Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

In my previous post there is a misprint - Feb. 3rd should be Mar. 3rd.

 

[turbo23dog]

Re: Birchtree's account talk

I'm getting a gut feeling to change my view point to longer term as well. I'm currently 97/0/1/1/1 GFCSI. I'm thinking let my new contributions go into CSI every two weeks, and on the off weeks, IFT some more into CSI. Just keep buying in slowly for the near and intermediate term keeping a close eye on signals. Just waiting for the right time to start and it might be now.

 

[Birchtree]

Re: Birchtree's account talk

You should hope that the CSI funds stay right where they are priced for the next two years - but we all know that is not going to happen. The market is in the process of bottoming, believe it or not, and investors should be looking to invest in or add to equity holdings. The best way to take advantage of the markets today is to dollar cost average your way back into the markets. Accumulation is the name of the game and turbo you are on the right track. You need to accumulate shares inorder to make money and like me if you already own a large block of shares you end up getting devalued but I'm still DCAing into the C fund every two weeks like clock work. I'll take as many shares at these low prices that I can get. I won't access the money for many more years.

 

[DCguy]

Re: Birchtree's account talk

You should hope that the CSI funds stay right where they are priced for the next two years - but we all know that is not going to happen. The market is in the process of bottoming, believe it or not, and investors should be looking to invest in or add to equity holdings. The best way to take advantage of the markets today is to dollar cost average your way back into the markets. Accumulation is the name of the game and turbo you are on the right track. You need to accumulate shares inorder to make money and like me if you already own a large block of shares you end up getting devalued but I'm still DCAing into the C fund every two weeks like clock work. I'll take as many shares at these low prices that I can get. I won't access the money for many more years.

I think Birch's right. I recently increased my contribution to max and I'm also DCAing into CSI. If you still got 10 20 30+ yrs before retirement, there's nothing to worry about.

 

[GUCHI]

Re: Birchtree's account talk

how bout 5 yrs. ??? should i worry if i have been dcaing for over a year now ??

 

[Birchtree]

Re: Birchtree's account talk

I wouldn't worry because pricing is not showing the fundamental value of the underlying companies - you are seeing emotional panic and exhaustion selling happening in the markets. So take opportunity. It is times like these that an investors self proclaimed, contrarian principles are truly tested. It is when everyone is panicking, selling and running for the hills that it is hard to buy in true contrarian style. Put your DCAing on auto-pilot and accumulate as much as you can at these ridiculous valued prices - this may turn out to be a generational opportunity. I bought 432 individual stock positions last fall and in retrospect all too early - but now I own the assets and will continue to add to them on the way up.

 

[Birchtree]

Re: Birchtree's account talk

The question is will the Fed's latest efforts at reflating the financial market succeed. If history is any guide then it should eventually stabilize the stock market and allow the newly formed 6 year up cycle along with the peaking 10 year cycle to work its benefits in 2009 - wait for it. As we all continue to wait the selling pressure bull dozed many value and fundamental investors into throwing in the towel - not me. The hedge fund involuntary selling situation has morphed into panic selling for ordinary investors - not me. This is why so many stocks and funds C/S/I have been reduced to extraordinarily low prices. No question it takes a lot of guts to commit capital to stocks in a panicky environment. But you simply have to keep DCAing into your accounts - this strategy is the redeemer of all portfolios at these prices. Collect as many shares as you can my friends.

 

[Rod]

Re: Birchtree's account talk

If you still got 10 20 30+ yrs before retirement, there's nothing to worry about.

That's what they said back in 1978!:

Couldn't resist.

 

[Thunderhorse]

Re: Birchtree's account talk

I think Birch's right. I recently increased my contribution to max and I'm also DCAing into CSI. If you still got 10 20 30+ yrs before retirement, there's nothing to worry about.

The timeline and the DCA'ing are what I am trying to focus more on. I've got at least 12 years to go so I try to keep that in mind rather than panicking and selling out cheap on a sharp downswing. Yes I've got a pretty good shiner from the last two months. I accepted the risk.

Running the returns spreadsheets if I take the period from 1 January 2007 through through today I'm down only about 5%. It ain't good but it ain't the end of the world either. I consider it a blessing catching parts of a couple decent rallies and missing the largest part of the downdraft last fall. Nothing clever or bright on my part. I just happened to be in G and away from civilization and cell phones deer hunting for a couple of weeks. That venison did seem to taste better.

If we do experience something similar to Japan's lost decade - well thats another story.

Make no mistake, I will IFT around looking for upswings. For now I'm content to ride a while. I don't weigh much so if the train does take off it won't notice me.

I enjoy reading your posts and learning your perspective. Thanks and keep 'em coming.

Birch,
For positions - what are your thoughts on small cap versus big cap index gains when a decent rally does show?

Thanks.
T'horse

 

[Birchtree]

Re: Birchtree's account talk

Now that you mention 1978 a recession at least of the magnitude of 1982 is quite likely. The recession that ended in 1982 lasted 16 months - twice as long as the 1991 and 2001 recessions - and saw the unemployment rate rise to 10.8% from 7.2%. We are now at 8.1% and probably heading higher. There have been studies that show the markets usually rally long before unemployment reaches a peak sometimes by several quarters. I believce the RSI on the monthly Dow is now lower than 19. It was below 24 only 10 times over the last 90 years. The average return one year later was 55%. Almost all of them were at the bottoms. I still say the best opportunities will come when people are most fearful and pessimistic. It will never feel comfortable to invest after a 55% decline. I've just raised some $56K so I do have some buying power available and will be putting that to work on a DCA basis starting next week. There is now a real disconnect between stock prices and their fundamentals so I'm really just adding to my existing positions or I would simply buy indiscriminately. There must be a barn around here someplace because I can sure smell that superlative bull manure. As Steady says: be in to win.

 

[Birchtree]

Re: Birchtree's account talk

Thunderhorse,

Historically speaking the small caps have usually outperformed the large caps. But these things seem to run in cycles with each cycle being different from the last one. The small caps have completed a 7 year cycle ending in 2007 - I'd look for the SPX type large caps to outperform in the next new bull leg. I own a mix of both types of stocks and own the C fund primarily in TSP with a 68% weighting and a 32% weighting in the I fund. I did ride the S fund up during the 2003 rally and switched to the C fund in February 2004 and have ridden the cycle on my Ducati up and down DCAing all the way. I remind myself on a daily basis now that capitalism without failure is like religion without hell.

 

[McDuck]

Re: Birchtree's account talk

Stocks: No Asset Class For Old Men
Forbes - ‎26 minutes ago‎

Firms Slash Dividends, Saving Cash
Investor's Business Daily - ‎35 minutes ago‎

 

[WorkFE]

Re: Birchtree's account talk

Birch,
Is it me or has the market instability pumped up the hostility on the MB

 

[Birchtree]

Re: Birchtree's account talk

I caught the rally in 1982 that started in August of that year. The recession didn't end until December-January. By that time over 50% of the move had been made. I enjoyed every point on the way up and made several hundred thousand dollars on essentially no money to speak of. The small caps started rolling over in February of 1983 while the large caps were strong until essentially the end of the year when they started to weaken. The correction ended in November of 1984 - and I gave back half of my gains holding tight but back then the capital gains tax was 50% and I didn't want to pay that much so I made the sacrifice and accepted my devaluations. And will history repeat this time around - if it does I'm planning on making a great deal of money for my angst. When better to buy low than when practically no one is brave enough to buy. By buying aggressively late in bears when people are disgusted with stocks, contrarian investors can make a fortune in the inevitable subsequent cyclical bulls. I'm not buying at this point in time for capital gains but rather accumulating shares for income from dividends that will be reinvested incase we trend sideways for awhile in a basing transition from bear to bull. Usually while most naive investors are crushed in these secular bears, prudent investors can thrive. Snort.

 

[turbo23dog]

Re: Birchtree's account talk

The atmosphere on this MB has gone completely negative with more talk about armageddon than I care to read. There's maybe only Birchy and 3 actively posting members who hold a positive outlook for the future.

 

[WorkFE]

Re: Birchtree's account talk

I was gone for a week. The good news is that since the market retreated further I have know need to retrace the MB. I am sure it is full of Hangem High Rhetoric.

 

[robo]

Re: Birchtree's account talk

The atmosphere on this MB has gone completely negative with more talk about armageddon than I care to read. There's maybe only Birchy and 3 actively posting members who hold a positive outlook for the future.

"I've never seen a monument erected to a pessimist." - Paul Harvey


http://seekingalpha.com/article/124602-the-rally-when-it-comes-will-be-a-doozy?source=headline1

http://moneynews.newsmax.com/streettalk/leuthold_buy_stocks/2009/03/05/188706.html

The upcoming rebound will be quite dramatic in percentage terms even for the most “boring” equity funds. Therefore, the tendency to err will almost always be on the side of being not greedy enough, rather than being too greedy.

Keep in mind that even the most bullish analysts are afraid to talk about the S&P 500 even regaining 1000, much less a more aggressive number such as my own forecast that it will exceed 1300 in 2009. Therefore, there will be a lot of nervousness all the way up. The market feeds on such uncertainty as it “climbs a wall of worry”.

The stock market will also certainly not accommodate the huge army of people who will be selling at 800, and 900, and 1000, and 1100, because they are too nervous to hold on for higher prices. Once these people sell, they’ll be hoping for a pullback to add to their positions—and that pullback will never arrive. Eventually they’ll feel compelled to buy back their holdings at far higher prices.

http://truecontrarian.com/

 

[Birchtree]

Re: Birchtree's account talk

Robo,

That's the nicest piece of information I've read all day - please bring me some more when ever you feel in the groove. I keep thinking about the upward sloping yield curve which is positive for the economic recovery - it's a longer term signal. Next year, about the time the recession is over, the market should be 50 or 60% higher than now. The best way to deal with a chaotic and unpredictable market is to own extremely undervalued stocks with strong balance sheets.

 

[robo]

Re: Birchtree's account talk

Robo,

That's the nicest piece of information I've read all day - please bring me some more when ever you feel in the groove. I keep thinking about the upward sloping yield curve which is positive for the economic recovery - it's a longer term signal. Next year, about the time the recession is over, the market should be 50 or 60% higher than now. The best way to deal with a chaotic and unpredictable market is to own extremely undervalued stocks with strong balance sheets.

Birchtree,

I don't want to keep you up all night with too much sugar.... One more comment! Now, I'm not as bullish as Steve, but we sure could get a nice rally and soon..... I have a Value Fund and it has done poorly - my hope is that will change soon!

Not all opportunities in the financial markets are alike. 2009 is presenting probably the best buying opportunity since the Great Depression—not so much because of relatively depressed valuations, but because the collapse since August 2008 has been so brief and dramatic. Therefore, the rebound will necessarily be similarly short and truly sweet.

How often do you get a chance to double your money in less than a year? Of course you can sometimes do that with a brilliant stock pick, but rarely can you double your money with funds in such a short period of time. And yet in 2009 there will be hundreds and perhaps even thousands of listed mutual funds which will double before the end of the year, and probably quite a few which will even triple or better from today’s closing prices.

Even when the stock market is rebounding from a multi-decade low, as we had in 1949 or 1982, it usually takes four or five years to double your money in an “ordinary”, nonleveraged mutual fund. If you pick the right industry sector, perhaps you can double your money in just two or three years—but not usually in less than one.

Therefore, don’t allow this year’s opportunity to pass you by. It’s psychologically difficult to visualize the stock market moving higher so quickly that investors are far more afraid of missing out on a rally than they are of suffering through a further decline—but that’s because we are at the lowest point since September 1996 and the public’s mood has adjusted accordingly.

http://truecontrarian.com/

 

[Corepuncher]

Re: Birchtree's account talk

The atmosphere on this MB has gone completely negative with more talk about armageddon than I care to read. There's maybe only Birchy and 3 actively posting members who hold a positive outlook for the future.

Unfortunately, there is no positive outlook for the future, at least if you are talking the next few years. You can't fight math.