If anyone had told you on Dec.31 2007 that:
1. Bear, Lehman, Merrill would all be gone in virtual bankruptcy, while Goldman and Morgan became banks
2. Citi, Fannie, Freddie, were all basically nationalized and bankrupt
3. The US financial system was insolvent, and estimates to repair it are from $2 to $4 TRILLION in new money...AFTER a $700 B bailout.
4. Copper inventories were going back up to all time highs, oil was overflowing at Cushing, and many of the biggest miners in Canada were at serious bankruptcy risk
5. California was essentially bankrupt...
6. Chinese Manufacturing would have CONTRACTED for the sixth straight month
7. The DOW holding 8000 would be considered a victory
There isn't anyone who would have believed em. I sure wouldn't have believed it. This is some seriously bizarre things we're seeing in the world. Things we haven't seen since the Great Depression...some things we've never seen. Yet there are still people out there who want to pretend this is 1974 or 1982?
At every step of the way its been bigger, badder and more destructive than almost ANYONE predicted. And the only people who did predict any of it think its still getting worse.
Yet many are cheered when the same people who thought 2008 was going to be a good year think 2009 is going to be a good year.
Bob Brinker a Year ago in his January 2008 Marketimer with S&P500 @ 1468.36 :Wake up and protect yourself. These are some crazy days.
Pg 3: “In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008.
We expect the S&P Index to achieve new record highs this year and to reach the 1600’s range in the process.
We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Above this range we prefer a dollar-cost-average approach for new purchases.
All Marketimer model portfolios remain fully invested as we enter 2008."
I don't believe anyone can time the stock market but a bear friend of mine told me over a decade ago that the CEOs of most companies were cheating shareholders via stock options and excessive salaries while banks were creating a credit buble by lending money too easily. He was not right in all his price predictions, but he was right about the banks and CEOs. My house is still nearly double where he told me to sell but the stock market is back to where it was when he issued his warning.
Here is a chart showing Brinker's Buy Levels prior to his most recent "buy bulletin."
Needless to say, with so many buys at higher levels, eventually he'll get one right.
For me, I take profits when the market is up and buy back shares when it is down such as times like these. The idea is keep a fairly constant asset allocation and rebalance when the market makes major moves, either up or down. With my "explore portfolio" I do it with individual stocks for more opportunity for good long term gains.