Comments on Fund My Mutual Fund: Royal Bank of Scotland Puts a Scare into the Marke...

August 06 = August 07.

2008-06-18T19:50:00.000-04:00

August 06 = August 07.

Yep, I am not being critical of you, was just comm...

2008-06-18T19:49:00.000-04:00

Yep, I am not being critical of you, was just commenting. And I agree on the arsenal can never be big enough but I'm the type that believes real world experience is more useful than academia - I am sure most MBAs would disagree with me. Or professors.

As for a true bear market - there is very little in terms of where to hide. Just think back to January 08, March 08 and August 06. Look at charts for Mosaic, Potash or any of your favorite bull markets.

The trick is to survive those episodes and retain capital to invest when the market calms down. Nothing goes straight down or up. Bear markets are not necessarily an "event" but an "era". You get some very nice rallies in bear markets as we saw off the Bear Stearns low. But without cash you are out of the game to buy anywhere near lows.

I have noticed that you don't take risk lightly. I...

2008-06-18T19:08:00.000-04:00

I have noticed that you don't take risk lightly. I really like that about your investment style.
Warren Buffet's rules of investing:
1. Don't lose money
2. Don't forget rule number one.

Reading books are just a suggestion... not everyone needs to do this... it has helped me though. I don't mean academic books about how markets should work but books by people who really did it... Books by people like Lynch and Victor Sperandeo...

One last point...

Perhaps the key lies in "there's always a bull market somewhere"...

Certainly someone who invested in POT and MOS in August is saying: "what bear market?"

Is this statement really true in a full-blown bear market... I guess we have to do some historical research on bear markets of the past and find out. One other thing I want to point out briefly,,, I like to go to stockcharts.comm type in "dj", and find a list of dj indexes. Sometimes you can find some unexpected sweet charts... "the bull market somewhere"...

I'm a believe that the arsenal can never be big enough...

Ok one last thing I guess...
I follow your blog and comment here because I think you know what you are doing, have a lot of insight to provide, and have a lot of potential to succeed... you should definitely know this... or I wouldn't be here

My whole investing style is "risk management". Pe...

2008-06-18T18:40:00.000-04:00

My whole investing style is "risk management". People always ask why do you sell, why do you leave winning stocks early etc. Thats conservatism. I take profits when I get them and layer out (and in). Thats risk management to me. People think trading = aggression. I'd argue in can be one of many things.

I don't need to read a book; I lived through 2000-2002 and lost my pants. The best tuition is the one where your own capital is destroyed through lack of risk control.

The difference between most newer investors (and I can tell this from reading message board posters) is they wake up every morning asking "how can I make the most money today?"

I wake up every morning asking "how can I lose the least today?"

That comes from being in the market for a long time and being prepared for times like these, simply from living through similar times and learning from them. Even then it won't be perfect, but you do the best you can.

The #1 rule of making money is to attempt not to lose money. That is a lesson most people who stand a chance in the market over the long run will learn over time. Everyone else will lose their pants and turn into a mutual fund investor. Simple as that.

TM,In this market I hold GTC stops on all my posit...

2008-06-18T18:33:00.000-04:00

TM,

In this market I hold GTC stops on all my positions. The only exception are my potash stocks... but even they may be in trouble if panic sets in in earnest.

The stops allow me to always define maximum downside risk. I move them up to key support levels as stocks move up.

I don't know if this can be done when very large amounts of money are involved... without affecting the price... except for large company stocks and done in pieces...

I believe that if you haven't already it may be a really good idea to read some books on risk management... I'm looking to do so myself...

The US economy and global economy by extension of the US has been largely inflated by easy money and credit for decades now... when you combine any kind of slowdown in this with baby boomers starting to pull money out of 401ks, the rich ducking for cover for 15% cap gains (if this turns out to be the case) and the enormous shortage based inflation in commodities the picture looks very risky in the next few years...

But who knows... I never thought the market would have held up so well this far...

I think your going to be really good. The more you know the sharper your sword... just like with all of us...

No, we would not make positive returnsWe'd just tr...

2008-06-18T15:45:00.000-04:00

No, we would not make positive returns

We'd just try to lose less than the market

You'd have to go to a 50-60% short exposure in my opinion to withstand that sort of loss

1340 to 1070 is 20% more downside from here - thats a full bear market on top of the losses suffered since Oct 2007 highs.

This is not a hedge fund; I'd swing more aggressively from 1 side to another in that arena or in my personal account

I am still managing this as a long biased mutual fund so people can compare apples to apples. That said, I think the fund would do better than bretheren as it normally does most of the time during down swings.

Market is in tight range 1340 to 1370 - 1320 is to me the next levee

If that breaks you are going to March lows mid/upper 1200s

If March lows break you have to pull out a long term chart to see what next support is. I outlined some of those in January and March but I'd have to refamiliarize myself with the points.

We'll take it 1 week at a time.

TMHow does your fund perform in the second half if...

2008-06-18T15:40:00.000-04:00

TM
How does your fund perform in the second half if predictions are right about SP at 1070 by year end? I know you have stated you are not able to take short positions. Can you still make positive return by holding 15% cash and using ultra short ETF? What is strategy today with SP again down around 1370 area?
KB
KB

http://www.rightsideadvisors.com/public/commentary...

2008-06-18T14:33:00.000-04:00

http://www.rightsideadvisors.com/public/commentary.go/rsa/commentary/blog/20080618_140601_msg.html/Dow-10747-in-the-Second-Half.html
10,747: Bank Woes Key to Richard Suttmeier's Grim Forecast
Posted Jun 18, 2008 12:52pm EDT by Aaron Task in Investing, Recession, Banking
Related: MS, FDX, FITB, KEY, BBT, RF, LEH

Stocks are tumbling again, a decline many press reports are blaming on FedEx's warning. While that certainly didn't help, the reality is the financial sector remains key for the broad market and is resuming its decline.
Largely because of the financials' ongoing woes, veteran market watcher Richard Suttmeier believes more bear market action lies ahead. Suttmeier forecasts the Dow will hit 10,747 by the end of 2008, a roughly 11.5% drop from Tuesday's opening level.
While most of the media's attention remains on the big banks and brokers -- Morgan Stanley reported a steep year-over-year earnings drop -- Suttmeier is increasingly concerned about weakness in smaller regional and community banks, citing evidence of rising levels of bad loans.

Case in point: A day after Goldman Sachs downgraded the sector, Fifth Third Bancorp said Wednesday it's slashing its dividend and seeking to raise $2 billion via a combination of preferred stock and selling certain business lines.
While weakness in the financial sector is obvious now, I should note Suttmeier has been negative on the financials since long before it was fashionable.
http://finance.yahoo.com/tech-ticker/article/28545/Dow-10747-Bank-Woes-Key-to-Richard-Suttmeier's-Grim-Forecast?tickers=MS,FDX,FITB,KEY,BBT,RF,LEH

lOAD UP ON SDS DXD DOG
the market is tanking..You can sense the house of cards falling..the end is so near..one world government. one currency..it's all in the BIBLE..not to be a JEsus freak, but it's predicted!