Ms. Park did an interview on BNN today at 1:35pm EST talking about recent market action and economic developments.
A link should be available after the show on the BNN web site.
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Ms. Park did an interview on BNN today at 1:35pm EST talking about recent market action and economic developments.
A link should be available after the show on the BNN web site.
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I just wanted to thank you so much for these interviews you do. In the middle of September I saw an interview and ended up selling our entire portfolio with much grief from our advisor. My husband and I are retired and now I realize we had taken on way too much risk. We had tried to sell before this, but were always given the “you will be making a big mistake” spiel. Although we did end up losing 7 % of our portfolio from its peak I realize we are extremely lucky since the TSX is now down another 3000 points since we sold. We will invest in the market again at some point but definitely not as much, and will continue to follow your blog and interviews.
So if there is anyone out there who can't sleep and is stressed out listen to Danielle. Losing a bit of money in order to sleep and have less stress is well worth it. You can replace the money but not your health.
Keep up the good work and again thank you so much for helping the average investor.
We have a very similar story. We retired on the strength of a Plan
drawn up by our bank. When I discovered Danielle, her book and her
blog I realized we had made a very big mistake. We too lost about 5%
of our savings before selling and like this couple we are very
grateful to Danielle that it wasn't worse. We add our thanks to what I
am sure is a growing list.
Danielle: Thank you very much for your book and these interviews. I wish I found this information earlier.
I have a couple questions related to this interview I hope you'll be able to answer. I don't meet your min. investment requirements otherwise would contact you directly.
I, to, bought into the buy-and-hold, passive index-investment story. I did what I thought was correct (conventional wisdom) – wrote a IPS, invested in low-cost index funds/ETFs (TDW-efunds, Tsx, US-S&P, EAFE, Europe, etc) along with ETFs in both retirement and RESP investments (global diversification, 10-15+ years from a once hopeful retirement, 6-10 years for the RESP). My “currently-known” mistakes were to be passive (not having a buy/sell discipline as you point out is required [not that I have the knowledge at this point to create one, now that I know one is required]) and to not fully understanding my real/actual risk tolerance. I'm know not alone, but that doesn't help me when I look at my portfolio.
I'm in dire need of a better “sleep factor” – I'm devastated with my loses and mad at myself and the financial “services” industry. I'm skeptical of using financial advisor's (“salesmen”) for financial advise. My portfolio size isn't big, so finding someone that meet the points you make your book – Ch. 14 (Takeaways) point #6, seems to be impossible. I'm confused, mad and scared …not sure what to do or who to turn to …All I can do, is to try to learn more and move forward, but have this short-term sleep factor thing to address.
Questions
NOTE: I realize, as you say in your book (p174), that “my opinion is just one person's opinion”:
1. Can you tell me how you estimated/came-up-with the $400 Billion in hedge fund redemption requests? (web site, articles,?). You said this result in a $600-800 selling pressure between now and December (beginning or end?). Or is this knowledge based upon your experiences/expertise?
2. Can you provide any examples of what factors could constitute a “significant trend change”? (“before people start to be rewarded for equity risk”).
3. Do you have any other suggestions (other then selling 1/2 on ones equities) against the Tsx going < 6000 ('02 levels) and other indexes going down - what rational things can be down to guard against this? Psychologically its difficult to lock-in loses. 4. Can you suggest any books to read for getting up to speed quick on TA? On page 80, you reference Ed Easterling book - I need to get this and read it. 5. Any other comments/suggestions? Thanks...
We are fortunate to have Ms. Park post her directions, opinions, insights, knowledge and links to information.
Bombarding her with questions as if your personal tutor is unfair, unrealistic.
I agree that it is unfair to be bombarding Danielle with requests for personal advice. My guess is that most of us who subscribe to the blog do not meet the minimum requirements to retain VP to manage our affairs. If we had the resources, we would simply retain VP and go back to sleep. The alternative is to be grateful that Danielle spends the time to write this blog and benefit as best we can.
I am sorry for your losses and anxiety. I can feel your pain. If you can learn from the experience the wisdom will serve you for the rest of your life. There is no shame in your mistake; you made your choices based on widely held views that are simply not accurate. Try not to beat yourself up. Think of it this way. It’s only money. I know, money is important, but it’s not like you killed anyone. Breathe. Make a list of good things you have done and realize that to err about money is very common and very human. You can use what you have learned.
RE your questions:
1. hedge fund info is scarce and hard to paste together, but she this article link for some further info into redemption’s
2. A significant trend change means the next cyclical bull has to start. Once it does markets will trend gradually up over many months and a few years before they will peak and start into the next cyclical bear again. Point is no new bull market has started yet we are still in the contraction phase so far.
3. Your choices at this point are do nothing and just resolve to not look at your accounts for the next year or so or sell all your equities now and go to cash, or as a third mid-ground sell half. You hold broad market ETF’s not high fee funds or individual stocks that can go to zero. This means that if you do decide to hold on, you have a good probability that these assets will recover most if not all of your loses during the next bull cycle. But you will need to devise a sell strategy again for when equity markets start to peak out again in the next period. Otherwise you will be left riding a stressful coaster to no destination.
4. Do read Martin Pring Technical Analysis Explained, and John Murphy, Intermarket Analysis, as well as this paper posted on our VP website: http://www.venablepark.com/documents/AQuantapproachtotacticalassetmgmt.pdf
5. Yes read Esterlings book and visit his web http://www.crestmontresearch.com and the rest of my recommended reading list.
Above 1. That was see this article link on hedge fund redemptions,
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/11/10/when-the-chickens-come-home-to-roost.aspx
I was fortunate enough to catch your last two interviews on BNN. Thank you for your straight talk and insights.
When you called for the S&P 500 to retrench to its 2002 low, I was incredulous initially, but am quickly coming around to your view.
Here's the debate I am struggling with now and I hope you will have time to give me a quick reply.
In my view, Canada is in much better shape than the USA. We don't have the same level of problems as they do – in mortgage and bank failures, credit card & autoloan defaults, hedge funds deleveraging, overspent consumers etc.
So while the S&P 500 is poised to hit the 2002 low of 775 (which is 11% off from Friday's close of 873), why do you expect the TSX to also retouch its 2002 low?
Because Canada is not the “bad boy”, maybe it will be punished less. Is it possible that the TSX will only go down as far as its 2004 low of 8132 – which coincidentally is also about 11% from Friday's close?
Thank you for any comments and insights you can provide.
Jonathan in Vancouver
Danielle,
Reading these and some previous comments I gather your book and the blog must not endear you to your colleagues in the industry. I suspect more than a few had to delay their own retirement plans as your readers, including me, become more enlightened. To those who managed to only lose 5 or 10 % of their portfolio, consider yourselves lucky. I reality, since hard asset prices seem to be going down fast, you might actually be ahead by cashing out at a slight loss from the rather than waiting for the next wave up. (I expect cars to get real cheap in the near future, and where I live real estate market situation is approaching a near crash status – good deals to be had soon. All this assuming, of course, that you have cash at your disposal as credit is getting scarce.)
Considering the ongoing debate regarding the auto industry bail out on both sides of the border and recent assurances by Obama that the sector cannot be allowed to fail, do you think that it might be a good speculative bet to invest a few bucks in Ford or GM? They’re giving the stock away these days.
Regards,
Marcus