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Posted: Tue Aug 09, 2011 11:58 am
Eric, I have seen no evidence that technical analysis works in the long run. On the contrary, all of the unimpeached research that I am aware of says it does not work. All systems occasionally work or they wouldn't be systems, but the only consistent winners seem to be the robo traders with servers located a couple of ip hops away from the exchanges. Regular investors have no chance of playing that game.
Edit: Yesterday I placed 3 lowball "bets" on mrk, ge, and intc. I picked up mrk and missed intc by 8 cents. If the market drops today I may get the intc but the ge at 15 will probably take a bit longer.
Posted: Tue Aug 09, 2011 5:28 pm
That's fine. I'm not trying to convince anyone to use technical analysis. I'm merely suggesting that studying market cycles and reviewing market internals may be a useful component of analyzing more or less favorable times to risk your hard earned money. Doing so implies no prediction - just observation.
If you want to see the way a famous value investor uses such information, then check out this Jeremy Grantham article published in January:
http://www.scribd.com/doc/47607952/Jere ... 011-Letter
Just goes to show that there are few ways, all of which are imperfect, to determine some sense of underlying supply and demand in the market. A basic familiarity with such history and precedent probably doesn't hurt.
Posted: Tue Aug 09, 2011 8:28 pm
I agree with that. I just think that published theories can't give you a direct edge because that knowledge is already factored into the market which is essentially what EMT says.
On the other hand, if someone develops a theory that works, they would have little incentive to publish it. They would just use it and get rich.
Posted: Tue Aug 09, 2011 8:39 pm
@jerry - don't give up on technical signals for the overall market. See http://www.buydonthold.com/category/blog/
for an example of using technical indicators in the real world... I've been watching the blog carefully since May 2010 and the indicators have been pretty much spot-on.
Posted: Tue Aug 09, 2011 8:58 pm
@dividendguy, @eric. Appreciate your thoughts on BAC. Eric, using your comments as a framework for some research, I think your spot on with the dead money comment. It may be a long while before BAC pays a worthwhile dividend. I used todays push to dump it just minutes ago for a nice profit.
Posted: Tue Aug 09, 2011 11:36 pm
Nicely done sir.
Posted: Wed Aug 10, 2011 2:30 pm
@george. I checked out buydonthold and I found limited and very short term back testing so it is hard to draw any conclusion without reading the book or watching it for a while.
I will follow it myself for a while and see how he does. I will also try and find out if he is a billionaire or at least very rich. I believe that is the best indicator of a truly successful strategy.
Posted: Wed Aug 10, 2011 10:09 pm
Another great day in the markets eh??
I used todays drop to purchase HGIC just before close. Anyone else make any purchases today??
Posted: Thu Aug 11, 2011 12:04 am
Nice pickup. HGIC is trading well below my cost basis. Insurance has been getting HAMMERED.
I wouldn't mind picking up AFL at these levels.
I am still a little short on funds until the early part of next month, but I may make a stab at a buy anyway.
Posted: Thu Aug 11, 2011 12:23 am
HGIC has been on my watch list for several months. I was anticipating they would have problems with the storms that hit in the early spring. This was revealed in their Q2 earnings report that came out Monday with the share price being hit as a result. I don't have to tell you what the rest of the week has done to the price. No way of knowing if the markets are going to go lower, but I'm happy with a YOC of 5.49%
AFL is also on my watch list. I had not been that excited about it due to the yield being just over 2% but now with it over 3% it's got my attention. Seems like the financial sector is getting hammered over the debt problems in both the US and Europe. There are a lot of bargins to be had if you can stomach the risk.
Posted: Thu Aug 11, 2011 12:48 am
One purchase today just before close: PCL, a timberland REIT that I had owned for years and sold a few months ago. 4.6% yield and it goes ex on the 12th (Friday). It's always been a plodder, but that looks ok right now.
Posted: Thu Aug 11, 2011 1:13 am
I've been looking at REITs for a few months as well. I can't decide if I should keep them in my taxable account or a trad. or roth IRA. Any thoughts??
Posted: Thu Aug 11, 2011 1:27 am
REITs almost always in an IRA, because their dividends are generally not fully qualified (i.e. you'll pay your marginal tax rate on the dividends). This may not be an issue if you are ERE, because your marginal tax rate will be low.
Posted: Thu Aug 11, 2011 1:34 am
Different REITs classify dividends differently. @dragoncar is right as to many REIT dividends, i.e., not fully qualified thus treated as income and better kept under a tax umbrella (the regular IRA vs Roth comparison should be made on anticipated taxable income and the compound effect of the initial tax savings over the number of years to withdrawal).
But timberland REITS are different:
http://forisk.wordpress.com/2011/01/19/ ... dividends/
Most timber REIT distributions are taxed as long term capital gains from the sale of timber, so I like to hold them in a taxable account.
Posted: Thu Aug 11, 2011 2:19 am
Might some REITs also provide "return of capital" as some or all of their distributions, which would not be taxable?
Posted: Thu Aug 11, 2011 1:32 pm
In a rare case of good judgement concerning the market, I decided to get completely out 3 weeks ago and wait for the DOW to hit 10500.
I have not waited for 10500 but I am now long on GE, MRK, T, INTC, NLY, WM, TOT. I plan on continuing to buy mostly dividend stocks held by Vanguard Wellesley if the market continues downward.
Posted: Thu Aug 25, 2011 3:16 am
Call me crazy but I'm betting AAPL works on closing its opening gap tomorrow
Posted: Thu Aug 25, 2011 4:11 am
Right now, AAPL is down 5%. That seems low to me, but it sounds like you're saying it's high. I don't know if you were paying attention to Apple between the time SJ left and the time he returned, but it was pretty bleak.
Posted: Thu Aug 25, 2011 5:24 am
Yeah, I wouldn't touch it until min 10m after the open. But I bet the gap closes...
Posted: Fri Aug 26, 2011 12:35 am
I purchased 18 shares of COP at $63.65/share on 8/22/11. This doubles my position with ConocoPhillips. This will likely be the last energy purchase for a while, as energy now comprises almost 25% of my portfolio. I feel that's high, and typically would like one sector to comprise no more than 20% of the portfolio.
My next purchase will likely be in the financial or consumer staple sector.