Tuesday Prognosis: not good

[TJ_98370]

There is something to said about the buy and hold strategy also. Real life example – in April 2004 a family member bought an equal value of shares of AT&T (T), JP Morgan (JPM), SBC Communications (SBC), and Altria (MO). Their inspiration for these choices was that these stock were on the so-called "Dogs of the Dow" list for that year. Not what I would consider a thoroughly researched purchase. Since then AT&T bought out SBC, and Kraft (KFT) was spun off from Altria. As of 22 Jan 08, this collection of stock (T, JPM, MO, KFT) is up 33.5% overall, despite taking a 9.9% loss from 31 Dec 07 price levels. It has improved slightly since 22 Jan 08.

I am aware that people like Mr. Market Ticker, whom I respect, are saying to get out of equities while the getting is good. Right now I am conflicted as to whether I should advise to ride this thing out or to get out and avoid this crazy volatility.

[biliruben]

It's impossible to predict how far down the market is going to go. I am sticking with the companies who I think have a decent chance of a bright, long-term future.

I'm also keeping cash on hand, and will start looking for some more good beaten-down companies when the S&P 500 tips down into the mid-12s. I figure 25% off from the peak is a reasonable guess for a bottom, which I think is 1182. I won't feel bad buying in the 12s even if it declines another 10-15% short-term, I don't think.

[casey1167]

My feeling is it will be a lot easier to make good purchase decisions this summer, after the second quarter numbers are out for all the companies. At that point a person can look at the real P/E ratios and make some educated decisions about long holding....

Until then, sell, sell, sell.....

[sid]

[perfectfire]