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Old 10-10-2008, 10:25 PM   #46
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This has happened over a dozen times since 1929 (as recently as 2002-2003), and every time many think it is the end of the world. The way I see it, you have two options:

1) Buy stock now. If it truly is the end of the world - what does it matter?

2) Buy stock now. If it is not the end of the world - you stand to make a good killing as the market recovers over the next 5 to 10 years.


A lot of people are selling because they can't handle the huge debt they have and they want to clear it off as much as possible.
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Old 10-10-2008, 10:31 PM   #47
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Buy stocks while there really fucking cheap right now!!!!!
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Old 10-10-2008, 10:43 PM   #48
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A lot of people are selling because they can't handle the huge debt they have and they want to clear it off as much as possible.
The notional value of the credit derivatives is several trillion (maybe hundreds of trillions) dollars.
They have been called a 'ticking bomb' by Warren Buffet and Bill Gross.

A good article from last March:
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}
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Old 10-11-2008, 01:01 AM   #49
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The notional value of the credit derivatives is several trillion (maybe hundreds of trillions) dollars.
They have been called a 'ticking bomb' by Warren Buffet and Bill Gross.

A good article from last March:
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}

And Mr. Buffet is on a buying spree.

Buy stocks in good companies like GE and yes, Goldman Sachs. Heck, I even bought a few of Fannie Mae because it was for pennies (just in case). Buy and hold these stocks.

Traditionally, stocks sell for a P/E of 15 or 20 or much higher. When good companies dip below a P/E of 15 - buy, buy, buy. That is what Buffet is doing and how he made billions (us little folks can at least build a decent nest egg out of this mess). GE is a now at a P/E of 10. GE is famous for great management and solid fundamentals. They have $170 billion in sales a year.

Again, the fundamentals are being forgotten in a panic. Right now, there is a panic.

There were tons of crooks with their hands in the cookie jar. We all know that. However, ironically, once the dust settles, they have placed into our lap the greatest financial opportunity in our lifetime.

If it isn't just that -- then all bets are off and you might as well grab that shotgun and many cans of green beans. Has anyone read Cormac McCarthy's "The Road?"
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Old 10-11-2008, 02:02 AM   #50
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However, ironically, once the dust settles, they have placed into our lap the greatest financial opportunity in our lifetime.
I agree. The "success" of the 1980s could not have happened without the economic catastrophe that was the 1970s and early 1980s, although there were some good years amongst the bad (much like this past decade, which has seemingly been mostly bad). The fortunes of the 2010s will be made off of the ashes of this economic disaster.

In any regard, this is a good time to evaluate companies of merit worth investing once "the bottom" hits, which is obviously quite difficult to predict.

Unfortunately, this is one of those moments where I wish I had one of those elusive jobs that value you and pay you well, because I don't have money to invest beyond my small, regular and systematic mutual fund investments. Still, holding and gradually adding to these should make money too.
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Old 10-11-2008, 09:10 AM   #51
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What I don't understand is how shit our AUD has gone? We've dropped 30 cents to the US dollar in 3 months, and I am just kicking myself for not buying some us dollars when i thought about it at 98.45 us cents. Why is the us dollar so strong against us when they're the one in the shit? Why the hell are we tanking again. I am moving to the UK. thank you aussie dollar.
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Old 10-11-2008, 09:39 AM   #52
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What I don't understand is how shit our AUD has gone? We've dropped 30 cents to the US dollar in 3 months, and I am just kicking myself for not buying some us dollars when i thought about it at 98.45 us cents. Why is the us dollar so strong against us when they're the one in the shit? Why the hell are we tanking again. I am moving to the UK. thank you aussie dollar.
It's a global economy. You want your currency cured? Ask your country to become financially independent of the US.
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Old 10-11-2008, 09:59 AM   #53
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It does suck, I agree, but I made a 300 dollar amazon order before we tanked so i'm happy.

I'm ready and able to branch out into selling drugs, women and gambling if the situation demands it.
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Old 10-11-2008, 10:03 AM   #54
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Buy stocks while there really fucking cheap right now!!!!!
Yep, but not if you're less than 5-10 years away from retirement; otherwise, yes, 'tis a good time to buy. Over the long run, the stockmarket tends to go up (see chart below):

Dow Jones Industrial Average (1900 - Present Monthly) - StockCharts.com
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Old 10-11-2008, 10:19 AM   #55
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And Mr. Buffet is on a buying spree.

Buy stocks in good companies like GE and yes, Goldman Sachs. Heck, I even bought a few of Fannie Mae because it was for pennies (just in case). Buy and hold these stocks.

Traditionally, stocks sell for a P/E of 15 or 20 or much higher. When good companies dip below a P/E of 15 - buy, buy, buy. That is what Buffet is doing and how he made billions (us little folks can at least build a decent nest egg out of this mess). GE is a now at a P/E of 10. GE is famous for great management and solid fundamentals. They have $170 billion in sales a year.

Again, the fundamentals are being forgotten in a panic. Right now, there is a panic.
In addition to the current massive deleveraging (the biggest margin call in history), we're also entering a near-global recession. I don't think that's the best time to buy because no one knows how long it will last or how deep it will be. There will be brief rallies here and there, but I personally don't see the catalyst at this point that will lift world markets. "Free markets" are also disappearing around the world as governments take stakes in banks and the traditional investment bank model vanishes. Fed rate cuts and other measures are being quickly shrugged off by the markets.

Buffett got a special deal with GE and Goldman - a 10% dividend on preferred shares callable at a 10% premium. The general public does not have access to those terms. His Berkshire Hathaway stock is down around 20% after the deals were announced. Goldman was in the 120s when his deal was announced - it is now in the 80s.

Before 1980 Dow stocks had P/E ratios in the 7 to 10 range, so I don't think below 15 should trigger an automatic buy. The "infinite growth" model of the past will not apply to the future, as the world runs into natural resource and credit constraints.
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Old 10-11-2008, 10:45 AM   #56
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Buffett got a special deal with GE and Goldman - a 10% dividend on preferred shares callable at a 10% premium. The general public does not have access to those terms.
Exactly. We're just going to have to gamble on high risk commons at this point. No, thanks.

I'm not buying now. There will still be bargains a little later on, but also a better idea of where we are heading.
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Old 10-11-2008, 11:17 AM   #57
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The key factor is time. If you have the time to wait things out, it's becoming a great environment to buy. Things may dip lower---at which point you buy more to lower your cost base---but as long as you're investing good companies that should conceivably pull themselves up down the road, then go for it. If you're looking to buy something that you can sell in the next few months or even the next year or two, it's not worth the risk.

I'm 28. I don't have a lot of money to play with, but I can set aside a few thousand that I can say I'm not going to need in the next few years.

People who are selling off should only be those who plan to retire within the next 5 or so years. If you have more time than that and want to sell some things in case everything is down the tubes for longer than that, sell some----but it's silly to sell everything at a loss if you have the time to wait.

The idea of cost base is huge at a time like this. Things may get lower, but that's not necessarily a reason not to buy anything now. If you have the time and patience, buy what's low now, and buy more if it goes lower. If you buy 1 share of Apple at 90 and it drops to 45--buy one share at 45, and it only has to climb to 67 for you to break even. Better yet---buy 10 shares at 45 and it only needs to climb four points to 49 and you break even. If it climbs any higher, you have yourself a profit.

So many stocks are artificially low right now. Apple dropped nearly 50% in the last month alone. That just doesn't make sense. Companies like MasterCard & Visa have seen similar drops----they may stay down or go lower as long as people aren't spending money (remembering that Visa & MC make their profits on credit card transactions), but there's no reason that they won't make money again once people resume spending.

If you have the time to wait things out, the only reason not to buy now is to hope to buy even lower. I say buy both.
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Old 10-11-2008, 12:12 PM   #58
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For multinational companies like Apple and GE, another factor has been the strengthening dollar (e.g. $1.60 in the summer for a euro vs. $1.33 now). A strong dollar equals lower profits for multinationals and therefore a lower stock price.
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Old 10-11-2008, 12:21 PM   #59
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Originally Posted by dazzlingamy View Post
What I don't understand is how shit our AUD has gone? We've dropped 30 cents to the US dollar in 3 months, and I am just kicking myself for not buying some us dollars when i thought about it at 98.45 us cents. Why is the us dollar so strong against us when they're the one in the shit? Why the hell are we tanking again. I am moving to the UK. thank you aussie dollar.
The US$ strength is actually much to be expected, as the US$ is historically a currency of refuge in times of economic crisis.
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Old 10-11-2008, 12:29 PM   #60
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The US$ strength is actually much to be expected, as the US$ is historically a currency of refuge in times of economic crisis.
Indeed. I'm keeping my eye on the CAD, since I'm going to be moving to Canada and all eventually. In 2002, at the height of the last minor recession, the CAD hit a record low of 1 CAD = 0.62 USD, while, at the height of the weak dollar, 1 CAD = 1.10 USD. Recently, the CAD has been hovering around 0.95 USD, but over the last week, it has dropped quickly to 0.85.

If I can get a bigger bang for my USD, when I inevitably have to exchange some money over, I'll be pretty happy.
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