"Not everyone sells into a declining Dow Jones Average, but those who do will have a hard time getting 3% interest in what looks like 5% (or more)inflation. Now may be the time to buy the Dow at 8,800 down from about 14,000 little over a year ago...EDM "
IMO now is NOT the time to jump back into to the market (if I recall there was some joker on here last summer saying it was a great time to buy,-hope he found a window high enough!).Gold,cash and some select commodities (Cocoa for instance) and selling into any ralley in the DOW will work a lot better then the old dead buy and hold. Dave K
It will be interesting what the new year brings. The markets trend upward and adjust downward in seemingly unpredictable cycles. The idea is to be on the sidelines with cash to buy when the others are panic selling. The Dow was at a record 14,000 plus in the second half of 2007, and sold off to 7,774 at a "magic moment" on Oct 8th, closing at 8,451; then tanked again on Nov 13th (magic-moment low 7,948 closing at 8,835); and took a beating again with magic-moment lows of 7,967--7,465--7,392 on Nov 19-20-21, closing at a low of 7,552 on Nov 20th. It has bounced back to close Friday Jan 2nd at 9,034.
A person with some intestinal fortitude and ready cash and possibly a dash of market savvy could have bought the Dow under 8,000 on the second low between Nov 13 and Nov 21. This is not rocket science to see something that smart people once bought and sold for 14,000 within the past 15 months going begging in the mid- to high-7,000's (be it guns or the Dow index). But you gotta be there, cash in hand, when all hell breaks loose. The Dow closed at 9,034 on Friday; $10,000 invested on November 20 at the 7,552.29 close would be $11,962.50 at Friday's close, a 19.63% gain in 43 days or a 166% annualized return on your investment, before dividends paid.
Better yet, a selected Dow portfolio (excluding GM and the bailed-out financials) would pay a 5.5% dividend yield if bought at the 8,000 level (and about 4.5% at the present 9,000). Are you getting 4.5% on your savings account? gov bonds? or MMCD's? What current return does gold pay? Or fancy shotguns?
Fine double barrel shotguns that are well-bought can be a store of wealth and may pay a capital gain when sold, but the real "profit" is in simply owning and using them. Don't confuse a Parker or Smith with a Vanguard S&P 500 Index Fund. And unless you are a farmer (like me) whose life situation is hopelessly intertwined with commodities (corn, wheat, soybean futures), prudent persons would stay away from speculating on commodities they do not actually expect one day to own (like "cocoa," which is not a winter-time kid's drink).
Anyway, assuming you bought the Dow under 8,000, what to do now? John Bogle says, "buy and hold." Jim Cramer says, "Buy and do homework." My Buy & Hold Homework likes: AA, ADM, BA, CAT, DE, GE, INTL, IP, KO, MSFT, and T (and maybe DD), and PARKER BROTHERS is always a strong "Buy," especially when in high original condition. And a final caveat: I have long positions in the previously mentioned "investibles." EDM
