Investors are suffering from Howie Mandel's "Deal or no Deal syndrome:" You never know what's next, the banker is always against you and models (Wall Street puppets) can't give any profitable tips. Read this article to find out when to hold'em and when to fold'em. Aside from the one million dollar price, investing in the markets has been somewhat like contending on Howie Mandel’s Deal or no Deal. Wall Street analysts and economist have given investors about as much profitable guidance about where the market’s going as Howie’s 26 models about where the million is hidden – none!
Unlike Howie’s guests, investors “play” with their own money, they have “skin in the game.” This market meltdown translates into more than just a few less cases (and ladies) to choose from. This is serious stuff, stuff that affects everyday life.
Unlike Howie’s contestants, each and every one of us knows how much our case of money (portfolio) is worth. The question is, should we cash in and protect what we have or “gamble” for higher values?
Today’s Wall Street “models”
Economist and Wall Street were just as baffled by the market meltdown as Jim Cramer and the likes who insist that nobody could’ve foreseen this turn of events.
At this point though, there is nothing we can do to undo the S&P’s (NYSEArca: SPY) and Russell 1000’s (NYSEArca: IWB) 50%+ top-to bottom drop. Rather than raising sunken ships to calm the storm, let’s fortify our ships. In other words, what did we learn that will protect our life savings in the future?
First and foremost, we need to remember not to allow our judgment to be clouded by complacency. As this rally continues, investors will grow more confident about a continuation of this rally. This entitlement of profits to come was the exactly sentiment that led to the post October ’07 meltdown. Be aware of a repeat!
Dr. Doom turns soft
In September 2006, Mr. Roubini, one of the few and probably the most popular economist who early on saw the writing on the wall, said that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.
- There are 737 ETFs that are offered to investors and range from everything as going short on gold to taking long positions on Malaysia
- Over the past three years, ETF assets have skyrocketed 77%, while non ETF mutual fund assets climbed a mere 9%
- ETFs account for 40% of all index fund market share, and this number is expected to increase in the near future
- Most mutual fund providers are offering a vast array of ETF products. Vanguard offers 39 different ETFs and holds $45 billion in ETF assets and Fidelity just recently broke into the ETF world
- 2008 was the year the actively managed ETF was launched, building an empire of 13 actively managed ETFs and $240 million in assets