Bubble Economics 101: Why you can’t make money even if you know a crash is coming.

[peterb]

My shorts and puts are up almost 40% for the year. But I did lose about 20% before I confirmed it was bear and started to trade it more. But I got out of RE in late 2006 and have been 60% cash ever since. 30% gold and 10% in the market. Stuff just keeps getting cheaper in US$ from where I sit. So it’s been pretty good. And if this last quarter of 2008 works out like I hope, it will have been a very good year for me. And believe me, I am not schooled in this. Purely an interested observer.

[greekfire]

stockstradr & peterb:

You guys/gals? are obviously smart and in tune with what’s going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don’t track individual companies, but rather groups of them. It’s not that we don’t care, it’s just a matter of daily cost/benefit analysis of our time.

In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds…with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn’t budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.

In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don’t have the time/motivation to constantly track them, but I am open to suggestions.

Congrats on your recent profits!

[greekfire]

stockstradr & peterb:

You guys/gals? are obviously smart and in tune with what’s going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don’t track individual companies, but rather groups of them. It’s not that we don’t care, it’s just a matter of daily cost/benefit analysis of our time.

In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds…with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn’t budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.

In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don’t have the time/motivation to constantly track them, but I am open to suggestions.

Congrats on your recent profits!

[greekfire]

stockstradr & peterb:

You guys/gals? are obviously smart and in tune with what’s going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don’t track individual companies, but rather groups of them. It’s not that we don’t care, it’s just a matter of daily cost/benefit analysis of our time.

In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds…with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn’t budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.

In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don’t have the time/motivation to constantly track them, but I am open to suggestions.

Congrats on your recent profits!

[greekfire]

stockstradr & peterb:

You guys/gals? are obviously smart and in tune with what’s going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don’t track individual companies, but rather groups of them. It’s not that we don’t care, it’s just a matter of daily cost/benefit analysis of our time.

In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds…with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn’t budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.

In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don’t have the time/motivation to constantly track them, but I am open to suggestions.

Congrats on your recent profits!

[greekfire]

stockstradr & peterb:

You guys/gals? are obviously smart and in tune with what’s going on in the markets. But you have to realize that the vast majority of people out there, myself included, might not have the detailed technical knowledge (or motivation) that you have. We don’t track individual companies, but rather groups of them. It’s not that we don’t care, it’s just a matter of daily cost/benefit analysis of our time.

In hindsight you both are looking pretty smart. I was too, up until about 6 months ago. I had transferred all of my REIT fund holdings a while back to an equal measure of cash, energy, and emerging market mutual funds…with the idea to hold them for a year and re-evaluate. REITs tanked soon thereafter and the other funds were performing quite well. Then energy and emerging markets started to drop, but I didn’t budge, sticking to my 1-year strategy. Then, in the last couple months, energy and emerging markets absolutely tanked, along with pretty much everything else other than the inverse funds and some singular stocks here and there. Heck, today even gold and silver are down 10% and 43%, respectively, from their 1-year highs. My point is that amateurs like us DO pay attention, just not as much attention as you do.

In hindsight, can you recommend some good alternative FUNDS that others like me can invest in order to profit or at least preserve what we have? I am not really interested in individual stocks because I don’t have the time/motivation to constantly track them, but I am open to suggestions.

Congrats on your recent profits!

[CA renter]

Same experience as stockstrader…

Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).

Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.

So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉

[CA renter]

Same experience as stockstrader…

Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).

Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.

So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉

[CA renter]

Same experience as stockstrader…

Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).

Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.

So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉

[CA renter]

Same experience as stockstrader…

Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).

Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.

So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉

[CA renter]

Same experience as stockstrader…

Was shorting home builders and some lenders in late 2004/early 2005 (yep, that sure sucked for a long time), and after churning some options/positions, held on enough to make a profit in the great sell-off in February of 2007. Exited almost all my positions because I had **finally** made some money and after being down 30-40%+++ did not have the stomach to stick it out any longer. Had a bad experience with one of my largest short positions — Golden West/World Savings — and couldn’t handle another 100% loss like that (options).

Needless to say, if I had held onto those positions — which included Fannie Mae, Freddie Mac, Bear Stearns, Countrywide, Goldman Sachs, Harley Davidson, Apple, Wachovia, Washington Mutual, Downey Savings, Circuit City, Starbucks, Best Buy, Zales, all the HBs, etc. — I would have made well into the six figures. Naturally, I day-traded (and got scared) out of all the good positions, and while making some good money, did not hit the timing that makes the difference between winning and losing.

So…even though some of us have been obsessive about keeping up with everything financial, it is still no guarantee that you come out all that far ahead. Definitely better than average, but not hangin’ with George Soros and Warren Buffett anytime in the near future. 😉

[EconProf]

Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn’t go up, don’t buy it.

[EconProf]

Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn’t go up, don’t buy it.

[EconProf]

Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn’t go up, don’t buy it.

[EconProf]

Mark Twain had the best advice about making money in stocks. Paraphrased, he said: Buy a stock when it is low. Wait until it goes up, and then sell it. If it doesn’t go up, don’t buy it.

[Author]

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