Everyone I speak to is worried about the market. People who should know better are not just calling for a pullback, but a plunge. The reasoning is ridiculous, if you think about it: stocks are up a lot, therefore, they should trade down–a lot.
I don’t buy into that way of thinking, unless there is a bubble.
Stocks are up mightily, but there are no big bubbles. Housing related stocks are reasonably valued, as well as the banks and tech. As a matter of fact, these sectors are undervalued, based on historical precedence. So let’s take the crash scenario OFF the table and assume at some point the market will undergo a 10% correction.
When I bought IMMR today, some of my colleagues warned against it. They told me to wait and buy cheaper. However, to do that, I needed the market to fall or IMMR needed to reverse course and start heading lower, something it hasn’t done in months. It made no sense to wait because I liked the company and wanted to own some of it. Instead of waiting in the tall grass like a paradiddle, I initiated a 35% position, with the intent to buy more lower. Since most of my buying has yet to occur, it’s in my best interest to see the stock go lower.
That’s the difference between technical trading and trading based upon a thesis and fundamentals. I’m not interested in stop losses and the chart doesn’t matter to me. I will build a position in this stock and try to hold long enough to see them report a few quarters of better than expected earnings. That’s where the big money will be made, not trading between ranges.
To answer your question, pal: I don’t worry about markets correcting for too long. If and when it happens, I will deal with it, as I have dozens of times in the past. For now, the trend is decidedly up, even though the basic and common laws of seasonality, decency even, are calling for a sharp correction.
UPDATE: iBC welcomes RAUL back to the tabbed blogger collection of 2013.
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You’re going to hold a stock thru a couple of quarters?
Sir Fly, get back in WNC.
I might
You started with a 35% position and you want to add?
Correct me if i am wrong, but I think this meant 35% of a normal position I think, not 35% of his portfolio.
No, I started off allocating 35% of what I intend to allocate. If I have to buy 100,000 shares, I only bought 35.
Glad to be back. I’m structuring my CREE position in the same manner. Talk about a runaway…
LOL, expect a market correction of at least 5% in the next 4 weeks.
The market hasn’t made new highs for so long, there is a new breed of investors that don’t think its normal for markets to make new high on a regular basis. The reality is – we could see new highs every year for the next 5 years- that’s actually alot more normal than what has happened since 2001, so get used to it!
…Not much of a paradiddle either as it turns out.
Some profits may slip away, but at least I won’t consider myself a gutless wonder for sitting on the sidelines while the market finessed all-time highs
“We” created the last crash. But after alot of correction and healing, a new era finally seems to have arrived. With any luck it may take flight with us on board.
Yen getting hammered, Jap market going to the moon. I think Kyle Bass may be getting close to something big. Keep a close eye on JGBD.
Great additions to the site, Senor. The IBC empire is now.
You’re all dead on tax day. Pick which year.
Since 1970, between May-Oct returns have avg 4.1% where as Nov-April returns have avg 17.2%….. Sounds like some sector rotation and defensive plays are needed during the initial phases of the sell in May mindset