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Awfully quiet round here


valuecfa
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Is everyone else just sitting on there hands like me, right now? Haven't added anything in past 2 days, other than a tiny bit of SD. May begin to start closing 10-15% of my hedges if we get another 4% drop. I hate it that nothing is screaming "buy me" right now, that i can find, other than a few positions i already own enough of.

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No, we finally started buying a few things today...more signficant nibbling rather than anything else, but some things are priced a bit more reasonable.  Overall, the markets are still overpriced relative to risk, and it is possible that we could see more downside.  

 

When investors start to get fearful, it takes a while for the unsophisticated to join the herd.  Usually the so-called "sophisticated" are the first ones to lead the pack...they don't know what they are doing, and are prone to making decisions rapidly because they are managing alot of other people's money.  They are panicking!  But the unsophisticated haven't yet.  But I can hear them starting to worry...and if they do, then you've got trouble.  While other people will have trouble, we won't because we're damn liquid.  ;D  Cheers!

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Looking at the metrics that I use for the broad market, the S&P today looks to me like it's still overvalued by somewhere between 10-35%.  I'd be a great deal more comfortable if it drops to the 800-900 range.

 

That being said, there are a few issues that may be attractive.  I have recently dipped my toe into MFC, and it has since declined slightly.  I think that I'll be very happy with MFC in five years.

 

If the S&P returns to the 600-700 range, I'll be leveraging the hell out of my portfolio.

 

SJ

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My cash is being moved around to various accounts so my hands are tied actually. SD talked about those sub $3 holdings not being margin-able and that's the situation I am in. I see tons of screaming buys but think this will go on for a few more days (likely wishful thinking).

 

SSW trading at 40% Distributable CF 2013, ESV 25% CF Yield, SD, PDS, L, CNA, ..... The list goes on. I really dont see the rationale behind the sale off, its seems almost manufactured by fear and high prices. Germany banning naked shorts seems like a smart move, and doesn't explain 600 points. Very interesting to watch. Thanks Parsad, you really convinced me to raise cash just wise I had a bit more.

 

 

----

 

SJ how do you get comfortable with additional leverage. I am looking at Leaps and Dec Options to conserve cash.

 

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Currently I am going over my list of favourite companies and re-reading quarterly and analyst reports so I am ready should markets continue lower. Many of the companies I like are US based; I am Canadian. One thing I am noticing is in troubled times (like now, and over the past year) is the CAN$ falls (versus US$) about as much as the US stocks I like = in CAN$ terms I am in the same place as before the fireworks started. And then when markets improve the opposite happens... my US$ purchases increase nicely but the gain is offset by the CAN$ appreciating versus the US$.

 

One solution is to focus more on Canadian stocks. A second is to try and find a hedge for my US purchases.... something I have been resistant to do up til now. My view is I do not want to start speculating on currency movements. But I am beginning to wonder if doing nothing (not hedging in some way) is not actually speculating in the end...???

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P&C insurers overall are quite cheap actually, and fortunately some of the better ones too! I'm quite confident that, in a decade or two, when we'll take a look back at the present time, we'll that it was a pretty good time to invest in them.

 

But, you know, the rear view mirror is always clearer...

 

I'll let you guess wich ones I'm very happy to own and would like to add shares  ;)

 

Lastly, I've been quite active recently, so I took a look at new "candidates" and didn't find any that are more interesting than the ones that I actually own. If you don't find anything more interesting, there is nothing more enjoyable to just add to what you're already own. .

 

All men's miseries derive from not being able to sit in a quiet room alone.

Blaise Pascal

 

Cheers!

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I'm buying. 

 

As Seth Klarman has pointed out, you have to take advantage of Mr. Market and average down in times of distress.  That's why cash is so important to have on hand, especially when the market is priced for perfection.

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SJ how do you get comfortable with additional leverage. I am looking at Leaps and Dec Options to conserve cash.

 

 

 

I'm pretty low-tech...I will simply use margin to leverage my account should the S&P decline adequately.  Right now I'm down to about 5% cash, but I'd be comfortable going to -25% or -30% cash if valuations justify it.  History shows us that the market can decline a great deal and then trade sideways for quite some time, but in general, margining works well if valuations are attractive (and if you don't go too crazy and risk a margin call).

 

I really hope that we will once again get opportunities like what we had last March.

 

SJ

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When this topic comes up here then it must be capitulation time.  It's funny to see companies across the US sitting on mountains of cash they didn't have 1.5 years ago. 

 

Is see a certain insurance company just increased by 25% in size today, officially.

 

Yesterday Jeff Immelt was jawboning that GEs second quarter results were going to be a lot better than expected and they were sitting on loads of cash and looking for investments and talking share buybacks.  Google, Apple, MSFT, Cisco, Dell, Intc, and others could collectively dividend out a few hundred billion in short order.

 

This is one of those priceless buying opportunities - an official correction.  31% down from S&P all time highs. 

 

Small amounts of RUS, MFC, SLF, SSW, CFX.un, GE, PWF

 

 

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When this topic comes up here then it must be capitulation time.

 

I think it is hardly capitulation when people are still looking for ideas of what to buy on a pull back, as always.

 

Capitulation, is when you start seeing people say... "I'm out", "Wow", "What do i do?", "We are going into a Depression",  "mother*^&*##!", or Paulson getting down on one knee & begging Pelosi to give him a trillion dollars, or Larry Kudlow turning bearish, or the government guaranteeing every asset on the face of the earth.

 

This is just a pullback.

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valuecfa, Wrong wording on my part. 

 

Anyway the greater point of my post was that its not a bad time to buy your favs because the goods news is being smothered by stale bad news.  And the market is down 31% from its peak which any other time would define a full scale bear market.

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valuecfa, Wrong wording on my part.  

 

Anyway the greater point of my post was that its not a bad time to buy your favs because the goods news is being smothered by stale bad news.  And the market is down 31% from its peak which any other time would define a full scale bear market.

 

Probably right. I am still having trouble finding anything more than reasonable buys, except for a few positions. SVU is beginning to look interesting to me again, though i am not fully done researching it, and it has some hairy leverage. In my opinion the US market is only about 12-15% overvalued now. Hopefully it will become greatly undervalued sometime in the near future again, as i am pretty much market neutral. Every 5% market rise or fall, as of late, has been barley moving my portfolio 1% overall in the same direction as the market. I'm really hoping to start lighting up on these hedges in the near future. Though still making a bit of money, it wasn't fun to be so heavily hedged on the way up these past few months.

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I think it is hardly capitulation when people are still looking for ideas of what to buy on a pull back, as always.

 

You may not see capitulation this time, or at least anything like we saw between November 2008 and February 2009.  Corporate balance sheets are pretty damn good looking in most areas.  Any selling we are seeing is fear about national balance sheets.  That is a long-term problem that won't correct overnight...no one big enough to bail this out! 

 

I see more see-sawing than capitulation.  You are going to have to be opportunistic...buy cheap or at least cheaper, and then sell as things get more expensive.  If you are planning on buying and holding for several years, you better pick the right companies.  I don't know about a lost decade, but I can't see markets being very buoyant over the next few years either.  This whole period will be the era of Ben Graham, not the buy a great business at a fair price era.  Cheers! 

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You may not see capitulation this time

 

No. One can only hope. :D  A horizontal market for a good period of time could correct an overvaluation just as easily as an immediate larger retracement. Or, the market could just as easily become even more overvalued, and who knows how far the fed is willing to go to prevent another larger downturn. There is really no way to tell. But i am hoping to see a lot of these :o  :o  :o in the near future. In the meantime i'm still looking for individual opportunities regardless of market valuation.

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Sanj,

 

FFH should shine in this type of investing environment. So, I think you should do okay buying and holding FFH but no doubt the volitility will present opportunities. The one point I am going to disagree with you on is the whole capitulation idea. Yes corporations may be in good shape but many investors will still sell. I don't think the bubble has been fully burst yet, as we never got to the levels seen in 73/74 or in 82 ....

 

One thing it will be is interesting!!

 

Cheers

Zorro

 

I think it is hardly capitulation when people are still looking for ideas of what to buy on a pull back, as always.

 

You may not see capitulation this time, or at least anything like we saw between November 2008 and February 2009.  Corporate balance sheets are pretty damn good looking in most areas.  Any selling we are seeing is fear about national balance sheets.  That is a long-term problem that won't correct overnight...no one big enough to bail this out! 

 

I see more see-sawing than capitulation.  You are going to have to be opportunistic...buy cheap or at least cheaper, and then sell as things get more expensive.  If you are planning on buying and holding for several years, you better pick the right companies.  I don't know about a lost decade, but I can't see markets being very buoyant over the next few years either.  This whole period will be the era of Ben Graham, not the buy a great business at a fair price era.  Cheers!   

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In the last four years, this is the largest monthly correction for the S&P500 since October 2008 (down 16.8%) and February 2009 (down 10.7%)...so far, down about 9.6% for the month.  A little more and the guys on CNBC will really be shouting on Squawkbox!  Cheers! 

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Is everyone else just sitting on there hands like me, right now? Haven't added anything in past 2 days, other than a tiny bit of SD. May begin to start closing 10-15% of my hedges if we get another 4% drop. I hate it that nothing is screaming "buy me" right now, that i can find, other than a few positions i already own enough of.

 

I had pretty recently de-leveraged completely and today I took a nibble at a small issue.  I'm not comfortable using leverage at this point, but if it goes down enough I hope I will be.

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people are somewhat freaked out.

I used to own SO (on Toronto), check out today's chart!

It took 10minutes for one guy to jump in and vote with his wallet that the 9:30 market sell wasn't due to the company failing to exist tomorrow!

Not that small of a company.

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The past few weeks I've watched my YTD gains go from +27% to +9.8% for the year.

 

If only I'd locked in that 27% I would be a good deal better off.  However if I were bearish enough to do that I doubt I would have racked up the 27% gain in the first place.  So it's difficult to say if I cost myself anything.

 

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The past few weeks I've watched my YTD gains go from +27% to +9.8% for the year.

 

If only I'd locked in that 27% I would be a good deal better off.  However if I were bearish enough to do that I doubt I would have racked up the 27% gain in the first place.  So it's difficult to say if I cost myself anything.

 

 

Therein lies the problem.  The very behaviour that gives me outsize returns can also subject me to high volatility.  I think the key is to separate cash piles.  One pile in conservative holdings that will feed you when things are bad, and one pile that is more subject to volatility.  To that end I have been buying up dividend payers at discounted prices.  My RRSPs barely budged in the last 4 weeks - actually up a little on FFH.  My margin accounts have been all over the map.  

 

The next trick is to be able to actually sell things at a loss, and buy something else that is cheaper, and better.  

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