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Old 10-10-2008, 07:23 AM  
ADL Colin
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Join Date: Feb 2001
Location: Tube Titans, USA
Posts: 11,929
Quote:
Originally Posted by Libertine View Post
That seems like an exceedingly bad idea

Looking at the current markets, it's extremely likely that you will lose 20-30% in the next few weeks. Those losses will take years to make up, and only after that will you begin to make a profit.



Consider that many companies still have hidden liabilities right now. It's likely that a few will still go bust no matter what happens. Ones that right now still look stable.

Even if you assume the markets will recover shortly, going into specific stock simply raises your risk exposure. By not choosing to go with a broad basket, you're betting both on a full recovery of the market in the relatively near future and on the future financial health of those specific companies.

Essentially, you're making two large bets at the same time. And that's not all.

You're making a third big bet in assuming that the near future isn't a deflationary one. Right now, that's a pretty big bet to make. Especially when combined with the other ones
I ended up buying mostly IR after it went down 10% this morning. Filled at 18.70. You can follow and either laugh at me or pat me on the back ;-)
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