I bought a bunch of BOFI

I had added little bits of BOFI on the way down starting at $90, but yesterday I added a bunch at $78.50.

This isn’t like companies that have fallen because of stupid decisions or bad results. This one is falling for no reason. There is no problem even alleged with their business. It’s a very solid company. It’s forward PE is now 17 according to Fletch who is ticker guide on the BOFI board. It’s already down 25% and it just seemed like time.

Saul

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This one is falling for no reason. …
It’s already down 25% and it just seemed like time.

BOFI is a great company, altho I don’t [yet] own it.
For anyone holding it who has a low cost basis, I can see adding now.
But as to starting a position now, that prospect worries me.

http://stockcharts.com/h-sc/ui?s=BOFI&p=D&yr=0&m…

http://stockcharts.com/h-sc/ui?s=BOFI&p=W&yr=3&m…

I don’t know what the market is going to do, but I’m not confident
about the continuation of a bull climate.
T-10 yields are falling, and yesterday the biotech sector, NASDAQ and Russel 2000 basically collapsed.
Anyone else have trepidation?

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You can get a 10% correction in a bull market anytime, for no particular reason. But a bull market doesn’t turn into a bear market without being provoked by a recession. And there is no sign of a recession at present, as I see it anyway. We’re not going to have a war with Russia over the Ukraine unless our government has lost its mind. Our economy is growing every quarter, interest rates are still well below normal. Relax. (JMHO)

Saul

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Appreciate your sentiment, Saul. I would like to relax.

You can get a 10% correction in a bull market anytime, for no particular reason. But a bull market doesn’t turn into a bear market without being provoked by a recession. And there is no sign of a recession at present, as I see it anyway. We’re not going to have a war with Russia over the Ukraine unless our government has lost its mind. Our economy is growing every quarter, interest rates are still well below normal. Relax. (JMHO)

Saul; Well said in a few sentences that would take a group of analysts in CNBC to debate for hours.
Regards.
-M

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Hi iBorg,

I’m with Saul on this one and have been buying all week, though if I had just waited until today, I could have slept longer on Monday through Wednesday since selected shares are still falling.

Except for a full sized position in BRK B which I bought all at once, I am like a mouse at the cheese, just nibbling constantly until prices start to look better. The contrary thing is they never start to look better without fear being attached and like Saul said, what exactly is there to fear? That interest rates are falling, to me, supports a strong market going forward. Companies are borrowing money they don’t need, debt in the private sector is under control and last earnings season was good.

So I’m sanguine and would be very surprised if this falling market, a coalescent market, didn’t turn around soon and with a minor vengeance.
Mykie
PS BIG CAVEAT; don’t take anything I say as expert. My opinion is no better than yours but I am putting money where my mouth is, for whatever that is worth.

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Anyone else have trepidation?

iborg,

I very much agree with Saul. We are just now coming off of the worse recession in 80 years. The economy moves in business cycles and the US economy is just now starting to kick into high gear. This last recession was so deep and so much investment was deferred. The country has delayed investing in new housing supply which will be needed when all those people who combined households to save money go get their own place. We are still in a ultralow interest rate environment. Construction jobs will pick up in a huge way; in fact, I think there will be so many jobs that there will be competition for workers that will drive wages up somewhat. Also, with all these new jobs, spending will increase and companies will, in turn, need to hire to produce more stuff for all the people with jobs to buy. I believe the recovery will be global and we will see several years of economic boom.

I believe that this will happen to the economy. What about stocks? Stocks have increase for the past 5 years. However, I think that we’re just now back to where we should have been had the financial and housing meltdown not occurred. Some stocks will not benefit from a strong economic recovery. However, if you pick carefully, you should do very well over the next few years as the business cycle completes this coming boom period.

I believe that I am well positioned to benefit. My holdings in order of position size are:

CASH 10%
INVN
ARNA
AMBA
TTS
BWLD
LKREF
AFOP
MELI
UBNT
BLX
BOFI
PSIX
SYNA
PRAA
CELG
ELLI
ISRG
CBI
CMG
GEOS
AAPL
NVS
MPEL
UA
CTRP
GTLS
INFN
ITMN
BIP
YONG
AHS

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Hi iBorg,

Russel 2000 basically collapsed.

You’ve gotten a lot of good responses already. The Russell 2000 is down again today, but just to put things in perspective: it’s within a percentage point of where it started the year, and is above where it was in early February. The media want to call small moves a collapse because it grabs eyeballs. Always remember that’s their business: not providing you with reasoned news or analysis, but selling your eyeballs to advertisers. You’re the product, not the customer.

On average, the market “corrects” – drops 10%-15% – about once a year. So it’s a frequent occurrence and nothing to be concerned about. All of the average returns you hear about include those corrections, as well as the very worst bear markets. They must, of course, since they’re averages. Chances are we’ll see a correction sometime this year, but nobody knows when. Chances were we’d see one last year too, but we didn’t, and if you were sitting on the sidelines waiting then you missed a 30%+ bull run. That’s the problem with timing the market.

If you genuinely feel very uncomfortable being significantly invested in this market, then you might consider using hedges. They will lose money if the market keeps going up, but if the peace of mind allows you to be more fully invested, then you still come out ahead since you’ll have more money at work gaining with the up market than you would otherwise. If the market sours, your hedge will soften the blow a bit and perhaps provide a source of cash to deploy at lower prices. Hedges will be a drag on your returns most of the time, though, because the market goes up most of the time.

Nearly all of the studies show that being more fully invested, staying consistent with your investing strategy, and avoiding trying to time the market lead to better long-term returns. It’s also a much simpler way to invest.

Neil

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Neil, Mykie and Chris, I appreciate what you say - thank you for your comments.

I am relatively new to investing, not quite two years into it, and
have been trying to learn/adopt/employ my strategy. Like Saul, I depend on my investments for income. That alone, gives me pause. Then there is much I do not understand about the markets and the economy, such that it generally gives me pause. Especially now, with this month’s rather wacky behavior, and the possibility of the infamous taper. [Remember, I said there’s is much I do not understand.] Truly,
I am hesitant to say much of anything at all, because of my ignorance.
But one thing is certain, I do want to learn, and I do appreciate all
help along the way. These boards, full of experience and insight, are
invaluable to me.

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These boards, full of experience and insight, are
invaluable to me.

Just wanted to add, especially this board, because of …well,
Saul, and the fact of his honest, open candor, coupled with the
experience and thorough research that he does. Simply invaluable
to me.

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Thanks iborg for your kind words.

Saul

Wow! I just got back home and see that BOFI is up ten dollars and seventy-eight cents, as I write. Makes me feel good about my large purchase. Wish all my decisions would be so soon validated.

Saul

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Just wanted to add, especially this board, because of …well,
Saul, and the fact of his honest, open candor, coupled with the
experience and thorough research that he does. Simply invaluable
to me.

Hi iBorg,

Just so you know: I, me personally, am just a smidgen of salt or pepper for the meal, Saul is the meal. Listen to me like you would listen to a very smart 10 year old who can’t add that well.
Mykie
But I have as much candor and honesty as Saul and that’s why I’m here too.

Wow! I just got back home and see that BOFI is up $10.78 as I write. Makes me feel good about my large purchase. Wish all my decisions would be so quickly validated.

Saul

Saul,

My complaint with Nostradamus is he never told us what was going to happen ahead of time. You do.

Jeb

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Wow! I just got back home and see that BOFI is up ten dollars and seventy-eight cents, as I write. Makes me feel good about my large purchase. Wish all my decisions would be so soon validated.

Saul

Wow! is right. I have spent the entire week getting up early to catch the market drift from the opening bell and buy or sell as the market dictates. SO buying all week and seeing all my earlier buys under water, though only pennies. Today I got up and saw ALL GREEN and I know I must have done something right even though daily prices don’t mean much…still, very nice to see, si?
Mykie
PS Saul, the day earlier in the week when you bought and posted several stocks that you had purchased at great, pullback prices…I couldn’t duplicate what you did and I envied your patience and perfect execution. This suggested to me that you have a well organized system. Mine can only be described as Hodgepodge but I’m working HARD on improving it.

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the day earlier in the week when you bought and posted several stocks that you had purchased at great, pullback prices…I couldn’t duplicate what you did and I envied your patience and perfect execution. This suggested to me that you have a well organized system.

Mykie,

No organized system at all. I was watching what was going on and I said to myself “This is ridiculous! All these great companies, MF recommendations, down 20%-25% in a week or two weeks on no bad news. These are the same companies they were two weeks ago. For the most part they are at reasonable PE’s (except SCTY and PSIX). I’m going to find something to sell that hasn’t gone down to raise money to buy these at 25% off.”

That’s the way it happened. Just intuition, if you will. And we don’t know if it will all turn out okay yet. The jury is still out.

Saul

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Hi iborg,

I am relatively new to investing, not quite two years into it

I would highly recommend reading the book “Markets Never Forget (But People Do)” by Ken Fisher. It’s an easy, quick read that offers excellent historical analysis of the market, and really puts everything into context. Equally interesting, in my opinion, is that it also goes over the media and pundit reactions of those time periods, and they’ve always been just as ridiculous and wrong as they are today. I think that book will help put things into perspective for you, and hopefully alleviate some of the fear that you seem to be experiencing.

Neil

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I would highly recommend reading the book “Markets Never Forget (But People Do)” by Ken Fisher.

I agree. A very helpful read.

Saul

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No organized system at all. I was watching what was going on and I said to myself “This is ridiculous! All these great companies, MF recommendations, down 20%-25% in a week or two weeks on no bad news. These are the same companies they were two weeks ago. For the most part they are at reasonable PE’s (except SCTY and PSIX). I’m going to find something to sell that hasn’t gone down to raise money to buy these at 25% off.”

That’s the way it happened. Just intuition, if you will. And we don’t know if it will all turn out okay yet. The jury is still out.

Saul

Nope, I don’t accept that. I believe you have fully synthesized the lessons of successful investing so much so that it seems like intuition, when really it is a very complex series of calculations that occur subconsiously. It reminds me of Malcolm Gladwell’s book Blink.

Jeb

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