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The Wealthy PM


 

Even during the Great Depression, the best investment results were earned not by the people who fled stocks for the safety of bonds and cash, but by those who stepped up and bought stocks and kept buying on the way down. A man named Floyd Odlum made millions of dollars putting his cash into battered stocks. His motto throughout the market nightmare of 1929 to 1932 never changed: “There’s a better chance to make money now than ever before.”

That’s from today’s WSJ Intelligent Investor column


 
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The Wealthy PM

  1. What is utterly confusing is the surprise such a statement elicits from the crowd. Four words: buy low, sell high.

    Equities just went on sale, folks. Door-crashing, midnight madness sale. We don’t know how low it all can go, but if a solid company looked good three weeks ago, and its share price just dropped 15-20%… (if you can’t finish that sentence on your own, CSB’s will go on sale providing 2% as of Friday).

  2. And watch how much flak Harper gets for suggesting the same thing in his interview with Mansbridge tonight…

  3. Equities just went on sale, folks. Door-crashing, midnight madness sale.

    That’s what a lot of people thought during the dotcom/telecom bust and many of them rode those stocks into the ground.

    but if a solid company looked good three weeks ago, and its share price just dropped 15-20%

    Nortel was still considered a solid company that looked good after it dropped 15-20%.

  4. Yes, buy stocks. Those gold toilets in the houses of the Bridle Path don’t come cheap, you know.

  5. Robert, Nortel was insanely overpriced before it even crossed 100, to anyone who paid attention. The signs were there. So much so that I, nowhere near a market analyst, was begging my folks to sell to the greater fool at 85, 95, 110, … I gave up talking about it at 60, 40, 20, 7, 2.50 …

  6. I only used Nortel as an example because everyone would have heard of it. We still haven’t reached the bottom…for that matter we haven’t even even seen the first dead cat bounce yet. So buying now is foolish.

    And I just looked up who Floyd Odlum was. He apparently knew the crash was coming and sold out beforehand. When the crash hit he had $14 million in cash that he could use to buy up those bargains and hold them while they continued to decline. Unless you have hundreds of millions of dollars I wouldn’t advise trying to copy Odlum’s strategy.

  7. I’m sure all the folks with 0/40 mortgages, watching the price of their house fall 20-50% and locked into that debt load, while raising a child and trying to avoid the possibility of a layoff will take your advice to heart, MYL.

    I’m sure they will be willing to further stretch their budget and expose themselves to even further financial hardship and risk.

    Great idea, MYL!

    Austin

  8. “All the folks with 0/40 mortgages” have helped create this illusion of wealth that just went POP! Helped of course by the banks that willingly lent money to people who could not / never planned to pay it back. These are the “villains” who have pushed down some fine companies to a price lower than they should be at. Feel free to avoid buying the dip if it’ll make you feel better, Austin.

    I suppose announcing a sale on bras at Zellers is a similar affront to the men of the world? Bloody grocery store announced a sale on dog food in their flyer, why do they waste my time like that…

  9. I’m getting laissez-faire mal de mer again.

    When does this movie end?

  10. “All the folks with 0/40 mortgages” have helped create this illusion of wealth that just went POP! Helped of course by the banks that willingly lent money to people who could not / never planned to pay it back.

    Right. And who OK’d them (the 0/40’s)? Who lifted that regulatory hurdle that led to this artificially stimulated growth?

    BUY! BUY! BUY! We’ll reduce your consumption taxes! BUY! BUY! BUY! We’ll even make it *easier* to be in debt to wazoo! You have nothing to worry about because the economy is *fine*! We are growing (shhh! don’t mention that it was all commodities)! We are creating jobs (uh…only in alberta)! The dollar? Why don’t worry! We’ll make sure that your dollar buying power will increase 50% over the next year so that you can take advantage of buying stuff over the border and not in our own backyard (just no one mention that it will kill our industries over the long term)!

    Are you saying that *none* of this had to do with the brilliant economic policy of the CPC?

    What we see now is the outcome of poorly thought out government policy, MYL.

    But you see, that is the stereotypical CPC voter…as long as you wave a few bucks in front of their faces, then they couldn’t care less about how it affects the entire country over the long term.

    The CPC know their base, and they know it well.

    Austin

  11. You can’t argue with the laissez-faires. “All is for the best in the best of all possible worlds”

  12. If you could kindly explain how the CPC managed to create the 0/40 mortgage and banking environment in the USA that led to the current troubles, we would certainly all be much obliged, Austin.

    And, if it is not too much to ask, would you kindly enlighten us how “CPC knowing its base” has anything to do with a heretofore non-political discussion on equity market strategies?

    And, a final request. OK, a suggestion, maybe. Well, maybe not a suggestion, as much as friendly advice. Well, you might not take it as friendly, but really, it — oh, just get on with it MYL: grow up. It’s ok to disagree with someone, but to reflexively throw out “typical Tory trash” doesn’t reflect well on perceptions of your open mind. Especially when I am not a Tory. Not that there’s anything wrong with that…

  13. First, MYL, Flaherty backed 0/40 mortgages from the 5/25’s in 2006. That was irresponsible. You recall that the CMHC is a crown corporation, right?

    Second, I made no statement about the US viz. 0/40s. But their economy tanking has a direct impact on our economy tanking, remember? And that not only applies to our ability to sell goods and services from the remaining manufacturing base we have, but also in our ability to sell our commodities. Not to mention how much our banks are entwined with US financial institutions. Do you think that maybe if the big financial institutions in the US are hurting, that their Canadian counterpart are magically immune? So what if our banks are insured by the government, and our money is “safe”? If the banks have exposed themselves to risk, then the government covers for them. And how does that affect the government purse, MYL?

    Third, I made no specific statement to you about the typical CPC voter. I simply said that the easiest way to mollify the CPC base is to wave a few bucks in their faces. I’m sorry you identify with them, MYL.

    Austin

  14. Austin has left a lot of knots all over the floor. Let’s start tidying up.

    It should come as no surprise that I am not a fan of the CMHC in the first place. If you want mortgage insurance, why can’t an insurance company assess your risk and charge a fair premium based on actuarial stats? But nooo, you are correct, it’s a crown corp, so now we have, count’em, FOURTEEN different scenarios including special programs for New Canadians and for Energy Efficiant Homes. Blech.

    But then, let’s look at 0/40. That’s the “Flex 100” product. “The product is available only for those borrowers who have a proven track record of managing their debt and the financial capacity to repay the mortgage, but who have not yet saved a 5% down payment.” So it’s not exactly Wild West lending here in Canada.

    The markets are not down because of any trouble in Canadian banking, Austin. Of course, that’s exactly what the Canadian banks and *spit* Harper are saying, so I get why you reflexively think the opposite.

    And sadly, it ain’t Wild West in the States, either. The taxpayer and unborn children in the USA are now exposed to the risk created by stupid banks and stupid customers engaging in a consensual business transaction. Because stupid Bush begged and stupid Congress obliged, to the tune of 700 Billion. How was your day at work, Dear?

    I am no fan of government-backing of the banks, either. What would be the fair premium to pay for deposit insurance, if a private insurance company were offering it? A helluva lot more than the government is charging them, I bet.

    I’ll let people read for themselves your drive-by smear of the Tories as responsible for this current economic mess, which is just so wrong that your venom against all things Harper is making you blind to that fact. American bubble pops. Pain worldwide, but mostly pain in the USA. Austin says “CPC sucks” and feels all better. Whatever, dude.

  15. MYL, perhaps it is a fault of mine that you address what you think I’ve said, versus what I actually stated.

    I did not state anywhere that the markets are down because of problems in our banking system.

    I did, however, state that our banks will face problems that in the end the government has to deal with because of the risk they have exposed themselves to.

    I also stated that 0/40s in Canada were permitted by Flaherty. This was also irresponsible. Sure banks don’t suffer. But people do and will because of it.

    CPC policy has destabilized our economy. Full stop. If you want to call it a “smear”, then go crazy.

    Austin

  16. Austin: Right. And who OK’d them (the 0/40’s)? Who lifted that regulatory hurdle that led to this artificially stimulated growth? …Are you saying that *none* of this had to do with the brilliant economic policy of the CPC?

    Actually, the CPC had nothing to do with the conversation on stock market strategies until you joined.

    Austin, again: I did not state anywhere that the markets are down because of problems in our banking system. …CPC policy has destabilized our economy.

    MYL, repeat: American bubble pops. Pain worldwide, but mostly pain in the USA. Austin says “CPC sucks” and feels all better. Whatever, dude.

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