Buy and Hold Myth Part 6
Final wrap up of secular markets and the dangers of “buy and hold” theory that wall street touts through it’s “market media matrix” networks. If you review the videos, part one shows you how a typical depression era bear market behaves. The price action is similar to that of the NASDAQ market, reaching a high of 5000 points only to lose 80%. It has been 9 years, and yet the NASDAQ has failed to return to new highs. However, the Dow Industrial Index made new highs. The reason for the Dow Jones Industrial average reaching new highs was because this index is largely “commodity based”. The stock exchanges changed the stocks of this index during the first cyclical bear market in 2000, putting a few high tech stock into the index and some diversified financial services. The Fed has created the biggest liquidity trap in history of the world, by creating the housing bubble through mortgages and other creative financial products. These problems have not been addressed, but the Fed and the Treasury have placed your children and grand children into bondage through confiscatory taxes.
None of the “toxic assets” have been sold, yet, the Wall Street Traders and you, being invested in your 401k plans, have been participate in this short term cyclical bull market since March of this year. You have also been conditioned to “believe” Wall Street” can solve all the financial crisis, even the politicians have been convinced. However, if you have any doubts about Wall Street’s competence, then you should be worried about the next financial crisis. Using some common sense, and some technical training, you can determine when the market is overbought and over sold. I have developed some simple tools to get you started. I will be doing the rest of the 9 myths about investing over the next several weeks. If you have any questions, please email me or leave comments on the blog. You will have to be registered to leave comments, so go register and let me help you out of a loosing position. You can follow me on twitter, which I send updates on 401k plans, insurance companies, banks, and other financially interesting story I find on the internet.
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Thanks for the video. So is it strictly timing (you mention bears last 24-27 months) as of why the recent bounce above the 180 DMA is not indication of a new bull? Why do you feel we are going to test the lows, it doesn’t appear that the lows were tested in your previous examples after a bounce above the 180 DMA?
1Hey David,
The market works in cycles so after every sell off there is a rebound. A new bull market will emerge as a cyclical bull market, lasting only 18-36 months, but not lasting 18 years like in 1982-2000. The point of the video was to dispel the myth about buying and holding, vs using a market timing model. To hold stocks long in 18 year bear markets since 2000, investors, 401k, pension plans, will all be affected negatively through taxes and inflation. The bounce from march lows is already 8 months old, the first bounce up to the 180 day moving average is the fastest, but for those who didn’t sell at in July 2008, they are still waiting to make a profit.
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