Waterfalls are usually a good thing, but not when seen in a stock chart

[John Ranalletta]

Technical analysts refer to them as "waterfalls". The reason's apparent. A really smart fellow at Bank of Montreal says a triple waterfall means "look out below". I count two for this stock market.

[David]

It won't collapse. There's nothing viewed as safer out there. That's to say that it's not an ideal economy, but there's oodles of money that has to go somewhere, and that's the US stock market.

[John Ranalletta]

I sincerely hope you are correct; and, I see signs of real recovery in many of my clients' businesses, however, once fat fingers were ruled out as the cause of a 1k point, intra day drop, one wonders how little it would take to start a rout. If I were in the market, I'd have put a solid floor in place under my positions or a hedge.

[David]

I'm not saying there won't be another drop--just that if a stock market is the goal, ours is still the best bet.

[Dave McReynolds]

Thanks for the tip, John. I was worrying about whether I should sell a substantial amount of the equities I have in my retirement portfolio. Instead, I just called my broker and he has put a sale order in place in the event the price drops more than 5%. I'd just as soon not go through the heartburn I went through in '08 again. My values have recovered since then, but I didn't like the roller coaster.

[Patallaire]

We are buyers now, cautiously ~ but buyers. We like buying opportunities in down markets, given a time frame we believe in the markets.

[John Ranalletta]

Cool. I readily admit I can't tell an opportunity from a falling knife when I've tried to catch one.

 

Then, again, I'm not an investor but rather a trader in stocks. I don't think anyone knows what a stock is worth or will be worth. Even the wizards of wall street blow up.

 

Second, Joe Schlub investor is sitting in on a game where the dealer knows which cards are being dealt. High freq traders have their computers IN THE EXCHANGES hooked directly to the exchanges computers. It's been proven that some trading houses get "peeks" at buy/sell orders.

 

IMO, the market is like a Vegas slot machine, i.e. it gives a little, hooks the player and then takes the roll. That's my view and I'm sticking with it.

[philbytx]

John,

 

You will find that the documentation in most account agreements mentions "marketmaking in certain stocks" or similar wording. Thusly, this gives your carrying/clearing broker a "peek under the sheets" at your order before it is placed at an exchange.

 

Nice....

 

 

 

[philbytx]

One rule of trading:

 

Any technical is usually trumped by a solid fundamental!

 

And who knows what the hell a solid fundamental is these days

 

 

 

 

[John Ranalletta]

My investing philosophy, in part, follows Buffett's rules. In this I believe he is correct.

 

Rule #1: Never lose money.

Rule #2: Never forget rule #1.

 

According to CrestmontResearch.com, from 1900 through 2008, the stock market has returned just 5.8% on an annualized basis (including dividends and adjusted for inflation). To capture that 5.8% return, investors had to suffer devastating losses along the way, including an 89% loss (1929-32), a 48% loss (1973-74), another 49% loss (2000-02) and, most recently, a 57% loss (2007- 09).

This is about the time money managers drag their dusty ibbotson's out of the closet for a history lesson, but money managers will never, never, ever guarantee and personally underwrite that your results will equal the ibbotson data. They just want you to believe you will.

 

 

[Green RT]

Thanks for the tip, John. I was worrying about whether I should sell a substantial amount of the equities I have in my retirement portfolio. Instead, I just called my broker and he has put a sale order in place in the event the price drops more than 5%. I'd just as soon not go through the heartburn I went through in '08 again. My values have recovered since then, but I didn't like the roller coaster.

 

I am no investment advisor, but I would worry more about stop loss orders putting me into the mode of selling when the market is down, then buying back in after it goes up again. A sure way to lose money.

[Dave McReynolds]

I'm sure what you say is true, Will, but I just lived through a period when I watched the value of my retirement portfolio fall by a good 30%. Every week it would fall more, and I would kick myself for not selling the week before. Now it is up a little from where it was before the decline, and would still be up a little if it lost 5%. If it continues to go up, fine; if it drops, I'd just as soon lock in my 95% rather than go through what I went through 2 years ago.

 

I don't need to draw anything out of the plan right now, but I am transitioning into retirement. If it drops 5%, I'll just convert everything into conservative income producing funds and sit on them.

[hootowl]

I just called my broker and he has put a sale order in place in the event the price drops more than 5%.

 

A 5% limit is a fairly tight stop on a long term investment. You may find yourself stopped out only to see the stock rebound soon after.

 

Look at a weekly chart with a 50 day simple moving average. Sell when the stock drops below the moving average.

 

Another technique is use a 13 & 34 exponential moving average crossover on a weekly chart.