Tim Price: Place your bets
Comment of the Day

July 24 2013

Commentary by David Fuller

Tim Price: Place your bets

My thanks to the author for his ever-interesting market letter, published by PFP Wealth Management. It is posted in the Subscriber's Area but here is a brief sample
There is a significant risk, in other words, that many investors will interpret rising (equity) markets as a signal that all is well, that the financial crisis is over, and as a result will overconfidently commit capital to markets when the risks to capital are demonstrably higher than they seemed when the financial world seemed to be coming to an end in early 2009. To put it another way, assuming no fundamental change in the prevailing economic circumstances, would you rather own stocks when they are cheap, or when they are expensive?

David Fuller's view This is a good paragraph.

Fullermoney's view is that the worst of the financial crisis is over, but we also felt that way last November, before the latest big rally had commenced. Veteran subscribers may recall the question repeated on a number of occasions in recent years, particularly in Audios. Basically, do two severe bear markets over a span of only eight years - 2000 and 2008 - make it more or less likely that a third will occur anytime soon?

Here are three samples: 24 Jan 2013 - 13th April 2010 - 3rd March 2010.

The best time to buy equities, I maintain, is after a market panic, when people are terrified but valuations are very low. However, psychologically it can be difficult to do so because the crowd, having sold, will be projecting the market lower.

In contrast, I am wary of buying when the market is expensive, as we see today, but I am also reluctant to sell too soon, while the monetary spigots are still wide open.

Back to top