Re: The Plain Truth About Market Timing

I know that right now for a darn certainty that
real estate is way overvalued. This in turn means
that the dollar is either overvalued, or the price
of real estate is about to crash. So now is a good time
to invest in precious metals. And this will be the
hindsight view five years from now.


"Ivanovich" <> wrote in message
news:
> >
> > What I learned from the millenium stock market crash is that a certain
> > type of market timing is not only possible, but absolutely necessary.
> >
> > When stock valuations become very high in relation to the intrinsic
> > worth of the underlying companies, it is time to get out.
>
> Problem is no one knows what "overvalued" means!
> >
> > Intrinsic worth can be measured by various means such as price to
earnings
> > or free cash flow. Take your pick. In hindsight, any such measure
> > would have (should have) convinced an investor to bail out before
January
> > 1999.
> >
> > Such an investor would have missed a lot of gains in the the next few
> > years. However, he would have saved himself from being killed in 2001
> > to 2003. For the people who lost their shirts in the crash, it doesn't
> > make a damn bit of difference how much profit they made ON PAPER in the
> > previous few years.
> >
> > I don't know if it is proper to label a strategy based on excessive
> > valuation as "market timing." But it sure as hell isn't "buy and hold."
> > "Buy and hold" doesn't work if ones investing career includes a bubble
> > like we saw in the nineties.
>
> Great in retrospect. Problem is you never know it's a bubble until
> after the bubble bursts. It also depends where in your investing
> career you are. If you're in your 20's and you held through the
> bubble and are still holding, you'll likely be OK by the time you need
> your money. If you're planning to retire in 10 yrs. you should not be
> in the stock market no matter what. That is, if you were planning to
> use your money in 2003, you were out of the market around 1993.
> >
> > "Buy and hold" is especially hazardous to the mutual fund investor.
> > During the bubble, the mutual funds all held on to their overvalued
> > stocks and so were punished as severely as the most stupid individual
> > investor on the planet. This is because any fund manager who would dare
> > to cash out during a bubble would be crucified. Conclusion: the mutual
> > fund cusomer is the one who is responsible for cashing out when
necessary.
>
> True if you invest with "active managers" which you should'nt in the
> first place. None of those people can do better than the average and
> most do worse. You should only invest in index funds.
>
> > Making money is hard. Buy and hold is easy. There's a conflict there
> > obviously.
>
> Not really. You first decide on your asset allocation depending on
> your time horizon. Then the stock portion goes to index funds, which
> you hold for many years, at least 10. The bond portion goes into a
> mix of different quality bonds of different maturities which you can
> pick yourself. The cash portion goes to some low-cost money market
> fund. Not really rocket science, despite what the "professionals"
> would have you believe.

Re: The Plain Truth About Market Timing

"Tom" <> wrote

>I know that right now for a darn certainty that
> real estate is way overvalued. This in turn means
> that the dollar is either overvalued, or the price
> of real estate is about to crash. So now is a good time
> to invest in precious metals. And this will be the
> hindsight view five years from now.

Go for it. You can buy my share of gold as well.
Gold, what is it good for? Earrings?

Re: The Plain Truth About Market Timing

Is your conclusion based on Macro or Micro Economics?
How much is RE worth and how much are dollars worth?
Is gold really "worth" 420 dollars?
What kind of logic are you using?

You throw RE, dollars, and gold into some sort of craps table and
decide that gold is the winner based on your fantasies. Did you
devine your statements from the new Harry Potter adventures?

We shall anoint it with the rights of free speech and move on.
Total nonsense.

arthur
=======
On Sat, 16 Jul 2005 22:09:13 -0500, "Tom" wrote:
>I know that right now for a darn certainty that
>real estate is way overvalued. This in turn means
>that the dollar is either overvalued, or the price
>of real estate is about to crash. So now is a good time
>to invest in precious metals. And this will be the
>hindsight view five years from now.
>

Re: The Plain Truth About Market Timing

Def. Money: A store of value; A medium of exchange

Gold is money and as such will never make one rich by trading a fiat
money for it.

Harry Browne made me a lot of money years ago.
Worth reading one of his old books even if you disagree.

I does have commercial uses besides its hard money quality.

arthur
======
On Sun, 17 Jul 2005 03:23:59 -0400, "Ed" wrote:
>
>Go for it. You can buy my share of gold as well.
>Gold, what is it good for? Earrings?

Re: The Plain Truth About Market Timing

"Arthur" <> wrote

> Def. Money: A store of value; A medium of exchange

Well Artie, get yourself a 20 pound gold bar and bring it to the supermarket
with you. Let us know how much in the way of groceries you left with.

Bring a pound of gold with you to Walmart and tell us what you got in
exchange.

Re: The Plain Truth About Market Timing

20 lbs? Would that be a Troy or Avoirdupois pound?
I will assume that latter as I do not think you speak Troy weights.
So, let's see, that would be 20 x 14.58 = 291.6 Troy Oz x $420 =
$122,472 which would buy a house on the bargain side of some railroad
tracks.

If the dollar is overvalued then buy gold coins with it from a
commercial bank or any of the numberous dealers. I suggest
Krugerrands as they are easier to sell and trade for less coinage and
bid ask spread.

If dollars are overvalued then why is the Euro worth more in dollars?

Why is the dollar worth less every year in terms of buying power?
That's overvalued?

As to RE, value is what a buyer is willing to pay and a seller accept
in exchange. One or both could be overestimating or underestimating.
If we assume an "arms length transaction" then both parties should
have acted in their best interest. What we are saying when we speak
of a bubble is that the current price is not sustainable in the medium
term of say a few years and that prices are likely to fall due to a
reduction in buyers as compared to sellers.

If one has something of value that is not legal tender such as gold
bullion, then one must comvert the value to legal tender or revert to
a barter system. Gold is a very liquid asset compared to RE. In SA
kugers are legal tender so one can buy groceries or houses with them.

arthur
=========
On Sun, 17 Jul 2005 19:09:37 -0400, "Ed" wrote:
>
>"Arthur" <> wrote
>
>> Def. Money: A store of value; A medium of exchange
>
>Well Artie, get yourself a 20 pound gold bar and bring it to the supermarket
>with you. Let us know how much in the way of groceries you left with.
>
>Bring a pound of gold with you to Walmart and tell us what you got in
>exchange. >

Re: The Plain Truth About Market Timing

"Arthur" <> the cross poster wrote:

> If the dollar is overvalued then buy gold coins with it from a
> commercial bank or any of the numberous dealers. I suggest
> Krugerrands as they are easier to sell and trade for less coinage and
> bid ask spread.
>

Like Ed asked, can I go to my local "Piggly Wiggly" with a Kugerrand?

Will the cashier handle the bid ask spread for me at the register?

Re: The Plain Truth About Market Timing

Gary C <> wrote:

> Like Ed asked, can I go to my local "Piggly Wiggly" with a Kugerrand?
> Will the cashier handle the bid ask spread for me at the register?

Can you take your stock certificates to the cashier? or your T-notes/T-bills?

It's an _investment_ you idiot, you put it in a bank vault.

Re: The Plain Truth About Market Timing

"Arthur" <> wrote :

>Gold is a very liquid asset compared to RE. In SA
> kugers are legal tender so one can buy groceries or houses with them.

So what. Tell that to the guy who is still holding $800 gold. If I bought RE
when gold was $800 I think I would have won that one.

Re: The Plain Truth About Market Timing

"Nick" <> wrote

> Gary C <> wrote:
>
>> Like Ed asked, can I go to my local "Piggly Wiggly" with a Kugerrand?
>> Will the cashier handle the bid ask spread for me at the register?
>
> Can you take your stock certificates to the cashier? or your
> T-notes/T-bills?
>
> It's an _investment_ you idiot, you put it in a bank vault.

Was $800 gold an investment? People that bought that were the idiots.

Re: The Plain Truth About Market Timing

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> Gary C <> wrote:
>
>> Like Ed asked, can I go to my local "Piggly Wiggly" with a Kugerrand?
>> Will the cashier handle the bid ask spread for me at the register?
>
> Can you take your stock certificates to the cashier? or your
> T-notes/T-bills?
>
> It's an _investment_ you idiot, you put it in a bank vault.


Me, the idiot?
I didn't say this:

"Arthur" <> wrote :"
"Gold is a very liquid asset"

Re: The Plain Truth About Market Timing

It was high inflation and interest rates and undervalued gold that
drove that gold bubble. I exited my gold assets around the $600 area.
I exited the stock market mid 1999. I'm no genius and no gambler.

I think one bubble creates another bubble. They suck money away from
other areas creating undervalued buying opportunities. That in turn
breaks the bubble.

During those years of high US inflation and corresponding high
interest rates the housing market died and sellers were taking below
market mortgages in order to sell their house. Gold zoomed.

People who buy at the top of any bubble always get hurt if they are
not wise enough to get out fast. 20 yr RE buyers who are not over
extended may survive okay but not the short term buyers.

In my area a modest 3 br house is priced for only a high income
couple. An old banker affordable house rule of thumb is 2.5 x gross.
2.25 x mortgage. At 6% 30 yr btw.

arthur
==========
On Mon, 18 Jul 2005 04:43:36 -0400, "Ed" wrote:
>
>"Arthur" <> wrote :
>
>>Gold is a very liquid asset compared to RE. In SA
>> kugers are legal tender so one can buy groceries or houses with them.
>
>So what. Tell that to the guy who is still holding $800 gold. If I bought RE
>when gold was $800 I think I would have won that one.