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when should a conservitive investor get back in this market?
Answers
2082 points
alanj answered 10 months ago …
When the 39 week moving average starts trending up, then buy on the dip.
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237 points
josephconlin answered 10 months ago …
By conservative investor, I assume you mean that you want to put money into the market when it is trending up for longer term holds. As with the answer about the 39 week moving average, you'll find that the best way to know what the long term trend is doing is by using some technical analysis.
Chris Rowe of www.thetycoonreport.com has mentioned many times that one way to see what the long term trend of the market is doing is to look at the weekly chart of the SPX with the 20 week and 40 week exponential moving averages on it. When the 20 week EMA crosses from above to below the 40 week EMA, the market is in a downtrend, as seen in December 2007. When the 20 week EMA crosses above the 40 week EMA, the long term trend will be up again. In order to see this clearly, you'll probably want to be looking at 2 years or more worth of data on the chart. As of 8 January 2009, the 20 week EMA is still below the 40 week EMA, so if you are really conservative, that is an indication to stay on the sidelines still.
This method will not have you buying at the very bottom nor selling at the very top (I don't know of one that does do that), but by the time you see the crossover, you will know pretty much for sure that the long term trend has actually changed (not possibly changed) from one direction to the other.
216 points
jrj90620 answered 10 months ago …
It depends on what you're invested in now.If you're 100% invested in U.S. Dollars and receiving little interest return then you are guaranteed a loss due to the depreciation of the Dollar.The real possibility of the Dollar going into freefall makes it important that you hold a minor amount of your total assets in Dollars or any asset backed by Dollars.I suggest you average into stocks beginning today.
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731 points
thinker70 answered 10 months ago …
Depends on your definition of conserative!
If you missed the meltdown then you should be screening for companies with a history of steady dividends, minimal debt, a strong position in their sector, minimal competition, 40-50% decline in stock price etc. and depending on your capital reserve, use a put startegy to buy stocks in companies you would like to own at the right price.
There are two approaches to this, "stink bids" well below current prices, in other words st a price at which you would be happy to own the company hoping that volatility will get you a fill over a few weeks on a limit order. The more aggressive and potentially profitable way to do this is to SELL PUTS on a stock you want to purchase at the strike price you choose. Somebody who owns the stock will pay you the premium as protection, (an assured buyer on a price decline) as insurance. If the stock never reaches your strike price you get to keep the premium, if it does then you are OBLIGATD to buy the stock at the strike price you chose. The only drawback to this is your broker will require you to keep funds on deposit to cover the cost, (or at least half if you have a margin account) until the option expiry date.
There is money to be made in the market whether it is moving up, down or sideways using puts and calls and it does not have to be higher risk than buying the stocks themselves if you have professional guidance.
