I’m also putting more buy orders in with this recent downturn.

J: Ben Graham talked about the irresponsibility of Wall Street that led to the Great Crash and I always said he could have been writing those lines in 2002. I guess he could have written it in 2008 as well!

cg: I definitely see more potential downside than upside on a broad level. We are not headed for rapid growth in the next year or two — give or take a few months or years. At any given time, individual companies and their stocks can grow regardless of the direction of the overall markets; but, I wouldn’t be in any broad-based mutual funds or index funds right now.

If you have to try and time the markets — like in a 401k with no outside brokerage or separate account option and just a bunch of crappy mutual funds — I’d wait for more certainty and predictability (like in all investing). I can’t tell you that this certainty and predictability will come at Dow 10,000 or Dow 5,000 — you just have to wait and see how it plays out, and sock away as much cash as possible.

That said, I put orders in for an individual stock just this morning.

Amit D.: For most people, it’s not a matter of timing your investment in bonds versus index funds, it’s a matter of an overall strategy of bonds instead of index funds (or a combination of the two). My point is: Most people should be in bonds, in whole or in part, regardless of how attractively priced the markets or a particular stock might be.

Think about this: A nervous 45-year-old investor wants growth and safety, and can’t stomach the markets. Where should (s)he invest? No doubt, this investor has lots of options:

• stocks
• bonds
• real estate
• mutual funds
• options
• commodities
• futures
• precious metals
• currencies
• life insurance policies
• annuities
• private businesses

The list goes on and on. Most people immediately think stocks and bonds for growth and safety. Why? Because that is what Wall Street has hammered down peoples’ throats. Stocks and bonds, and preferably through mutual funds.

For decades before Wall Street really gained popularity with Jane and Joe American, bonds were the investment of choice for most people. Stocks were risky, misunderstood, or reserved for a very small portion of Jane and Joe American’s portfolio. Some things never change.

It’s time for Jane and Joe American to go back to the intelligent investing of the 1950s, and realize that a portfolio entirely or mostly in bonds is not bad or too scared considering that most people do not have the stomach or strategy for investing in stocks.

One last point on this: If someone told me a very compelling argument why the price of nickel will triple in the next year, it wouldn’t change the fact that my tolerance and expertise is not in nickel. Thus, I would not invest in nickel. Instead, I’d focus on my core competency and look for underpriced businesses, no matter how attractive the nickel potential was. That’s the kind of “intelligent investing” I think people need to make with their own money and strategies.

If stocks dumbfound Joe and Jane American the way that nickel escapes me, they shouldn’t be in stocks and I shouldn’t be in nickel.

Bill: I think investors can find opportunities in their home markets no matter where they are, unless their country is truly going to hell (eg. Zimbabwe — and we’re not there yet). The American economy needs to do some unwinding, and that can be a long, painful process. The Dow won’t be at 15,000 next October, and if it is — run! Still, opportunities will exist in American companies.

I’m all about investment freedom. (That’s why I hate what Wall Street has done to most 401k plans — setting restrictions on mutual funds, no separate accounts for a lot of companies, etc.) I don’t think you should ever narrow your scope down to one country (US or not). If you are comfortable looking at foreign companies, you should.

Other than the restrictions I impose on my own investing — restrictions that were set not by me, but by my sphere of confidence and competence — I would never say, “Don’t look at XYZ” or “Stay away from China” just because.

From a macro perspective, things are ugly the world over and other countries may offer more growth (and perhaps safety) on a broad index level — a serious consideration for mutual fund investors. Still, I wouldn’t worry about that if focusing on individual companies.

The main question I have is: is it wise to buy American for the long term? A lot of the minimal growth of the S&P500 over the last ten years can be attributed to Sarbanes-Oxley, and with the increasing amount of make-it-up-as-we-go legislation, can’t we expect our economy to suffer more? Already our country is saddled with a lot of debt, and we can probably expect American companies to suffer for it via taxes. We also have the devaluation of the dollar to consider, which has been losing value for several decades now as opposed to other currencies.

With the bailout, the Iraq War, the future unfunded liabilities of Social Security, and the national debt, should we follow the advice of someone like Peter Schiff and move our investments overseas for the next few decades? Not just China, but Australia, New Zealand, India, and the like?

Im in for the long-term on MHP! I got in at 35$ just to see it drop days later to 25$.

It doesn’t hurt me one bit, I’m only interested in finding out if the business can deal and survive in the long-term given its duopolist nature of the debt rating industry.

FYI: Moody’s is more efficient(margins as a whole because it only serves financial segment) and has much lower Capex which makes for good investment. Only difference with MHP is that it has a 5-8% margin that contributes to diversifying its cashflows through its Dominant position as an educational platform(books/online courses) for MANY states and provincs(in Canada).

perhaps joe would LIKE to interpret this for our entertainment purposes of course!

(never take Joe’s advice to the letter. You should make OWN decisions and take RESPONSIBILITY is key here)

DO you mean, it is better to be invested in BONDS, as a desirable % of portfolio, EVEN IF

you had the chance to invest on an INDEX FUND(whole stock market) at today’s prices?

It would seem like a good strategy as long as you believed the economy would recover. For example:

if you can buy the Economy’s Output at 2006-2007 levels, you would probably ENJOY a 30% gain in advance of FUTURE economic developments.

I think this CONTRADICTS your strategy somewhat but is worth to be scrutinized as I may be missing out on the bigger picture.

Say the economy recovers and grows after 5 years of low economic output; in other words, the Index fund could recapture 30% in 5 years = 6% per year.

On top of it all, you haven’t factored in “the INCREASE In the value of the future cash the businesses generate”; thus, you will likely NOT sell that index fund and you will get greater gains IN THE LONG-TERM.

I’ll post another premise for readers to share their opinions in a few days!(im busy trying to FIND the right professor to teach me Financial theories LOL)

..GREAT POST JOE, your DA MAN I’ll be trying hard to answer any questions that I can for you from our newest members.

I think that something people are missing is just how bad it is that there is an amount of money that will probably never circulate again. When sub prime mortgages were floating around, there wasn’t anybody without a pulse that couldn’t get a home loan. This, coupled with a lot of mortgages that are simply not being originated for the time being (personally, as a landlord, it is HARD for me to get money… and I won’t buy any house unless I get margins of at least 40%) means that revenue and profits will be significantly less than they were in the past.

With this doomsday/chicken little-esque quip, you are right that there are a ton of bargains out there… I am shocked to see so many companies trade at levels that more or less value their earnings and growth at next to nothing. Yesterday, I bought shares in DRAM-which were trading for about 70% of their cash!