble little house on a country acre here in Georgia. Not even a mile or so from me a whole subdivision started popping up with homes 100 times more than mine! I kid you not. Its ridiculous how it finally swept over us here the last 10 years or so. I can remember when we breached the $100,000 average just maybe 15 years ago. If my momma were still here, she would be saying "my stars and garters, look at them people living high on the hog..got no more sense than the good Lord gave a fence post." I appreciate her more everyday, preaching food, shelter and clothing and the rest is gravy. I grew up listening to DeBussey (Claire De lune) Beethoven (Moonlight Sonata) and a host of Christmas Carols from momma and her piano. Her one and only splurging pleasure her whole life. I was content with my favorite toy being a decent climbing tree.
Watching my piddly savings being whittled away now, Im thankful for my upbringing. Food, shelter and clothing, everything else is just gravy. I pray as much for others hurting now.
Take care farmboy
Andy, the world stock markets will have to continue to go down as long as credit is frozen. This is forcing hedge funds (which operate solely on credit) to pull out of the markets. It the institutional investors who are driving the markets down, not the little individual investors. On the other hand, individual who have cash (are liquid) and aren't risk averse have the potential to really make a lot of money by buying low (right now).
In my blog post, the pivotal point I was trying to covey is that Institutional investors sell into good news. The USA Government announces a 750 Billion dollar bailout. This was good news, therefore on monday the stocks dropped.
Where is the bottom?
Where are the good deals?
I think the bottom of the stock market will be around 6600 it should be a 40 percent cut from the 11,000 number, or 60 percent of 11,000 is 6,600.
I see the stocks as being over-priced of their inherent values by at least 40 percent.
I do not see an rush to worry about buying stocks until it gets around 6000-6600, and then still a problem.
I see the possibility of buying real estate for up to 60 percent off the 2007 prices. It will be a buyers market, however no way to sell with any exit strategy for about five to ten years.
Stocks are incredibly dangerous and 99.99 percent of people need to,"Just say no."
Andy, a follow up here from the poster who spoke of hedge funds. I'ld say your analysis is pretty good. The bottom is anyone's guess, but mine would be about the same as yours (6000's for the dow). During the great depression stocks went down 89%. I don't think its that bad this time, but think this will be the worst since the great depression. I've been buying quality financials. Not all at once, just a bit here then a bit there. Most people average about a 5% return on their investments over time (about the same as a fdic insured cd). Of course people who are smarter than average do better than average.
I believe the whole market is going to slowly devalue down to 6000. If there are any good buys to me they would have to be in the newer IPO's. However, since they use spin and hype to create an image, these may be slowing to a stop.
In the end, buying companies that have a good product, an easily defined products, an understandable products is my choice.
If I ever decided to buy stocks, it would be on purchasing stocks whereby a small compapany is releasing a new product that makes good sense. I would find them in Popular Mechanics, I would buy holding onto them using a computer tool that says if the price goes down more than 7 percent, it is to auto sale the stock.
I would keep moving it up daily or weekly, it should never go down 7 percent from any high or I would sell.
Today's market is a mess, more or less time to sit the money in some bank and wait until there is an obvious play.
I do understand that if you had 10 million dollars this is not so easy to do, I mean just leaving in a bank.
Andy, one last follow up before I let this thread die. If you ever do decide to invest in stocks, buy the book "Security Analysis" by Benjamin Graham. Mr. Graham was the mentor to Warren Buffet and the man who taught Buffet most of what he knows about investing. The book was written in the 1930's and really explains in great detail the fundamentals of conservative investing. The key is to buy big companies with strong fundamentals during a crisis. Large companies will see their share prices battered but will likely not be allowed to fail (govt. will bail them out if needed). The only downside to the book is the cost. On amazon for about 50USD or more usually. But probably the best investment a person could ever make. I hope this advice may help you someday. You share info freely and your tips on CCleaner have really helped my computer run better.
I did not know Warren Buffet had a mentor. I read one or two books about Warren Buffet, however many years ago.
This would be good advice you gave.
I have never had a need to invest in stocks because I have always owned my own company. There is the reasoning, that the best investment should always be your own company.
Although it would be nice if my company earned so much money I could not invest in it fast as I earned the money. Then I would need to invest in something else.
I have played with the idea for years of investing 5000 in the stock market. I was 2 in my state, and 52 in the nation on the stock buying game called the "National Investment Challenge."
I earned 100-124 percent percent three quarters in a row. It would be fun from a gaming point of view to do it for real.
Plus with the new computer sell options I could do better.
I will try to buy the book or check out from the library in the USA.
You are probbly very right about investing in your own company. You know your own ability better than you (or I) could ever understand the ability level of people running the large corporations. I invest because I have a fair amount of money (though not rich) and honestly because of I suppose laziness. Investing is easy and if done wisely lucrative.