- Joined
- Oct 22, 2007
- Messages
- 1,191
I have been silent for a while. Sometimes you just run out of things to say and do. Todays markets are the toughest I have seen since 2003, or was it 1998, 1990, 1987, 1982?. No I see a clear analog with the downturn of 1974... Oh I wasn`t investing in those years; I was a university student.
Doesn`t matter all downturns are roughly the same. First you`re exited about the buying opportunity. Then it is getting even worse than you expected (that is where I am right now), you lose interest and refuse to open your statement and then... finally, finally, a ray of sunshine comes through the darkness spread by the prognosticators and doomsayers. He, your portfolio is still alive and we`re off the bottom!! Oh... there is an obvious bull market. This time things are different and we`re having a new economy. These are my stages of a downturn.
Right now I am in the `It is getting even worse than I expected` stage. In my desparation, I did send the following e-mail to Gorden Pape:
Subject: Your G&M article `Bad to worse`
Dear Gordon,
I have e-mailed you in the past on various topics. I am an avid reader of your columns and am sad to learn of your departure from the Money Letter. Your contributions were the main reason of my subscription. Once my Money Letter subscription ends, I won`t renew but I`ll try to subscribe to another service where I can learn your views.
I do want to congratulate you on your latest G&M article where you are holding the course despite the current market turmoil. Although I have read many investment books including yours and Jeremy Siegel`s, I truly am amazed about the steadfast believe that things will turn around expressed by you and many other advisors.
I am following this strategy as well and advocate it to my friends, but deep in the night I wonder. All those buy and hold theories are based on the believe that most companies in your portfolio won`t go under and that our shareholder`s equity is not significantly diluted. With investments in UBS, Royal Bank of Scotland and many other banks the expectation that buy and hold works may not be entirely realistic. A lot depends on survival of these companies or better survival of the shareholders equity invested in them.
Jeremy Siegel`s long term is very long indeed but it still goes only back to the inception of the S&P and more fragmented to the Great Depression. Many `Buy and Hold` strategies seem to be based on even shorter historical data s. In addition, how much damage can one truly recover from using an individual`s investment horizon? I am 56 years old (somewhat junior to you) and with a personal life expectancy of another 40 or so years, Jeremy covers 57 years, so I truly wonder about what `long term` means. Although men like Sir John Templeton claim that one should always be 100% invested in equity (if I remember correctly) and ignore stock market volatility (other than for buying more), currently it is tough to maintain these `Buy and Hold` believes.
Diversification is nice - I diversified amongst stocks, fixed income and plain real estate (I lost faith in CEOs and annual reports after Enron and now the banks) and I am still down 15% (or somewhat worse depending on how pink my glasses are) from last year`s peak- (thank heaven for real estate with stocks alone I would have been down a lot more). Guys like Warren Buffett with Berkshire Hathaway are down 50% (including investments in GE and JNJ which looking back at this point in time don`t seem exactly brilliant). So is that what we`re about? Gambling on the integrity of the managements of companies we invest in and hope that the long term `Buy and Hold` still works? So how are we that much different from speculators such as `day traders`?
I used to say that `I am an investor – not a speculator` but these days I wonder. How are you feeling at night?
On another topic: If we ever learn something from our current troubles it is the overpayment of senior management – in particular CEOs. I do not wish to put all blame for our trouble on corporate senior management or even on senior management of financial institutions. The blame has to be spread out much further than that, including individual investors and borrowers. But it is also clear, that lot of the value increases of the previous bull market was not the result of capable management but much more the result of `market conditions`. Even worse, those same `brilliant` managers did not protect investors from the current malaise nor did they foresee it. So, yes these managers were greatly overpaid via their bonuses and stock options. This will have to change.
I hope my notes may help you in your future investment ideas and thanks for reading my spouted opinions.
Regards,
Godfried Wasser
================================================================================
======
Here is Gordon Papes reply - in one of his columns: http://gold.globeinvestor.com/servlet/Arti...me?back_url=yes
->
Where I Stand
7:20 EST Saturday, Feb 28,2009
Gordon Pape
TORONTO (GlobeinvestorGOLD) - I read an article in The Globe and Mail last week that criticized Prime Minister Stephen Harper and his predecessors for failing to provide an update on Canada`s status and future goals similar to the State of the Union address given annually by the President of the United States. (Yes, I know that Barack Obama`s speech to Congress last week was technically not a State of the Union message but it real terms it served the same purpose.) That article made me realize that I should provide an annual update for readers about my basic approach to investing and my view of the future.
As a starting point, let me restate my fundamental positions. First, I am a strong believer in the value of diversification. I feel that every portfolio should hold a mix of equities, fixed-income securities, and cash in proportions that are consistent with each person`s goals and risk tolerance.
Second, while I believe in the value of long-term investing, I am not obsessed with a buy-and-hold approach. There are only two securities that have been on the Recommended List of my Internet Wealth Builder newsletter for more than 10 years and only a handful that have been there for more than five years. The financial world is highly dynamic and I believe investors need to move with the times. That is why I frequently recommend taking profits or part-profits or, when things don`t go as expected, taking a loss and moving on.
Third, I am an investor, not a speculator. I focus on securities that I feel offer a reasonable risk/return ratio. In cases where one my picks carries above-average risk, I make it a point to warn readers accordingly.
I know that some people don`t pay close enough attention to these cautions and sometimes invest in securities that are not appropriate to their risk profile. That`s why I keep stressing the importance of understanding exactly what type of investor you are before you act. You can`t, and shouldn`t, buy everything that the experts recommend. You need to exercise judgement based on your personal situation to select those that best meet your needs.
Looking ahead, I don`t have to tell you we are in difficult times. The media is full of doom and gloom stories. How long this downturn will last is anyone`s guess. The Governor of the Bank of Canada has said that we`ll start to come out of it later this year and so far he`s sticking by his guns. I hope he is right but many prominent economists disagree.
That`s why I have set two primary goals for this year: to help people preserve the assets they have while starting to gradually rebuild their wealth. This means I will take a cautious approach for the next several months and I urge readers to do the same.
Only when I see clear signs that stability is returning to the world economy in general and the financial sector in particular will I start to become more aggressive in my recommendations. For the time being, I am in what might be termed a survivalist mode. There will be great profit opportunities in the future but they won`t be of any value to people who have no money left to invest.
Gordon Pape is a noted author and editor of the Internet Wealth Builder, Income Investor, and Mutual Funds Update newsletters. His website is at www.buildingwealth.ca
Doesn`t matter all downturns are roughly the same. First you`re exited about the buying opportunity. Then it is getting even worse than you expected (that is where I am right now), you lose interest and refuse to open your statement and then... finally, finally, a ray of sunshine comes through the darkness spread by the prognosticators and doomsayers. He, your portfolio is still alive and we`re off the bottom!! Oh... there is an obvious bull market. This time things are different and we`re having a new economy. These are my stages of a downturn.
Right now I am in the `It is getting even worse than I expected` stage. In my desparation, I did send the following e-mail to Gorden Pape:
Subject: Your G&M article `Bad to worse`
Dear Gordon,
I have e-mailed you in the past on various topics. I am an avid reader of your columns and am sad to learn of your departure from the Money Letter. Your contributions were the main reason of my subscription. Once my Money Letter subscription ends, I won`t renew but I`ll try to subscribe to another service where I can learn your views.
I do want to congratulate you on your latest G&M article where you are holding the course despite the current market turmoil. Although I have read many investment books including yours and Jeremy Siegel`s, I truly am amazed about the steadfast believe that things will turn around expressed by you and many other advisors.
I am following this strategy as well and advocate it to my friends, but deep in the night I wonder. All those buy and hold theories are based on the believe that most companies in your portfolio won`t go under and that our shareholder`s equity is not significantly diluted. With investments in UBS, Royal Bank of Scotland and many other banks the expectation that buy and hold works may not be entirely realistic. A lot depends on survival of these companies or better survival of the shareholders equity invested in them.
Jeremy Siegel`s long term is very long indeed but it still goes only back to the inception of the S&P and more fragmented to the Great Depression. Many `Buy and Hold` strategies seem to be based on even shorter historical data s. In addition, how much damage can one truly recover from using an individual`s investment horizon? I am 56 years old (somewhat junior to you) and with a personal life expectancy of another 40 or so years, Jeremy covers 57 years, so I truly wonder about what `long term` means. Although men like Sir John Templeton claim that one should always be 100% invested in equity (if I remember correctly) and ignore stock market volatility (other than for buying more), currently it is tough to maintain these `Buy and Hold` believes.
Diversification is nice - I diversified amongst stocks, fixed income and plain real estate (I lost faith in CEOs and annual reports after Enron and now the banks) and I am still down 15% (or somewhat worse depending on how pink my glasses are) from last year`s peak- (thank heaven for real estate with stocks alone I would have been down a lot more). Guys like Warren Buffett with Berkshire Hathaway are down 50% (including investments in GE and JNJ which looking back at this point in time don`t seem exactly brilliant). So is that what we`re about? Gambling on the integrity of the managements of companies we invest in and hope that the long term `Buy and Hold` still works? So how are we that much different from speculators such as `day traders`?
I used to say that `I am an investor – not a speculator` but these days I wonder. How are you feeling at night?
On another topic: If we ever learn something from our current troubles it is the overpayment of senior management – in particular CEOs. I do not wish to put all blame for our trouble on corporate senior management or even on senior management of financial institutions. The blame has to be spread out much further than that, including individual investors and borrowers. But it is also clear, that lot of the value increases of the previous bull market was not the result of capable management but much more the result of `market conditions`. Even worse, those same `brilliant` managers did not protect investors from the current malaise nor did they foresee it. So, yes these managers were greatly overpaid via their bonuses and stock options. This will have to change.
I hope my notes may help you in your future investment ideas and thanks for reading my spouted opinions.
Regards,
Godfried Wasser
================================================================================
======
Here is Gordon Papes reply - in one of his columns: http://gold.globeinvestor.com/servlet/Arti...me?back_url=yes
->
Where I Stand
7:20 EST Saturday, Feb 28,2009
Gordon Pape
TORONTO (GlobeinvestorGOLD) - I read an article in The Globe and Mail last week that criticized Prime Minister Stephen Harper and his predecessors for failing to provide an update on Canada`s status and future goals similar to the State of the Union address given annually by the President of the United States. (Yes, I know that Barack Obama`s speech to Congress last week was technically not a State of the Union message but it real terms it served the same purpose.) That article made me realize that I should provide an annual update for readers about my basic approach to investing and my view of the future.
As a starting point, let me restate my fundamental positions. First, I am a strong believer in the value of diversification. I feel that every portfolio should hold a mix of equities, fixed-income securities, and cash in proportions that are consistent with each person`s goals and risk tolerance.
Second, while I believe in the value of long-term investing, I am not obsessed with a buy-and-hold approach. There are only two securities that have been on the Recommended List of my Internet Wealth Builder newsletter for more than 10 years and only a handful that have been there for more than five years. The financial world is highly dynamic and I believe investors need to move with the times. That is why I frequently recommend taking profits or part-profits or, when things don`t go as expected, taking a loss and moving on.
Third, I am an investor, not a speculator. I focus on securities that I feel offer a reasonable risk/return ratio. In cases where one my picks carries above-average risk, I make it a point to warn readers accordingly.
I know that some people don`t pay close enough attention to these cautions and sometimes invest in securities that are not appropriate to their risk profile. That`s why I keep stressing the importance of understanding exactly what type of investor you are before you act. You can`t, and shouldn`t, buy everything that the experts recommend. You need to exercise judgement based on your personal situation to select those that best meet your needs.
Looking ahead, I don`t have to tell you we are in difficult times. The media is full of doom and gloom stories. How long this downturn will last is anyone`s guess. The Governor of the Bank of Canada has said that we`ll start to come out of it later this year and so far he`s sticking by his guns. I hope he is right but many prominent economists disagree.
That`s why I have set two primary goals for this year: to help people preserve the assets they have while starting to gradually rebuild their wealth. This means I will take a cautious approach for the next several months and I urge readers to do the same.
Only when I see clear signs that stability is returning to the world economy in general and the financial sector in particular will I start to become more aggressive in my recommendations. For the time being, I am in what might be termed a survivalist mode. There will be great profit opportunities in the future but they won`t be of any value to people who have no money left to invest.
Gordon Pape is a noted author and editor of the Internet Wealth Builder, Income Investor, and Mutual Funds Update newsletters. His website is at www.buildingwealth.ca
