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Home Blog June 2009

Archive for June, 2009

Life Lessons from Bernie Madoff

Monday, June 29th, 2009

While Bernie clearly Made-Off with thousands of people’s hard earned money and is now going to be spending the next 150 years in jail (not sure how that works), I think there are some important things to consider.

Brace yourself because what I am about to say may not be so popular to hear (especially for the victims)…but here it goes. We should thank Bernie for reminding us of some key life lessons.

In order to even get our heads around that, people should start by spending less time operating out of anger about Bernie and instead focus their energy on what lessons we have all learned from Bernie so we can transform this horrible event into a positive experience. We cannot change the past…so no point in living in it.

 Thank you Bernie for Reminding Us of These Life Lessons

1) Never put all your eggs in one basket

2) If it sounds too good to be true, then it probably is

3) If someone makes their product or what they do sound like it is reserved for the elite only – and that makes you want it more, then be skeptical as there is more to the story

4) People are way too trusting and way too easy to be manipulated – P.T. Barnum told us that a long time ago (there is a sucker born every minute)

5) Always, always, ask questions especially when things are going well

6) Do your own research (don’t just blindly trust a friends opinion or recommendation – what if they didn’t do their homework either)

7) Take responsibility for all of your personal and financial decisions

Think Better…Live Better,

Dr. Doug

Slow Summer Ahead

Friday, June 26th, 2009

Market coach Doug Hirschhorn discusses the four reasons why investors should expect a slow summer. Watch the video online.

4 Reasons We Should Expect a Slow Summer

Thursday, June 25th, 2009

 

1)      Professionals are Risk Averse

a.       Major players in market are still licking wounds from last years losses. They have made back substantial amounts to get closer to their high water mark and now are starting to see redemptions slow down and even some positive cash flow into the funds. So last thing they want to do is press when the markets are hitting a range and risk giving back some of those profits from Q1 and Q2.

 

2)      Government Mish Mosh

a.       Lots of meetings, lots of talks on rebuilding, lots of unanswered questions….leads to too much uncertainty for professionals to build an investment theme based on significant catalysts.

 

3)      The Risk/Reward Profile Stinks

a.       Violent, but low liquidity moves are likely. When fewer players are in the mix, that means less buyers and sellers. This can cause sharp drops in prices on little or no news. For the professional this means that the risk/reward profile for his trades is not favorable and as a result, the best trade is to take a vacation and sit on the sidelines for now.

 

4)      The Markets are Created by People

a.       People have lives and families. Summer is typical vacation time for many or long weekend trips to summer homes. After the roller coaster ride this market has given us, many people are just exhausted and need some solid Rest and Recuperation time to charge up for the remainder of the year. When less people are trading the markets, then less volume is injected into the markets. Less volume means fewer trades/transactions.

 

Think Better and Trade Better,

Dr Doug

Navigating Range-Bound Markets

Sunday, June 21st, 2009

Range Bound markets can make your portfolio bleed cash. And with all the unanswered questions looming about what’s next for the economy, it looks like we could be stuck in a range for a while.

Here are 3 reasons I think your best trade is to just sit and wait:

1.) Everybody wants in. The masses are looking for reasons to buy and get in. When the herd gets involved, what seems like the right decision in the short term often ends up the wrong decision for the long term. Bottom line, herds just create more turds.

2.) The rules keep changing. The government keeps modifying the rules of the game. They’re trying hard to make sure Wall Street does not revert to its old bad habits.

3.) It’s not clear where the best investments are. It is unclear where the best place is to put your money. Do you go with equities, stay in fixed income and commodities, or take a chance on emerging markets. Fight your fear of missing out and wait.

Never Say Never. If the past year and half has taught us anything, it’s that the markets are emotionally charged and can be unpredictable. I’m not saying you should never get back in the market, I’m just saying right now may not be the best time. Watch the video online at my blog.

4 Reasons to Expect a Slow Summer for the Markets

Thursday, June 18th, 2009

 

1)      Professionals are Risk Averse

a.       Major players in market are still licking wounds from last years losses. They have made back substantial amounts to get closer to their high water mark and now are starting to see redemptions slow down and even some positive cash flow into the funds. So last thing they want to do is press when the markets are hitting a range and risk giving back some of those profits from Q1 and Q2.

 

 

2)      Government Mish Mosh

a.       Lots of meetings, lots of talks on rebuilding, lots of unanswered questions….leads to too much uncertainty for professionals to build an investment theme based on significant catalysts

 

 

3)      The Risk/Reward Profile Stinks

a.       Violent, but low liquidity moves are likely. When less players are in the mix, that means less buyers and sellers. This can cause sharp drops in prices on little or no news. For the professional this means that the risk/reward profile for his trades is not favorable and as a result, the best trade is to take a vacation and sit on the sidelines for now.

 

 

4)      The Markets are Created by People

a.       People have lives and families. Summer is typical vacation time for many or long weekend trips to summer homes. After the roller coaster ride this market has given us, many people are just exhausted and need some solid Rest and Recuperation time to charge up for the remainder of the year. When less people are trading the markets, then less volume is injected into the markets. Less volume means fewer trades/transactions.

 

 

 

Think Better and Trade Better

Dr Doug

 

 

 

 

 


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