Slava plays Clairvoyant of Calgary

[Slava]

First let me say that this is one of the stupidest things that someone can do...try to predict the stock market! But with the other investment thread being severely de-railed into a dsicussion about oil workers vs. auto workers and things like that I figured it was time for a new one.

I also feel somewhat remiss about not posting last year when I was moving the bulk of my clients in to cash....so here goes. Before I make any predictions here though let me state unequivocally that this does not constitute investment advice, and like any good workout plan you should consult with an advisor before you implement these things!

Basically given the current cycle my position is that we are set for one more re-test of the lows. I would suggest that this will take place in the first week of December and things will bottom out right around the first. My suggestion for my clients will depend on a few things; if you are buying on a disciplined schedule (i.e. once a month or more frequently you have a purchase that comes out of your account) you should continue with this.

If you are not on a program such as that however you should really think about moving to a cash/very conservative position. Its a temporary situation and you will want to buy back in before the end of the year in all likelihood. I would highly, highly recommend this if you are in a position of holding non-registered investments specifically to crystallize the losses you have likely suffered.

What in the world do I base this on? Well there are a few things:

A) The last day for Hedge fund redemptions is on November 30th...you can bet that if people are eligible to take money out and that is their last kick at it than there will be some serious money moving.

B) The fundamentals in the market indicate that we are not quite done yet. As the date for a recovery begins to push back into later 2009 the bottom of the market moves a little backward with it. My impression is that the bottom is 60% of the way through...as the trough deepens, the 60% mark moves as well.

I say one more time for the record, that this is purely my opinion. As a lot of you may know I am not one who believes in trying to time the market, because it is relatively impossible...however I am also not terribly interested in watching everyone else ride it down and then back up again! I would be extremely interested to hear with others have to say though, which is a large part of the reason that I post this!

[Iowa_Flames_Fan]

I'm totally suing if this advice doesn't make me rich. ;)

Seriously, I'm not doing anything with my investments--just leaving them alone. I'm just glad to hear someone who knows more than me saying there may be an end in sight, because those statements are a little depressing.

[bluejays]

First let me say that this is one of the stupidest things that someone can do...try to predict the stock market! But with the other investment thread being severely de-railed into a dsicussion about oil workers vs. auto workers and things like that I figured it was time for a new one.

I also feel somewhat remiss about not posting last year when I was moving the bulk of my clients in to cash....so here goes. Before I make any predictions here though let me state unequivocally that this does not constitute investment advice, and like any good workout plan you should consult with an advisor before you implement these things!

Basically given the current cycle my position is that we are set for one more re-test of the lows. I would suggest that this will take place in the first week of December and things will bottom out right around the first. My suggestion for my clients will depend on a few things; if you are buying on a disciplined schedule (i.e. once a month or more frequently you have a purchase that comes out of your account) you should continue with this.

If you are not on a program such as that however you should really think about moving to a cash/very conservative position. Its a temporary situation and you will want to buy back in before the end of the year in all likelihood. I would highly, highly recommend this if you are in a position of holding non-registered investments specifically to crystallize the losses you have likely suffered.

What in the world do I base this on? Well there are a few things:

A) The last day for Hedge fund redemptions is on November 30th...you can bet that if people are eligible to take money out and that is their last kick at it than there will be some serious money moving.

B) The fundamentals in the market indicate that we are not quite done yet. As the date for a recovery begins to push back into later 2009 the bottom of the market moves a little backward with it. My impression is that the bottom is 60% of the way through...as the trough deepens, the 60% mark moves as well.

I say one more time for the record, that this is purely my opinion. As a lot of you may know I am not one who believes in trying to time the market, because it is relatively impossible...however I am also not terribly interested in watching everyone else ride it down and then back up again! I would be extremely interested to hear with others have to say though, which is a large part of the reason that I post this!


Good to hear some professional tips. Just be sure to update us when to get in! Far too many people explain why thing happened, but it's good to hear some predictions about future happenings.

[Clarkey]

Are we really going to see prices fall below the global panic fest of 3-4 weeks ago? That was the perfect storm of badness and immense fear all at once. I think we saw an over-reaction and over bail and that most sound companies will hover around that same bottom for a while and then start to improve. Some would argue that the market was under-reacting and not accounting for the long term blow this crisis will deal. That could be true, and I fully admit I don't know what the full extent of this thing is but I am bullish on a handful of bluechip Canadian based energy companies nonetheless. You can't go wrong with companies that have solid balance sheets, and a crapload of proved reserves that will always have a value whether it's worth $50 bucks a barrel or $200 bucks. Buy up bluechip energy and ride it out, the bottom can't go much lower on these guys, and if it does, just hang on for a year or 2 and you'll make money.

[Clarkey]

Good to hear some professional tips. Just be sure to update us when to get in! Far too many people explain why thing happened, but it's good to hear some predictions about future happenings.

You've got to do the cost benefit on this. I think it would feel crappier psychologically to miss out on potentially the biggest buying opportunity in history than to say that you sat on the sidelines and avoided another 10-15% market drop.

[bluejays]

You've got to do the cost benefit on this. I think it would feel crappier psychologically to miss out on potentially the biggest buying opportunity in history than to say that you sat on the sidelines and avoided another 10-15% market drop.

While I agree, a market drop of 10%-15% is something I'd be happy to avoid. A 10% gain annually is something most investors hope for. That much of a drop and you start to lose sleep. Also, I think for most people, a loss is a lot more emotional than a gain. I'll keep an eye out for this potential drop.

[bluejays]

Oh, forgot to ask (don't want to derail the thread...this early at least). I'm just in the process of finalizing my questrade account signup (cheapest trades on the net). I'm just going to use their basic webtrader to do online trades, but have never used it or seen what it looks like. Does anyone use Questrade? How is their Webtrader interface? Are their trades filled efficiently? How is their customer service?

[Slava]

I agree with you Clarkey; it would be bad to miss the initial 10-15% uptick. My point here is that if you have a chunk of money sitting in the market and it drops another 10-15% before that uptick though you are better off to move out and get back in at the new bottom.

Further, the initial uptick is not the be all and end all. You could miss the first up week and still gain the next 2-3 years of up times in the markets. If you are buying single securities this is even more apparent. Many companies went up by 10-15% only to rise by a few hundred percent over the next 5-7 years! Sometimes that little bit of caution is worthwhile...it can give you the confidence to know that company you're buying is doing what you expect.

[MoneyGuy]

All of this assumes that one knows when the next supposed 10-15% downturn occurs, when to exit the market and when to re-enter. I submit that no one does. Check out these facts.

-When the market does reach bottom and the recovery starts, on average it tends to make up fully a third of the losses in the first 40 days!!
-Over the last half century, bear markets tend to average negative 30% over 11 months; the bull markets tend to last five years and go up 161%.

That first point illustrates why you can't afford to miss the initial part of the recovery, which is spring loaded. I'd rather risk being in the market for a further 10-15% drop than being out of the market for any of the recovery. I want to be there to benefit from the entire recovery.

Market timing is just guess work. It usually fails. I wouldn't try.

[Clarkey]

Oh, forgot to ask (don't want to derail the thread...this early at least). I'm just in the process of finalizing my questrade account signup (cheapest trades on the net). I'm just going to use their basic webtrader to do online trades, but have never used it or seen what it looks like. Does anyone use Questrade? How is their Webtrader interface? Are their trades filled efficiently? How is their customer service?

I'm on questrade. The webtrader thing seems to be ok, not great but not horrible either. There was a thing in one of the papers rating all of them, I think it got 12th place out of 15. I think BMO's thing was rated highest. I just don't get paying $30 when you can pay $5-10 with a slightly less sexy user interface.

[Clarkey]

All of this assumes that one knows when the next supposed 10-15% downturn occurs, when to exit the market and when to re-enter. I submit that no one does. Check out these facts.

-When the market does reach bottom and the recovery starts, on average it tends to make up fully a third of the losses in the first 40 days!!
-Over the last half century, bear markets tend to average negative 30% over 11 months; the bull markets tend to last five years and go up 161%.

That first point illustrates why you can't afford to miss the initial part of the recovery, which is spring loaded. I'd rather risk being in the market for a further 10-15% drop than being out of the market for any of the recovery. I want to be there to benefit from the entire recovery.

Market timing is just guess work. It usually fails. I wouldn't try.

It depends on your time horizons too, if you absolutely need to cash out in the next couple months it's a different story. I'm not in that situation.

[Phanuthier]

Thanks again to our 2 resident experts and others

To me, the lows where we broke the resistance levels on the DOW and NYSE, correct me if I'm wrong, but weren't alot of stocks getting artificially pulled up by a new trader in the game, i.e. the feds?

To follow MoneyGuy's advice (and I realize the dangour of believing too much of the internet) I keep watching closely for when the end of this bear market is and the start of the bear, but the news just keeps getting worse and worse. Largest number of job loss in x number of years, projects getting cut (info from some friends working in design houses), the High-Tech has gone through massive layoffs the past 2 weeks, this week they recorded the largest drop in sales in however many years.

Are those the fundamentals / indicators that you are talking about Slava?

[Slava]

Thanks again to our 2 resident experts and others

To me, the lows where we broke the resistance levels on the DOW and NYSE, correct me if I'm wrong, but weren't alot of stocks getting artificially pulled up by a new trader in the game, i.e. the feds?

To follow MoneyGuy's advice (and I realize the dangour of believing too much of the internet) I keep watching closely for when the end of this bear market is and the start of the bear, but the news just keeps getting worse and worse. Largest number of job loss in x number of years, projects getting cut (info from some friends working in design houses), the High-Tech has gone through massive layoffs the past 2 weeks, this week they recorded the largest drop in sales in however many years.

Are those the fundamentals / indicators that you are talking about Slava?


Absolutely. That and the numbers that we appear headed for in the historical context could be much worse. For example the housing correction in the US is not yet in line with the historic norms for a recession, let alone the fact that this recession is being led by that sector.

I do agree with your sentiments about timing the market though moneyguy...but suffice it to say that there are a lot of people who try this, and over the past 12 months they have been rewarded for doing so.

[MoneyGuy]

Thanks again to our 2 resident experts and others

To follow MoneyGuy's advice (and I realize the dangour of believing too much of the internet)...

The difference is I'm not shy and am willing to tell people who I am. Otherwise, I agree; you could be taking advice from a 10-year-old kid. I don't mean Slava, who I know and is who he says he is. Unless he's a very old-looking 10. :)

I do agree with your sentiments about timing the market though moneyguy...but suffice it to say that there are a lot of people who try this, and over the past 12 months they have been rewarded for doing so.

Sometimes you get lucky and it works, sometimes you lose those bets. I have a friend (not a client) who told me in 1995 he would not buy into the U.S. market because it was overpriced. He missed out on years of 20%-plus returns. My point is, it may have worked this time, but anyone who keeps making those bets over time is very likely to lose more than win. I'm old than 95% of you and have a large portfolio and I'm not willing to time the market with my money. I'm willing to sit tight and take another (possible) 15% decline for the assurance of knowing that I'll be there for the recovery, all of it. Someone who times the market has no such assurance.

[Slava]

Well the whole "timing the market" question is one that I actually struggle with. I don't know that an internet forum is the place for this, but this is term that gets bandied about a lot in the industry.

Lets face it though; if a recession is imminent, and almost everyone agrees on that than why would an investor ride the market down? It seems silly to sit back and hold onto positions just to be in the market as opposed to sitting back and buying when things bottom out, or at least get lower. I often wonder (sometimes aloud) whether the timing the market sentiments aren't still best left for the day-traders and stockpickers of the world...when ETF's are being held for an average of 3 days at a time; these people are trying to time the market. I consider looking at the macro-economic trends and taking a proactive approach to be something different though.

[MoneyGuy]

I'll tell you why. The market is not the economy. The market tends to move about half a year before the economy does, because investors make their decisions based on what they expect to happen. If, as I expect, the economy is in recovery about the middle of next year, then the first part of this year is about the time to begin investing again. Anyone who waits for a stong sign of an economic recovery, has missed a huge part of the market recovery. That's why I'm sitting tight.

[Nancy]

I think there is somewhat of a difference between attempting to time the market based on technical analysis of price movements and identifying major macroeconomic factors and adjusting your investment strategy accordingly. I think this is what distinguishes reliably performing investors like Buffet from someone who gets lucky on one side of a business cycle and loses it all on another.

[Nancy]

Do you guys really think that past trends apply to this situation. To me (uneducated on this of course) this seems like unchartered waters that you cannot use past patterns to predict what will happen.

Totally agree. It could end up being an exact repeat of the recession of '91, which in my opinion could be a best case situation, or it could be more like the early '70s. And, to be honest, I do think that you'd do well over the long term to get into the market right now... What's keeping me back is the possibility of either my wife or I losing a job.

[Slava]

I'll tell you why. The market is not the economy. The market tends to move about half a year before the economy does, because investors make their decisions based on what they expect to happen. If, as I expect, the economy is in recovery about the middle of next year, then the first part of this year is about the time to begin investing again. Anyone who waits for a stong sign of an economic recovery, has missed a huge part of the market recovery. That's why I'm sitting tight.


I don't disagree with you on that at all. I actually think that we are on the same page in a lot of respects here, except for the idea of moving out of the market and waiting for the bottom (my thought) and yours of just sitting tight.

I do think that historically this time in the market is very similar to past experiences. Incidentally the current market is most similar to the 1990-1991 bear markets in a lot of ways. While the media would have you believe that this is uncharted territory that is not entirely the case. Sure, the recession this time is being lead by housing and that is not always the case, but a similar situation took place in the 90's. Also while the actual numerical declines on the market have been severe (about 6000 points from peak to trough on the TSX) as a percentage the figures are still in line with past recessions and slow-downs.

Lets face it...when the GDP drop is 0.6% we are not looking at armageddon here. Yes, there is a lot of pain particularly in the US where a 25 trillion dollar market (housing) has just trimmed $5 Trillion (20%). That type of drop is going to be painful. People are ditching their houses and keeping their cars...which is an anomaly compared to past events. But at the same time you have corporations with balance sheets that are very strong. You have demand in SE Asia that was simply not there in previous decades, and by all accounts that demand will strengthen over the coming year.

There is no question that this is a temporary situation on the markets.

[flamesfever]

Do you guys really think that past trends apply to this situation. To me (uneducated on this of course) this seems like unchartered waters that you cannot use past patterns to predict what will happen.

I think this is a really valid point. When can anyone recall deflation in a globalized economy?

[Nancy]

<SNIP>

Lets face it...when the GDP drop is 0.6% we are not looking at armageddon here. Yes, there is a lot of pain particularly in the US where a 25 trillion dollar market (housing) has just trimmed $5 Trillion (20%). That type of drop is going to be painful. People are ditching their houses and keeping their cars...which is an anomaly compared to past events. But at the same time you have corporations with balance sheets that are very strong. You have demand in SE Asia that was simply not there in previous decades, and by all accounts that demand will strengthen over the coming year.

There is no question that this is a temporary situation on the markets.

I guess this is the wildcard... It either gives you comfort or worry. Being so heavily dependent on exporting to Western markets, a slow down in consumer spending is going to have some sort of impact on these countries. In fact, didn't China itself recently annouce a $500billion stimulus package for Chinese companies?

[Slava]

I guess this is the wildcard... Being so heavily dependent on exporting to Western markets, a slow down in consumer spending is going to have some sort of impact on these countries. In fact, didn't China itself recently annouce a $500billion stimulus package for Chinese companies?


This is a wild-card indeed. I guess that if the demand in SE Asia is not as solid as expected than things will be bad for longer. That still doesn't mean bad forever though!

As far as global deflation there were fears about this in 1998 as well, so that is still not brand new (and definitely not a good thing in any event). We are not in that situation yet however, we just barely entered what is technically a recession so lets not put the cart before the horse.

[MoneyGuy]

Do you guys really think that past trends apply to this situation. To me (uneducated on this of course) this seems like unchartered waters that you cannot use past patterns to predict what will happen.

Yup, I do. Absolutely. If you look at all of the corrections/bear markets of the last several decades, they all had different stimuli. Every single one of them: 1957, '70, '74, '81-82, '87, '90, '98, '00-02. We'll come out of this as we have all the others.

This is my bottom line and the only thing that drives these decisions for me: I absolutely and totally believe that five years from now the markets will be much higher than today and today's prices will seem like a bargain. That's why I'm buying. Warren Buffett is, too, if what the world's greatest investor is doing matters.

I think some of you guys suffer from paralysis from analysis. Some of you seem to care about stuff that doesn't matter to me.

[bluejays]

Almost a $300 drop today on the TSX. Can't hardly wait until Questrade receives my funds, so I can get in on some of this. Waterhouse and McLeod are way too expensive.

[Clarkey]

I think it took me about 2 weeks total to get hooked up on Questrade.

[bluejays]

I think it took me about 2 weeks total to get hooked up on Questrade.

I wasn't sure how to send them my drivers license, so I mailed them and got a response saying someone would reply within 2-3 business days. Low and behold, over a week it took. So far, I've sat a few days idle without completing the sign up process, but all in all, it's probably taken 2-3 weeks or so. I just sent over some funds through online banking, so I expect by Tuesday or so, the fun should begin!

[FurnaceFace]

Well, Nov 20 and we're dropping. Looks like Nov 30 came early...

[Slava]

Well, Nov 20 and we're dropping. Looks like Nov 30 came early...

Well what has happened is that a lot of the delevering for the hedge funds has taken place because the institutions had to declare their intentions last week...so I was a little off.

I can't say that I'm thrilled to have seen this coming though...I would be much, much happier to suggest that we were likely to head in the other direction sooner rather than later!

[FurnaceFace]

Ah, soon is all relative. Soon can be a year when talking a 40 year cycle. ;-)

[Ronald Pagan]

I for one take great pleasure in seeing the Hedge Funds get hammered.

[Phanuthier]

I for one take great pleasure in seeing the Hedge Funds get hammered.
Me too :bag: (This might as well be a confession thread post)

[Slava]

I for one take great pleasure in seeing the Hedge Funds get hammered.

That can only be because you don't see the wider implications?

I take no pleasure in saying that the markets are headed lower....a lot of people are losing a lot of money, which in turn means that they either (A) can't retire (B) will go back to work or (C) will see their already limited income be reduced further.

[Slava]

So slava, whens it going up, all I got to believe in, is you or Joe Pesci and he ain't on this board.


While Joe Pesci might be a little more reliable, I would say that sometime in the next 10 years you should see a slight increase!!

[Ronald Pagan]

That can only be because you don't see the wider implications?

I take no pleasure in saying that the markets are headed lower....a lot of people are losing a lot of money, which in turn means that they either (A) can't retire (B) will go back to work or (C) will see their already limited income be reduced further.
In my opinion Hedge Funds are one of the reasons ordinary people are losing so much of their wealth.

I don't take pleasure in the market correcting, don't get me wrong. But I do take great satisfaction in seeing one of the most rogue and dangerous segments of the market taking the shortest haircut.

[Slava]

^ I can understand that sentiment, and as someone who certainly doesn't promote these vehicles I don't disagree. I just have a hard time watching people lose money to begin with, and this is a huge amount of money.

[macker]

John Maynard Keynes 2 cents : The market can stay irrational longer than you can remain solvent. We are only in the 3rd inning here. It is going to get very ugly in the months ahead. Tomorrow could/should be :eek:

[Slava]

John Maynard Keynes 2 cents : The market can stay irrational longer than you can remain solvent. We are only in the 3rd inning here. It is going to get very ugly in the months ahead. Tomorrow could/should be :eek:


I love that Keynes quote...but why do you think there are 6 more innings to come?

[Bend it like Bourgeois]

Well what has happened is that a lot of the delevering for the hedge funds has taken place because the institutions had to declare their intentions last week...so I was a little off.

I can't say that I'm thrilled to have seen this coming though...I would be much, much happier to suggest that we were likely to head in the other direction sooner rather than later!


You can gloat a little for sure. Not the happy dance kind of gloating. More the 'I knew the flames would get killed by San Jose' kind of gloating.

[Slava]

You can gloat a little for sure. Not the happy dance kind of gloating. More the 'I knew the flames would get killed by San Jose' kind of gloating.


While I would rather be right than wrong (and potentially cost people a lot of money), there is no gloating here. I know a lot of guys in my industry who are really hurting right now and take absolutely no pleasure in that.

[macker]

I love that Keynes quote...but why do you think there are 6 more innings to come?

The $600 Trillion derivatives market will take a long time to deleverage and Bernanke keeps throwing more debt at the problem when debt is the problem. I really believe that the US is being mismanaged currently :eek:

[Slava]

Bump....and of course a market update: TSX down 711 pts this morning. (I can't pass up a chance to say that I'm right, even if the first day of the week isn't even over yet!)

[Nancy]

And in the "I can't believe that's news" category, CNN has just released a news alert that the Census Bureau has officially declared that the US entered a recession in December of 2007."

[Sylvanfan]

The predicting down part wasn't the hard part, its that its going to have to start going up now that will prove your mettle. You better be right I have tkane all the equity in my house and put all my life savings into your prediction.;)

I sold my house in August and am preparing to move into a stick shack in the mountains in January. I estimate that if I can do that, hunt for most of my own food, I should be able to survive a 14 year depression in which I can't make a dollar on my current savings, and not touch my RRSP's (which are worth nothing right now anyways). Hopefully the NDP and Liberal coalition government can figure out how to pay EI for 14 million unemployed Canadians and keep doing it (they've always claimed to be that smart anyways haven't they?)...it would extend my stay of execution.

[Slava]

The predicting down part wasn't the hard part, its that its going to have to start going up now that will prove your mettle. You better be right I have tkane all the equity in my house and put all my life savings into your prediction.;)

lol....well I know that if the markets were up by 700 this morning than I could've signed in here to see a "Slava has no idea what he is talking about" post in the thread, so I had to point this out.

On another point though: you still have equity in your house? Clearly the housing sector is due for much more of a crash! ;)

[Phanuthier]

Good job Slava! I took your advice and had my eyes on a few stocks, they weren't at their 52W lows with the drop today but I liked their company, management and future prospects so I bought into those TSE stocks today. :)

[MoneyGuy]

And in the "I can't believe that's news" category, CNN has just released a news alert that the Census Bureau has officially declared that the US entered a recession in December of 2007."

How can that be? A recession is generally defined as two consecutive quarters of negative economic growth. If we've been in recession for a year now, why announce this now? Maybe CNN defines it differently, such as the time when some of their economic reporters were laid off. :confused:

[bluejays]

I was gonna bump this one myself. Never bought today, but probably gonna jump on tomorrow or Wednesday as I'm guessing we'll see a small drop again considering there wasn't a recovery today at close. I guess we shall see!

Thanks Slava!

[Slava]

Well RRSP season is upon us and the markets have yet to recover. A lot of you probably wonder about what to do with your contributions that have to be in by March 2nd, so I figured I would dredge this thread up again and make another few predictions. Of course you should speak with an advisor for your situation or at least weigh my general predictions carefully before commiting to anything.

Also, (much to the glee of some posters I'm sure), I will eventually be wrong in my predictions and prognostication. Its a fools game, but it is entertaining to me!

I suggest that mounting evidence shows that the TSX will re-test the November 21 lows. This means that while we are at approximately 9000 this morning, we would see a 15% drop this spring. I think that this is likely for a number of reasons and could get into this if people are interested in hearing it.

What does that mean for your RRSP's or investments? Well there are a couple of ways to look at this.

(1) I read that thought, but that guy doesn't know what he is talking about. In this case ignore this, poke fun at my prediction and do what you think is best.

(2) If you believe this is the case and will want this money in the near term you might want to consider putting your investment into cash until the lows are re-tested. You also might look at investment options where not all of the cash is deployed at once (a dollar cost average strategy that still gets the money into the RRSP before the deadline though).

(3) Similar to the first point; the markets are down without question. You have riden things this far and another 15% won't matter even if I'm right. Buy equities and enjoy the ride for the longer term. There is nothing wrong with this approach as you will come out ahead over the longer term.

(4) Buy bonds and get paid to wait. I think that with further rate cuts to come and still a couple of months until a recovery is imminent this could be a decent place to sit. You could still see some appreciation here and have flexibility to move to equities when things bottom out.

Further to my prediction, I think that once we hit this 7500-7700 level we will shake out a lot of the problems that we've had. From there I think that the market begins its recovery and you need to be invested!

[macker]

Here was a pretty accurate prediction made by Jim Rogers on March 4, 2007.
http://www.reuters.com/article/newsOne/idUSL1470530620070314?src=031407_1316_DOUBLEFEATUR E_mortgage_troubles&pageNumber=1
Almost scary how clairvoyant he was!

[Dan02]

Here was a pretty accurate prediction made by Jim Rogers on March 4, 2007.
http://www.reuters.com/article/newsOne/idUSL1470530620070314?src=031407_1316_DOUBLEFEATUR E_mortgage_troubles&pageNumber=1
Almost scary how clairvoyant he was!

with the number of people throwing their hat into the ring to quess at what's going to happen, one of them is bound to be right, or atleast pretty close.

Props to this guy for being close though.

[Cowboy89]

(4) Buy bonds and get paid to wait. I think that with further rate cuts to come and still a couple of months until a recovery is imminent this could be a decent place to sit. You could still see some appreciation here and have flexibility to move to equities when things bottom out.


From a fixed income perspective: This strategy isn't necessarily without downside risks through this anticipated period. All the money that MoneyGuy and Slava were previously predicting to spearhead a "Spring-loaded" market recovery back in November/December went into bonds big time, namly corporate bonds. Investment grade corporate spreads have been tightening and premiums have shrunk. New issues have been dramatically oversubscribed to reflect this demand. What this means for investors is that they could be buying corporate bonds at a time when bond prices are higher and yields are much lower than a period after signs of recovery are present and fears of deflation subside. Timing the market is important to this strategy if it is to include corporates. Buying treasuries offer record low yeilds for the short-term stuff, (in fact a lot of investment savings accounts beat treasury rates, so why bother!).

In my opinion if I were more risk adverse, Slava's option 2 allows you to make the RRSP contribution and recieve your tax refund on 2008 income(Which for a lot of people might be significantly more than 2009's or 2010's income), without exposing your money to the volatility of either bond or equity markets until such time as you're comfortable.

[MoneyGuy]

From All the money that MoneyGuy and Slava were previously predicting to spearhead a "Spring-loaded" market recovery back in November/December went into bonds big time, namly corporate bonds.

What I said and continue to say is that when the market turns, it will really take off. When we reach bottom (no one knows when that will be), I feel it will be the investment opportunity of a lifetime.

This is what I'm doing. My TFSA contribution is going into high-risk stuff, while my RRSP contributions are going into equities. I'd rather be in the market for a further 10-15% drop than miss the big up, which will come. I haven't been proven right yet, but I will be.

(3) Similar to the first point; the markets are down without question. You have riden things this far and another 15% won't matter even if I'm right. Buy equities and enjoy the ride for the longer term. There is nothing wrong with this approach as you will come out ahead over the longer term.

[Fozzie_DeBear]

This is what I'm doing. My TFSA contribution is going into high-risk stuff, while my RRSP contributions are going into equities. I'd rather be in the market for a further 10-15% drop than miss the big up, which will come. I haven't been proven right yet, but I will be.

I was thinking of doing something similar with TFSA...maybe an Gold focused ETF...although my financial planner is recommending dividend stocks and global equities

[Slava]

What I said and continue to say is that when the market turns, it will really take off. When we reach bottom (no one knows when that will be), I feel it will be the investment opportunity of a lifetime.

This is what I'm doing. My TFSA contribution is going into high-risk stuff, while my RRSP contributions are going into equities. I'd rather be in the market for a further 10-15% drop than miss the big up, which will come. I haven't been proven right yet, but I will be.

That is a given, no question about that!