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I wrote something about this the other night, but can't find a record of
sending it or of receiving it back from the group. Probably sent it on to a
XXX site somewhere :) ,
Anyway, with the 'depression' in Asia, the near collapse of the Russian
market and the potential collapse in Europe, I wonder if anyone here in the
group has done any experimenting with various indicators that appear to work
better in a bear or depression type market???
I got the following missive from my dad last week, FWIW:
"HI
DOW DOWN 250 RECOVER TO CLOSE AT 112
Asia in DEPRESSION wait for EUROPE to confirm if when they are hit the
WORLD will
also be in depression Could last several years I sincerly hope not
Socialism will triumph
LOVE DAD"
I realized that it's been 20 or 30 years since I've had to deal with this
type of market. It's hard to imagine making a living when the equity market
might move just 2% the entire year.
So I pose the above question as something we might want to discuss. Not
only which indicators might work best, but what vehicles would be best for
investing, such as equities (type of industry that best weathers this type
of downturn), options, futures (metals, food stuff, etc.), and whatever else
there may be.
Indicators don't look promising. In additional, my latest issue of Road and
Track has more $200,000+ sedans in it than were being built in the 1920-1930
era. Look how many of those survived, other than in collections. Look at
housing! We visited my folks and my wife's family in March. I expect
ridiculous prices here in California, but Toledo, OH for gosh sakes :) !!!
There were several areas with houses from $500k to over $1mm. Granted you
get more there than we do here in California, but come on, let's be
realistic.
Do we take our housing profits and sit on the sideline for a couple of years
and rent? It's hard to believe that my house will appreciate much more in
value than it has. Our median prices are up over 25% from March, 97 to
March, 98.
Anyway, I need to start thinking about a defensive posture in trading. Most
of our stuff is short term anyway, so our basic trading strategy won't
change, other than building in a negative bias similar to the positive bias
we built in for this long bull move. I'd like to look at some long term
ideas. With the market still up there, we should be able to take some
longer term defensive positions without a lot of risk as a hedge against a
multi year stagnation (you'll notice I don't use the word depression?).
Granted, we can short 'stuff', buy OEX Puts (longer term) on recoveries,
etc. I would still like to think we will get another run up which will
enable me to take some reasonably priced Put positions, but I haven't seen
the impetus for the run up.
Any thoughts would be appreciated...
Guy
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