David Schwartz gives his view on the future of the stockmarkets

hamster · 28-01-2003 8:26pm #1

David Schwartz gives his rather pessimistic view on the future of the stockmarkets. I disagree, I reckon the Buy'n'Hold stategy will win over the long:

http://www.thisismoney.com/20021103/si55067.html

One segment suggests:

One of the most important lessons is that buying and holding is no longer a sound strategy. It worked well in the final two decades of the 20th Century, but the world is different today.

What do ye think? I say Nay

Otherwise it's back to bonds for Pensions or really high flying risks in/out of shares... and we all know how well most Fund Managers do compared to the average of the major indices!

Tazz T · 30-01-2003 11:40am

That's written in October. They're talking about the start of a bear market at the end of the article. That certainly didn't happen. Like everyone else, he doesn't really have a clue what's going to happen. No one will until the war is over. Although I'd agree that the 'in and out' approach is the only sensible one. Cyclicals are the way to go now. That's why daily on volume on stocks such as MNO2 and Vodafone is so high.

Personally, and I'm a bit of a chartist. I think that the market will bottom out between 3000 and 3200, there will be more big drops over the next two/three week with a few small rallies - some investors will try to secondguess the bottom of the market. But, as soon as the US look like winning the war, confidence will return. History dictates that we could see as much as as 30% leap over a period of about 3 months.

Long term I think shares will be very slow growing over the next 10 years.

So, I'm basing my investing strategy on the following scenario: 3000 -3200 mid Feb. 3600 - 3800 by April and a end of year target of 4000. But, in reality, anything could happen.

We could all be dead by the end of the year., in which case, it doesn't really matter.:)

I'm interested in hearing other opinions. See who's closest.

hamster · 30-01-2003 8:03pm

You reckon on the "in 'n out" strategy. No long term buy and hold using the dividend returns as form as interest paying "deposit"?

Considering how low interest rates are it not a bad deal. Would you consider Buy and Hold might be right for the long term (eg, Surely in 2004, AIB will be worth more than 12
Euro per share... if at least by inflation alone)? Once you have a branch of shares to diversify.

Tazz T · 31-01-2003 12:55pm

High cost shares like AIB and Bank of Ireland will be the first to suffer in any crash. If you're looking to go in long term, wait until you think you're getting value. I,m fairly confident these types of shares are going to get fairly stuffed in the short term. I'd wait.

hamster · 31-01-2003 7:58pm

Tazz T,

Why you think AIB or BOI as an example are considered "High cost shares"? eg AIB is trading at normal PE of 11. It was trading at a high of 15 euro last July and now at 12.75 euro. It could go lower or higher depending on it's own merit and that of it's peers in the UK, US and Europe. The market understandable is gripped by geopolitic tensions.

Tazz T · 05-02-2003 2:04pm

Exactly! With AIB, at 15 euro you would have lost 2.25 per share. With the same amount of shares in say, Psion, then trading around 70p, you would have been able to diversify more with the money you saved and you would have lost just 20p a share.

I don't want to blow my trumpet but I see one of the large fallsI talked about early in the thread occurred at the beginning of this week and was followed by a small rally. We're already under 3600 now. Another war announcement will take it even lower. I've sold out of sexeral stocks and will pick them back up after falls of around 4%.

David Schwartz gives his view on the future of the stockmarkets

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