Investment

» BoltonCT - Not yet "Time to Cut Our Losses?"

(It is not time to buy until all the Fools capitulate. They are not quite there yet but their investments you will see have seen significant gains wiped out. Remember to recover a 50% loss you must double your money.)

" FoolWatch Weekly
Is It Time to Cut Our Losses?
By Paul Elliott February 29, 2008

"What's up with this market? Where's it headed? What do we do now?"

I have my theories. I've shared a few in recent columns. I'll share one more. But there are two much bigger fish I think you'll want to hear from first.

"What's The Motley Fool's take?"
I get that question a lot. The answer is complicated. Fools don't fret "the market" on a day-to-day basis -- much less boil it down to a unified "Fool take." Though what you're about to read is as close as you'll get.

It's lifted from a letter that Motley Fool co-founders David and Tom Gardner sent to members of their Motley Fool Stock Advisor newsletter service. I think you'll find it useful, so I have a notion to leak it. But let's back up. Why are we even having this conversation?

This market bites, that's why. And I'm not whining about Google (Nasdaq: GOOG) shedding $200 or Apple's (Nasdaq: AAPL) 40% giveback. That we can live with. We should expect those kinds of swings. I'm whining about the senselessness of it all -- the nagging feeling that nothing is working, and that we should throw in the towel.

There's nowhere to hide!
Of course, Google and Apple are tips of the iceberg. Housing stocks bounced, but they're still a disaster. Same with the big banks. But even that makes sense, since the current mess all started with a credit crunch.

Retailers are getting creamed, too. And even that makes sense, given the creeping use of the "R" word. But oil services ... enterprise tech ... even the so-called defensive plays. There's more at work here than the "R" word (in my view, that's the second most dangerous red herring for long-term investors).

No, this has the trappings of the "B" word, the No. 1 ghost troubling investors today. Yes, I mean bear, as in bear market -- more specifically, our infatuation with the idea of it, and what that might make us do. And who can blame us? Just look at the carnage so far:

Company , Decline

Citigroup (NYSE: C), (54.9%)
Cisco Systems (Nasdaq: CSCO), (32.3%)
General Electric (NYSE: GE), (20.1%)
ExxonMobil (NYSE: XOM), (8.8%)
EMC (NYSE: EMC), (39.5%)

It's enough to make you want to clear out and move to cash, right? That's why I wanted to pass along this advice from David and Tom Gardner to help you decide. Read the letter in its entirety, and decide for yourself whether it's of any value to you ...

Dear Fools,
It's tough to remain focused and Foolish as an investor when the market throws us a seemingly endless run of triple-digit losses. Where's the fun in losing money?

Of course, we at The Motley Fool like to see our stocks go up as much as anyone else. But we frankly don't care so much when those gains come. We know markets are at times irrational. "

(Got to Motley fools site to see where they still say grin and bear it.)

-- posted by BoltonCT

» permabear - Not yet "Time to Cut Our Losses?"

In response to Not yet "Time to Cut Our Losses?" posted by BoltonCT:

This market bites, that's why. And I'm not whining about Google (Nasdaq: GOOG) shedding $200 or Apple's (Nasdaq: AAPL) 40% giveback. That we can live with. We should expect those kinds of swings. I'm whining about the senselessness of it all -- the nagging feeling that nothing is working, and that we should throw in the towel.

There's nowhere to hide!

Sure there is:

http://bigcharts.marketwatch.com/quickch...

-- posted by permabear

» BoltonCT - Not yet "Time to Cut Our Losses?"

In response to Not yet "Time to Cut Our Losses?" posted by permabear:

You are absolutely right permabear, but Motley Fools would no doubt be short gold stocks or opposed to them like BB and Sy.

In the last six months the gold index is up about 50% relative to the S&P.

http://sg.finance.yahoo.com/q/ta?s=%5EGS...

Some gold bugs recently lowered their target price for gold from over $3000/oz to about $2000/oz.

Where is a good reliable place to sell our gold eagles when gold hits $2000/oz?

-- posted by BoltonCT

» permabear - Not yet "Time to Cut Our Losses?"

In response to Not yet "Time to Cut Our Losses?" posted by BoltonCT:

Where is a good reliable place to sell our gold eagles when gold hits $2000/oz?

Gold is no doubt going to be very volatile in the coming months and years. There are undoubtedly going to be some nasty corrections. But I've had my money in my belief that gold is in a long-term secular bull market, while stocks have been in the opposite, both beginning in 2000. So I've stuck with and will continue to stick with a gold position come thick or thin.

As far as where to sell gold coins, gold eagles are extremely liquid, prices are posted on the internet and the big financial newspapers, and should be easy to exchange. Any reputable coin dealer in your area should give you a fair price for your coins. The only drawback is that gold coins are considered collectibles and are taxed at a 28 percent capital gains rate. The same is true of the ETFs, GLD for gold and SLV for silver. A lot of folks aren't aware of the tax consequences of these ETFs.

-- posted by permabear

» BoltonCT - How to sell your gold eagles.

In response to Not yet "Time to Cut Our Losses?" posted by permabear:

Thanks permabear. I want to re-establish my gold exit strategy as I bought the Eagles direct several years ago. I may not wait until gold hits $3000 or even just $2000/oz if the stock market finally hits bottom in a year or two. This will be tricky since inflation is not often concurrent with recession. Stagflation in the late 1970's drove gold up a factor of 25 fold from 32 to $800+ and oz. We avoided a currency crisis after Lyndon Johnson's "guns and butter" fiscal chaos by Nixon going off the gold standard. I remember Reagan ended the Jimmy Carter stagflation and our currency became immediately strong in Europe.

How will we transition from our GWB "Guns and anti-terrorism" fiscal chaos to a demonic socialist spending spree after the November election? Is that why you predict 2009 is TEOTWAWKI?

-- posted by BoltonCT

» BoltonCT - Where oh where has Bob Brinker gone.

I still like BB even when he is disappointed with the market going its own way. He covers a lot of financial territory and has a lot of good advice. Lately however I have a hard time getting stations local enough to hear him well.

I used to have two local radio stations and three webcast choices when the local radios ran sports instead of BB. But now only one local station carries him and I can't find any web cast of BB any more. Are they dropping his shows? If you have a link for the web cast of BB please post it here.

-- posted by BoltonCT

» allancoleman - Where oh where has Bob Brinker gone.

In response to Where oh where has Bob Brinker gone. posted by BoltonCT:

http://streamingradioguide.com/radio-sho...

-- posted by allancoleman

» permabear - How to sell your gold eagles.

In response to How to sell your gold eagles. posted by BoltonCT:

Norm is the TEOTWAWKI person. I guess I can be known as the secular bear person, because it is the position I've been arguing, especially when Kirk was around, for years. While Jas has been predicting recession for the past year or so, Norm is sticking with his 2009 timeframe. Personally I'm avoiding timing the market other than just sticking with the longterm trends. Norm argues that the government can put off the pain a while longer with lots of stimulus and Plunge Protection Team methodology. We'll see about that. All the economic indicators I'm reading are pointing down today, and I don't know if the government and the Fed has enough bullets in their arsenal to put off the pain.

As far as the next president goes, if you read me, you know I am a partisan democrat. Nonetheless I acknowledge that whoever the president is, it's going to be ugly in the coming years.

As far as timing gold, while I'm sticking with the longterm bullish view, I do follow a couple analysts and commentators who I have found have a pretty good handle on the ups and downs of gold. Peter Grandich, Marc Faber and Jim Rogers are a few that have had a pretty good track record when it comes to gold and commodities. If all these guys predict a top, I'll sell. Clive Maund is also a pretty good technician. He's actually looking for a correction short-term, but remains bullish long-term: http://safehaven.com/article-9606.htm

-- posted by permabear

» BoltonCT - Cliffhanger today

Most of the European markets started down about 1.5% and moved slightly lower to down 2%. Bombay ended down over 5% as India, the outsourcing capital of the world becomes the largest importer of the unemployment of the world. Last to hire becomes first to fire. Japan was down 4.5% but still has ascending tops and bottoms. The Communist Commissars set the Hang Seng down a relatively flat 3.1% but Shanghai started low and ended up 2.1%.

Today appears to be the third test of the bottom for this rally in the USA.

The news seems so negative and it could be the capitulation before the rally. If that occurs there will be a spike down in many stocks today followed by an afternoon recovery. Since Europe closes earlier Europe may not see the recovery, if it comes.

Now at last the rest of the world is recognizing the problem some of us saw over a year ago. Greenspan is the primary source of that problem. Greenspan extended the life of the bubble beyond all reasonable excesses. President Bush is also part of the problem as all his competent appointees bailed out early and he sought to appoint his secretary, butler, and barber who were most recently giving him his best advice. President Bush will join President Taft as the well meaning US presidents from Pluto who had no clue what was happening. Taft gave his buddies our national petroleum resources. Bush let his buddies borrow the central bank's assets.

But we recovered from Taft's well meaning administration and will undoubtedly recover from Bush and Greenspan. Perhaps Greenspan was setting the stage for the return of Ayn Rand. If any of the senators become president perhaps he hopes Atlas Shrugs.

U.S. stocks fell on Feb. 29, capping the market's fourth straight monthly drop. The old Spiral (Parabolic SAR) said sell on Friday. Unless the US markets bounce today the old MACD will also say sell. If the S&P ends down more than 4 points this could be a cliffhanger. If it ends down significantly more it will likely be the end of the technical rally.

Boeing and United Technologies Corp. plunged after losing the air tanker deal last Friday.

U.S. stock-index futures fell today. Standard & Poor's 500 Index futures expiring this month declined 6 pts. Dow Jones Industrial Average futures dropped 89 and Nasdaq 100 Index futures declined over 9.5.

``The party is over,' Buffett wrote in his annual letter to shareholders. ``It is a certainty that insurance industry profit margins, including ours, will fall significantly in 2008.' Fourth-quarter profit declined 18 percent on falling insurance rates.

The dollar declines toward a three-year low as losses from the collapse of the U.S. subprime mortgage market are estimated to almost double.

-- posted by BoltonCT

» BoltonCT - Cliffhanger II

Most of the European markets today have moved down over 1%. Bombay ended down over 2% as Indian markets continue to fall. Japan ended losing its earlier gains last evening but still has ascending tops and bottoms. The Chinese markets were down about 2%.

Today still appears to continue the third test of the bottom for this possible rally in the USA.

There was no capitulation so the market is still at risk of resuming its decline. Wall Street appears to be divided now and at war with itself. It is the Bulls against the Bears and the bulls have been showing a good defense. But unless the Bulls take the ball and rally soon they will fumble and the bears will have the ball again.

The old Parabolic SAR for the five American exchanges I follow are now all bearish. The last two caved in yesterday. The MACD for the Dow just turned bearish and the other four exchanges are about to give MACD sell signals if the market does not bounce now. The New Combination of SAR and MACD signals will also turn bearish if the Bulls can't rally now.

The S&P 500 futures are down -13 and accelerating downward at this moment. The NASDAQ futures are accelerating downward -18 at this moment. It looks like today may be the day the Rally falters and the bears take the bulls by the horns.

International bank Citigroup may face bankruptcy. The Arab nations are heavy owners of the bank and it probably is not worth saving. The Sheiks will probably extort the US with further price increases to buy Citigroup outright. That is one of the possible futures USA international corporations face for selling out the USA for a little extra in performance bonuses. The USA may have to let international organization fail as the USA hasn't enough cash now to save the world.

If the bulls fail to lead today, hold onto your hats.

-- posted by BoltonCT