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  1. #1
    Speedy Az winner69's Avatar
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    Default Investing strategies and secular bear markets

    Essentially winner69 is a long term investor, ie wants to maximise long term returns) but also hates losing money

    Winner69 has a strategy:

    Since 2000 the underlying hypothesis about long term market conditions that drives my investment habits have been

    • The US market commenced a secular bear market period in 2000. This followed a secular bull market that run from 1982-1999
    • In a secular bear market long term returns are essentially zilch, even though there can be periods when the market can go up more than 20% in any one year.
    • Secular bear or bull markets have in the past averaged 13-14 years
    • By implication the NZ market is tied to these long term trends


    Winners investment strategy is:

    • Because long term market returns will probably be very low become a stock picker and pick long term growth prospects based on fundamentals.
    • As market sentiment is stronger than fundamentals and hope only hold stocks that are trending upwards. During times over real market weakness tighten up trailing stops (essentially the Phaedrus long term trading strategy)
    • To maximise returns while retaining some degree of diversification perferable number of stocks is 5, but no more than 10 at any one.
    • Don't worry about portfolio weights - because all stock picks will be trending up
    • Because I understand NZ and Autralia markets and economies restrict stock picks to these markets
    • Do not be embarassed to be 100% cashed up if necessary



    Whats happening now

    In December 1999 the DOW was 11497 - currently 12486 -- up 8.6% over the last 7 years is some effort eh .... see what I mean about a secular bear market .... about half way one through I guess.

    Since and inc 2000 the DOW has had 3 up years and 4 down years.... this year prob a down so the score is 3/5 ... see what I mean about a secular bear market

    The current downturn is only adjusting for the recent 'bull market' correction that occurs during secular bear markets - and this downturn is only 10% off a high so probably has a lot more to go

    Both the NZ and Aust markets have performed much better over the last few years and are currently valued at PEs seen at the highs of market valuations ..... nowhere where they end up at an end of a secular bear market.


    Result of all - as of today nearly cashed up .... and not embarassed at all
    Last edited by winner69; 11-02-2018 at 10:21 AM.

  2. #2
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    Out of interest, does the fact that you are now nearly fully cashed up mean that your existing stock picks did not meet your selective stock picking criteria? Or were they no longer trending up? Or have you sold stocks that met your criteria and are still in a long term uptrend, despite your plan?

  3. #3
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    Seeing as you recomended me a book the other day i shall return the favour Have you read the Agressive investor by Colin Nicholson? sounds as if you have a fairly similar strategy. Well worth the read

  4. #4
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    I believe we have been in a secular bear market, in general stocks, for the past six yrs as winner has stated.
    But if you dig a bit deeper you will find that commodities are negitively corellated to general stocks. When general stocks go into long term bear markets (15-20 yrs) commodities go into long term bull markets - Have a look at charts of the CRB index and the DOW from the late 60s to 1981. this pattern has repeated itself over and over for the last 200 yrs.

    Look at a chart of the CRB index since 2001
    Look at a chart of crude oil since 2001
    Look at a gold chart since 2001
    Look at any of the base metal charts since 2001
    Then have a look at a chart of the s&p 500

    Commodities are going up, general stocks are going sideways
    ,
    He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)

  5. #5
    Member Heavy Metal's Avatar
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    Default Skewed analysis

    Quote Originally Posted by winner69 View Post
    Whats happening now

    In December 1999 the DOW was 11497 - currently 12486 -- up 8.6% over the last 7 years is some effort eh .... see what I mean about a secular bear market .... about half way one through I guess.

    Since and inc 2000 the DOW has had 3 up years and 4 down years.... this year prob a down so the score is 3/5 ... see what I mean about a secular bear market

    The current downturn is only adjusting for the recent 'bull market' correction that occurs during secular bear markets - and this downturn is only 10% off a high so probably has a lot more to go

    Both the NZ and Aust markets have performed much better over the last few years and are currently valued at PEs seen at the highs of market valuations ..... nowhere where they end up at an end of a secular bear market.


    Result of all - as of today nearly cashed up .... and not embarassed at all
    In claiming we're still in a bear market you use a very convenient time frame to make that assumption. Using the same analogy gold has been in a secular bear market for the past 27 years - price still lower than in 1980, more down years than up.

    Three of the four down years occurred in 2000-02. That was a bear market. Since then the market has three out of four up years. That is a bull market.

    The Aust market is nowhere near a valuation high. Current PE of 13 is lower than the 15 year average.

    Being able to move to 100% cash might be easy and realistic and comforting for a small time investor, but if you have large sums of money invested across the asset classes (incl property), it is far more difficult to achieve this.

  6. #6
    Senior Member Halebop's Avatar
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    Quote Originally Posted by Heavy Metal View Post
    The Aust market is nowhere near a valuation high. Current PE of 13 is lower than the 15 year average.
    You've just committed the very same crime you accused W69 of.

    The Australian market is now made up of a quite different earnings mix thanks to a multi-commodity boom. This boom hasn't been in play for most of the last 15 years (Quite literally the opposite). On average the earnings of mining companies just don't get valued as much as the earnings of service companies because they are capital intensive and much more cyclical and much more volatile (i.e. in an uncertain world they represent a sector with one of the least amounts of certainty). So a quantitative measure of PE doesn't encompass the qualitative factors of earnings mix, sustainability and volatility. Have a look at service companies... insurers, retailers and the like and PE ratios are hardly enticing.

    ...and conversely even if we ignore the mining factor the overall PE might just be measuring the market's view of future earnings, future inflation and future discount rates.

  7. #7
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Heavy Metal View Post
    In claiming we're still in a bear market you use a very convenient time frame to make that assumption. Using the same analogy gold has been in a secular bear market for the past 27 years - price still lower than in 1980, more down years than up.

    .

    I would contend the secular bear market in gold you mention ended in mid 1999 ...... during that period gold went from $850 to $250

    Since then I would say in the early stages of a secular bull market ..... rising from that $250 to you never know ..... one of the characteristics of a secular bull market being that the bull market periods have greater gains than the bear market periods (like the years you mentioned)

    Anyway as with aspects of technical analysis (as this is what this) everything is open to interpretation. Like some might also say that that the secular bull market in US stocks that most say ended in 2000 is actually still in existence becuase new highs are being reached

    What you have pointed out about gold confirms what Mick pointed out - stocks and commodities always seem to go their opposite ways


    By the way your other point that closing positions can be difficult is true .... and this does to a certain extent eliminate many stocks as a possible trade if I keep the number of stocks held down to a preferred number of 5 with a max of 10 ..... even the biggest exposure I have had in this respect is that I managed to move a sizable parcel of TRS a few weeks ago without too much difficulty (prob sold a few of shares to Fisher funds over the years)

  8. #8
    Member Heavy Metal's Avatar
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    Default Interpretation of secular bear market

    Yep interpretation is everything. One can choose the time period to validate their arguments.

    You say Dow is in a 7 year secular bear market, I say Dow is in a 4 year secular bull market after a 3 year bear market, some say gold in 27 year bear market, Dow in 25 year bull market etc etc.

    Interesting re TRS - great stock but very illiquid. No problem moving $10K worth but what if you bought $1M at IPO and/or accumulated $1M over the time since the IPO? Ditto housing, you have to wait months to try and sell if things go sour, or have a fire sale. And this correction has only lasted 4 weeks!!!

    Also interesting to compare this correction vs a similar credit crunch episode in 1998 (LTCM/Russian debt crisis). Market retreated 17% but recovered its losses within 5 months. The 1998 correction started around the same time of year too.

  9. #9
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    Question

    Can someone else interpret this???Does this indicate writer believes $US will continue down,gold goes up and DOW goes up????http://biz.yahoo.com/seekingalpha/07...5_id.html?.v=1
    living2

  10. #10
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    Quote Originally Posted by living2 View Post
    Can someone else interpret this???Does this indicate writer believes $US will continue down,gold goes up and DOW goes up????http://biz.yahoo.com/seekingalpha/07...5_id.html?.v=1
    I think he's saying that everything is going to depreciate against gold -USD, DOW, commodities. He say's even if prices of DOW etc keep increasing they will still depreciate against gold

    Although I agree with some of what he says, I'v become rather weary of the gold bug writers in general.
    .
    He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)

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