TorilMUD Forums

Trying my hand at stocks again, but doing the whole "buy stock and hold it" thing this time. I started off with MSFT, thinking "Microsoft is a huge company that's not going anywhere." Then their stock started going down... and down. Well, ok not a lot, but I seemed to be buying in on the downswing.

Now it's back on an upswing, and looking at their history it looks like I bought in near the top of their usual high. So since it's heading towards where I bought in again, I'm wondering if I should sell once it's positive and then wait for it to come back down and buy back in. But I'm kind of guessing, I guess... so figured I'd see what you guys thought.

Recently, I bought a bunch of VTSAX.

I threw my hat in with a couple of small cap funds early in 2010, but I'm not sure if it's a sustainable strategy. I'm keeping almost half of my holdings in guaranteed return funds out of an unsubstantiated fear of a double dip recession. I put about 1/4 of what I have into real estate funds targeting specific markets.

Of that, roughly 1/3 follows the strategy of a long term dividend bearing investment with the dividends reinvesting.

I'm optimistic about economic expansion, but my current portfolio is a messed up mix of paranoia and optimism.

IMHO the stock market will be a losing proposition for the next couple of years at minimum. I predict you will see the DOW at the 9,000 level before this cycle is through.

So I should learn how to short stock? ;)

Where is your money going then? Savings accounts are so far under inflation it's pointless, and CDs don't seem much better.

Difficult investment environment. I'm more concerned right now with wealth preservation than accumulation when it comes to investments. I would probably invest in producers of consumer staples, health care, and US treasuries, with a small portion of my portfolio invested in commodity producers (gold/oil/agricultural), underlying commodities and a basket of foreign currencies. I am bullish on Brazil and China, though I think in the short term both could see serious setbacks. Nonetheless, I would allocate a small portion of my portfolio towards a broad selection of companies in those countries.

Shorting stock is very difficult and I don't recommend a portfolio based upon shorting. Long term the odds are stacked against you. One product I like is the Hussman Mutual Fund. It's a long fund but he hedges appropriately based upon market risk, and he seems to outperform during challenging market climates (and underperform during bull markets).

The big problem with investing right now in my opinion is that all the money in the world is in commodities and staples as Corth suggested... What happens when more moeny chases the a fixed # of assets or inflation takes root? The price of the asset goes up. What amplified the 2008 crash, where bank and insurance company value evaporated, was the additional money going from these stocks into commodities. The price of gold, oil food staples all shot up in response primarily to this and secondarily to unrecognized inflation.

So what happens if the world economy starts rip roaring again? the money will flow out of commodities into these new companies and anyone heavy in commodities will get killed. Course rip roaring does not happen overnight unlike the speculation of billions in losses at the biggest banks in the world. So commodities are probably a safer bet for retaining wealth while investing in companies is probably the better investment value at the moment.

I was on the upswing of that nice SLV rally a couple months back. Also the crash, but I stopped out in time :)