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So where am I going with all this attempt at reading history from price
patterns, newspapers and big money footprinting?
Only to try to get a grip on what to expect on the Nasdaq, should Nasdaq
have been a parabolic ascent in recent months.
These are snapshots of what the present day mutual funds seem to be
portraying as their stance on their websites.
The bottomline is this:
It seems to me that Wall Street is more an exercise in consumer marketing
than effective investing.
Along the following lines you will find the very same message that I tried
to convey as Product Manager in another life, in my quest to build brand
equity over my competitor brand...
- Post-purchase dissonance management
- Reinforce the Key Result Areas
- Think "problem solver", and not "uncertainty".
- Espouse Deliverable Benefits
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All quotes are copyright the respective organization, and are included here
to make a point.
If individuals are quoted, it is assumed to be a policy for that
individual's organizational policy and NOT that of the individual.
Janus, April 4 2000 Market Commentary (most current)
Blaine Robbins of Janus Fund sitting in for Jim Craig.
On what he expects going forward…
I would hope the only volatility we'll see going forward is upward
volatility, however, market psychology isn't easy to determine. Nonetheless,
it's my opinion that equities won't slip any further than they already have
to date. Interest rates also play a role in the direction of the market, and
a recent decline in long-term rates should be positive for stocks.
Short-term rates, on the other hand, will likely continue to rise. However,
given that the market has already priced in another 50 basis points rate
increase, near-term rate hikes should have little impact on equities.
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Fidelity, April 4 2000 interview with Peter Lynch:
found here:
http://personal400.fidelity.com/global/whatsnew/content/101008.html.tvsr
Q. Peter, we've seen a high degree of market volatility over the past few
days, particularly with the technology-oriented Nasdaq Composite Index. What
would you say to investors who may be a bit jittery about these declines?
A. I'd say the same things I said 10 months ago, the same things I said 10
years ago. The stock market is a volatile animal. History tells us that
roughly once every two years since 1970, we witnessed a decline of 10% or
more. In fact, we've had four 10% declines in the last four years, and one
already this year. That's simply the nature of the animal, and trying to
predict its direction over the near term is an exercise in futility. Behind
all the smoke and noise on the market's surface, it's important to remember
that companies – small, medium and large – make up its backbone. And
corporate earnings drive stock prices. If you look at the 500 stocks in the
S&P 500®, earnings have grown 9% annually since World War II. That's a
pretty good track record. The recent volatility we've seen can be compared
to a long airplane ride – you're bound to hit some turbulence along the way.
Knowing what investments you own and why you own them is like fastening your
seatbelt to prepare for the bumpiness.
Q. Any parting thoughts for investors?
A. A couple of things. First, if you're going to need money within 12 months
to pay for college tuition or put a down payment on a house, the stock
market is not the place to be. You can flip a coin over where the market is
headed over the next year. But if you're in the market for the long haul –
five, 10 or 15 years – then time is on your side and you should stick to
your long-term investment plan. Second, I have no idea whether the next
1,000 points for the Dow or Nasdaq will be in positive or negative
territory. But I would argue that the next 10,000 points for each will be
up, as will the next 20,000. The bottom line is to spend time getting to
know your investments. There's too much at stake not to.
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Vanguard, updated 16 April 2000, Salient points only.
Details here: http://www.vanguard.com/cgi-bin/NewsPrint/951942565
Headline: Stay the Course Through Market Turbulence
Key points:
- Maintain your balance
- Keep an even keel
- Continue investing regularly
- Make gradual shifts (if necessary
- Consider the tax consequences of selling (GB's note: This made me laugh -
which is the lesser sin - making money and paying taxes or not making money
and not having to pay taxes?)
here's the full text of this point:
Many investors swore off stocks after the 1973–1974 debacle—selling out
their entire equity holdings. Not only did these investors likely incur a
tax liability when they sold, but they also missed out on the market's
eventual rally. While it should not be your sole consideration, evaluate the
tax consequences of your investment decisions. Given the tremendous advance
in stock and bond prices over the past 15 years, you may realize a
significant taxable capital gain when you sell or exchange shares of a fund
at a higher price than you purchased them.
- Set realistic expectations
And so it goes, the same old swan song.
A gem from the Peter Lynch interview for the penultimate email in this
series:
Q: Does mass psychology affect these cycles?
Lynch: Psychology definitely plays a role. I've often referred to the mass
psychology as background noise – all the headlines, talk radio programs, and
financial Web sites proliferating with opinions. When the economy is strong,
people say, "It can't continue." If things are deteriorating, they say,
"We're going to have a depression." Somewhere in the back of many investors'
minds is the fear that the Crash of 1929 will happen again, and they'll end
up selling pencils on the corner. In truth, the market didn't cause the
Depression. Fewer than 1 in 100 Americans owned stocks in 1929. The
Depression was an ugly economic situation with over 20 percent of the
population out of work and banks failing; it wasn't really about the stock
market.
I've always said, the key organ here isn't the brain, it's the stomach. When
things start to decline – when there are bad headlines in the papers and on
television, the background noise gets louder – will you have the stomach for
the market volatility and the broad-based pessimism that tends to come with
it?
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Gitanshu
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