David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures. Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.
Today is the second tremor and with every technician this side of planet Mars expecting a test of the recent low, a new low could bring with it the actual earthquake. I know that you have been cautious but I am wondering why you would believe that a brief relaxation in signs of risk would suggest that the risk has passed? Isn’t it quite normal for things to calm down during brief periods during corrections and/or bear markets?
I guess what I am saying is this: the current causes trotted out for us to rollover into a bear market seem inadequate to me. Those causes are adequate to lead to troubles in some of the dodgier financials, and housing related names.
For there to be a broader selloff that sticks, we need something bigger — a self-reinforcing appreciation of the yen, a diminution of global trade and capital flows, a new war, etc. These things can happen, and I have told people to be on the lookout. But those are not certain to occur. I try to avoid certainty on market issues.
As for me, I stay on the conservative side of my asset policies, and lose a little less than the market in downdrafts. Lord helping me, I’ll make it up on the other side. After 2002 comes 2003, perhaps.
Thanks for the clarification – and for the “record” I don’t believe this is the start of a recessionary bear market. However, as I stated in a prior post, I do/did believe that the current correction is likely to surprise people as to its magnitude. I don’t have any empirical gauges to back it up yet, but my guess at this point is that a recessionary bear market is more likely to be a 2008 issue. In the mean time though, protecting during a nasty correction sure does make it easier to scoop up fallen angels!
I appreciate your feedback, and I did not mean to place any words in your mouth. There is a large-ish doom and gloom crowd that grabs at every large twitch in the market. I like my bears to be more well-studied, like James Grant.
I agree with your point regarding some bears. However, I stopped getting Grant’s because it was long on bearish talk but very short on timing mechanisms. Pinpointing an overvalued market isn’t all that hard….it is figuring out the “when” that is the hardest part and although Grant’s is a great read I couldn’t justify the relatively steep price….especially since I don’t trade CDS’s!
Hi all!
Very good site! I like it! Thanks!
G’night