Bear Market Analogy

Pretend for a minute that your mental fitness is proportional to your physical fitness. Also assume that a bear market is very much the same as some type of wacky amusement ride. Then what you are left with, my friends, are those who can handle it, and those who can't.

Not Much, Not Much

I haven't posted anything in over a week because I have lost interest at the moment in global equity markets. Go lower? Go ahead. Go higher? It's about time.

Since I am almost entirely long right now the only action I watch for is a unprecedented pop in one stock to sell into to buy another cheap one. That's about it right now.

Holiday

I'm sitting here reading some academic crap I probably already know waiting for the market to open and BLAM! I sign into my brokerage account to see US exchanges are closed for some holiday.

Sure Canadian markets are open but they're not going anywhere without Papa States. Until tomorrow Papa.

To The Lost Ones..

This one goes out to all my fallen comrades. When you have nothing left to lose, you have nothing to fear. You are free my friends.

I am a bottom caller

I am calling the bottom or damn well near it in BAC. It's fear that sparked the sell-off and the scent of fear drew short sellers to pile on. If I wasn't already broke I'd buy more. Out of spite.

But for now I'll just wait it out and learn a valuable lesson one way or the other.

So...

I'm getting my ass handed to me in the market. I'm long BAC, I'm long Canwest (CGS), I'm long steel and wood small caps. Yeah I'm losing money. No I'm not worried (enough to sell anyway :P).

I'm not surprised by any of the blood on the street, part of me was expecting it. Now I'm going to get some of my bum friends to give my some cash to invest. Market's gotta come up sometime, right?

Credentials

I always like to know get to know the author when I'm reading. You can't deny context.

I'm a 21 year old undergrad pure mathematics finance student at the University of Waterloo. I spend some of my time skipping first year accounting courses and some of it in a real analysis class with some real geniuses. I'm there because those are the challenging classes for me. I've done internships at two major Canadian banks, one for the Canadian statistics department, and one for a sub-prime mortgage brokerage in the summer of 2007. I'm currently studying for the first examination of the CFA designation. I'm also currently looking to do an internship with an investment manager that I respect.

Warp Speed

I've had this feeling lately that we (the market) are going to go lower sometime soon. Not a funny ha-ha lower either. History says when the economy gets around this bad equity prices go lower. So why haven't they yet? That question gives me another funny feeling.

Reading this article made me think about the time we live in. This isn't 1929 folks. Panic and fear affect us differently today than it did then. The initial reaction is the same of course, humans didn't emotionally evolve in 80 years. We are the same biological creature, but now in a different setting. Now we communicate with one another more freely than ever before. We disperse our fear and doubt by informing ourselves, telling others about our failures, and listening to others.

In the beginning of 2008 you were asking yourself, "Is it really possible we might be heading into a bear market?" Now you are asking yourself with the same uncertainty, "Is it really possible that we will see the beginning of the next bull market in 2009?"

The answer to the first question might be similar to the second.

Small Caps FTW

It is pretty clear now that small caps are a good bet for the month. All of the ones I'm in were in the green today which is comforting to see. The best time to buy them is probably mid-late december when the tax selling is at a peak and they are at inexplicably low prices. Last year could have been the best year for the bottom pickers due to the bear market, assuming 2009 doesn't end worse. Even if 2009 sees lower lows, there might not be as pronounced selling due to the fact people are used to losing money.

If you're down 50% and you lose another 50% that second loss doesn't hit you nearly as hard. This is my first bear market, and a nasty one at that, but it'll pass. This isn't Armageddon. This isn't going to be a decade long.

Short term: I could care less.

Long term: Up.

Kill

Personally, days like today are why I invest. We need more days like today. We need them soon. I'm selling some emerging markets ETFs that I bought at damn near the bottom a little while ago so that I can afford to purchase leading small cap steel stock. I think all the variables are lined up for that trade.

Bears need it.