Wednesday, October 29, 2008

Lucky 13--Revisit

We've not revisited this "Lucky 13". They've only suffered a 26% decline through the close of yesterday--helped immensely by ROH's takeover bid! Click on the label to find the series of posts for this group.

The lesson: Gimmicky but catchy investment strategies all get washed up on the same beach when the liquidity tide heads out quickly.

I think for the average investor, they get so caught up in all the tricks, tips and tools of the trade, that they forget that the economic backdrop and the overall place in the cycle go a long way toward increasing your probabilities of having a successful outcome on a position taken.

I say that with this hard-won knowledge: It's hard to get folks to agree on where we are in any cycle. If you've been following economic commentary, it's only been within the last three months that we have the majority of folks agreeing that we are going into a recession.

Which reminds me.....Brian Westbury, who thought everyone was full of patooky who were dour on the economy is not being trotted out very much.

1 comment:

Anonymous said...

A new misery index!
Note the first chart

Consumers to hunker down for at least the next 12 months. It will take a couple of years or more to repair damages.

How are we going to have a V shape recovery, as Brian Westbury at First Trust asserts?

So, we had a 10%+ rally yesterday; but the S&P is still down 40.5% from its high in October, 2007. To get back at the 1565 level on 10/9/07, the S&P will have to rally 68% from this point on (930 as of 10/29/08).

Forget about the high last year. Just less than a month ago,
S&P was 1164.74 on 9/30/08. To get back to 1164.74, the index will have to rally 25%.

Thanks to the wisdom of buy-and-hold (a basket of well-diversified Blue Chips). That has to be the biggest misconception in wealth creation of all time!