Does Consenus Makes Sense?

Do I think we’ll see 4,000? Nope. Do I think we’ll see the equivalent of 4,000 corrected for long-term market growth? I don’t know, but it seems likely that we will eventually see the equivalent of such a low point. John TwinDeltaTandem

Wow…so clear when someone like John lays it out. Kaboom the path is clear. Investing at low points is an easy path to market out-performance. Using margin at low points is the accelerant.

This thread on the BMW Method Board at TMF shows a remarkable dire consensus. I feel compelled to remark that on the few occasions predictions come true they are usually short lived.

I am slightly in cash. Around 10%. The FI portfolio is 79% cash and buying. If you’re finding reasons not to buy in the current market and though bought confidently in the last two years then you are taking a difficult path to investment success.

If we wash dramatically lower from here then I’ll start to use margin. That is the time to use margin safely. Unfortunately most people us margin in bull markets. To some extent they are right, you want to be in margin and looking to pare back that margin during the early phases of a bull market. You just don’t want to get caught on margin any were in sight of a market peak.

If you are in cash now, well down! You’ve done better than me on this ride down, my cash got to around 20%. I did choose cash instead of an index fund when starting the portfolio as that was clearly the best position to be in. All it takes is a few right calls down the years while keeping the mis-steps as small as possible.

Beware the negative consensus.

Buy on Fear.

Tune out the noise, what do you know is right.

I wonder what the rest of the thread offers. I like most of the suggestions thus far:

1. Be a cheap and recoverable lesson that he will never forget. qazulight
2. Most of what Dan said was probably true, but hey smell the roses the entire world stinks of power and greed. The pigs are at the troths.
3. “When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished by how much he’d learned in seven years.” Mark Twain lptj suggestions on the mechanics of how to deal with SS18 was good
4. I like Wendy’s suggestion
   Tell him to put half into an online savings account at Countrywide, which yields 3.35%.
   Tell him to put the other half into BAC, which currently yields 11.8%.

Interesting re-reading the first part the consensus is not so dire after all. Only a couple gloomy posts. Most seem balanced and wise.

The FI Fund is 18.68% up on the ASX200.

Cheers
Dean