| This time things are different/ get ready for oppposite |
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Jon
Preferred Member
Cash: $ 50.02
Posts: 193
Joined: 13 Apr 2005
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| This time things are different/ get ready for oppposite |
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Geez. Last night we talked about the ‘this time it is different’ comment regarding M&A activity, indicating that was something to be concerned about but it was not necessarily a timing device. How about 1 day? New rule of thumb: when you hear ‘this time things are different’ or some variation thereof, get ready for the opposite to happen in short order.
Last night’s comment:
Wednesday we heard the ‘it is different this time’ phrase raise its head. That is always a warning sign that sentiment is getting extreme either upside or downside. We heard it in October 2002 when Bob Pisani reported on CNBC that the traders were saying the old indicators did not work anymore, that the market was just going down despite extreme sentiment, etc. When we heard that we were pretty surge the bottom was near, particularly given the extremes we were seeing in other areas.
Wednesday Pisani was trying to say that this rally was not like other rallies that would top out anytime soon because it was driven in large part by the M&A activity that was unprecedented in the history of US business. No doubt that M&A activity is helping keep the market higher as investors speculate on the next takeout, but this is not really different. M&A is just a reason for money to enter the market. Money is money. It seeks returns by whatever vehicle is present, and M&A is one of the ways money is seeking to make more money. There are also buy backs and there is an economic expansion. The money seeking returns uses whatever is available whether it is internet stocks in the late 1990’s or M&A speculation in 2007.
Thus you have to be a bit concerned when you hear this kind of talk because things are not different, they hardly ever are. Lots of money out there wants to maximize returns. Speculation on M&A and talk of things being different is always an indication things are getting a bit overheated. Sentiment is a warning, but it is not a timing device. If we hear more of this kind of talk there is reason for concern.
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Sat May 12, 2007 1:35 am |
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efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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So what is the consensus? Are things going to go away in May or not (until August)?
I look back on last year (my first full year self-investing IRA and Roth IRA money), and my 401(k) and IRA's took a significant hit between May 10th and May 24th, 2006. So I can see why there was some apprehension Thursday May 10th. But anyone who was shaken out, missed (or caused) the bounce back up Friday. Fortunately I did not have access to a computer either day. Although, for some intuitive reason I set some alerts Thursday morning to notify me of drops, and two of them popped up in my e-mail.
My 401(k) YTD is a slightly behind last year at this time, but my IRA's are ahead of ALL of last year (for the moment), and my IRA is beating my 401(k) (Roth IRA is slightly lagging). But I am still a little uncertain whether to hang on for the ride or take some profits. October 2005 was very bad to me, October 2006 was my best month of last year. What if people held back due to expected fallout from housing and the markets keep chugging through summer?
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Sun May 13, 2007 4:01 pm |
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coaster
Senior Advisor
Cash: $ 1318.60
Posts: 6495
Joined: 11 Oct 2005
Location: Wisconsin
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But why would you take profits? Do you need the money now? Or is there a better place to put it? Those are the only two reasons I can think of for selling something. Granted, there are times when a money market fund is a "better place to put it." But who can predict ahead of time when that will be?
I've read that one common mistake investors make is to sell their winners. (i.e. taking profits.) So if you're going to raise your cash allocation, you want to sell your dogs, not your winners. Don't take profits, take losses. That's the way to preserve capital.
On a sidebar, there's a corollary to Jon's post about "this time it's different" and that's "consensus." Whenever everybody agrees, then it's likely to turn out different. 
~Tim~
Eye Candy : Why Whimsy
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Sun May 13, 2007 8:17 pm |
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iwillguide
Preferred Member
Cash: $ 31.20
Posts: 155
Joined: 09 Jun 2009
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| hi |
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intresting information ..thanks for long story
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Thu Apr 08, 2010 3:52 am |
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