'We are, you might say, in a time when the smart money lacks all conviction, while the dumb money is filled with a passionate intensity."
Paul Krugman with a different explanation as to why the market is in a bubble. Note, that the market is in a bubble is so obvious that he doesn't even discuss it.
I don't believe I can time the market, but it just seems mad at the moment.
Everyone hates this rally but yet the stock market keeps rising but who is doing all the buying?
The run-up in stock prices that took place between mid-May and Thursday’s sudden plummet was driven, to an important extent, by investors rushing into very dubious companies — what one observer called a “flight to crap.” That sudden plummet has since been largely reversed
AlgorithmsEveryone hates this rally but yet the stock market keeps rising but who is doing all the buying?
From reading your posts I know you have investments in Ryanair, CRH and Berkshire (I think you mentioned that at some stage), I dont know what else you own but Ryanair and Berkshire are still down substantially since before Covid . Im just wondering did you sell 25% of everything despite their performance or did you discriminate and only sell some stocks. In any case why did you not just add to stocks like Berkshire ? My point is that the stock market recovery has been extremely narrow, focussed on the US technology stocks, if you dont own any of these you have not really recovered that much. Even in the case of Berkshire the performance would be much worse except for his holding in Apple which has compensated for everything else. Im not being critical by the way Im just trying to find out more your thinkingI would be better off today had I not sold off last week. But I would be even more jittery today after yesterday's rises.
I am comfortable now with 75% equity and 25% cash.
Hi Joe
I don't try to pick winners or losers.
I have a portfolio of about 10 stocks.
Some had become overweight , so I sold off 4 of my heavier stocks to achieve the 25% reduction while rebalancing my portfolio.
Brendan
I am reminded of the story about the barber who gave JP Morgan a stock tip.
This implies that anyone can perfectly time the bottom, which is impossibleTerry Smith has a good article on the issue in the current FT
Google: There are only two types of investors
When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it. It’s safer and more profitable to be in the latter camp.
...
Imagine that over this 50-year period there were two competing investment strategies. One is to invest an equal amount every trading day throughout the period irrespective of market conditions — so-called pound (or dollar) cost averaging which many investors actually apply by making regular contributions into a pension, Isa or regular savings plan.
The other strategy requires enough foresight for the investor to invest the same amount daily, but to stop investing when the market turns down and save the cash. This money is only invested when the Dow makes a new bottom, hitting its low point in any period of decline (hence why it’s known as an “absolute bottom buying strategy”).
... Over the 50-year period, the second strategy would have produced returns 22 per cent higher than the first. It sounds impressive — perhaps a little less so when you break it down to an 0.4 per cent outperformance per year. But think of the time and effort you would have to spend monitoring markets to get those calls just right.
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I hadn't heard of the barber before.
Was it not the shoe shine boy?
Brendan