AI
Friday, August 06, 2004 5:19:55 PM
Hi F400, There's always the chance of yet another disaster coming along. It's good to attempt to calculate "downside risk" along with "downside probability." Each investment has its own downside risk but the probability of that may be high or low. The I-Wave attempts to combine this type of thinking into a usable measure. It looks at where various market measures are and attempts to show a risk level. It also, by its own statistics gives a measure of probability.
When we see the I-Wave below 30% for stocks, we know that only 10% of the time since 1982 has it been that low or lower. Another way of saying the same thing is that 90% of the time the risk has been higher. We're not there yet, but it's getting closer by the week.
Obviously "Low Risk" doesn't mean "no risk." There's still a lot of time before the presidential election for mischief. Probability of it is "high." Maybe the market is already discounting that as well.
Thank you for your thoughts; it's much appreciated. A friend of mine says the 401k money is still flowing at a steady pace, however the direction of that flow is still not toward the "growth" side of the market. It would appear that caution is still the buzz word. That makes the Wall Of Worry that much higher. For fundamental investors this seems to be a good thing. Maybe my "Speculation" IW component is telling us this in a different way. There's just plain not much speculation around right now.
Have a great weekend,
Tom
When we see the I-Wave below 30% for stocks, we know that only 10% of the time since 1982 has it been that low or lower. Another way of saying the same thing is that 90% of the time the risk has been higher. We're not there yet, but it's getting closer by the week.
Obviously "Low Risk" doesn't mean "no risk." There's still a lot of time before the presidential election for mischief. Probability of it is "high." Maybe the market is already discounting that as well.
Thank you for your thoughts; it's much appreciated. A friend of mine says the 401k money is still flowing at a steady pace, however the direction of that flow is still not toward the "growth" side of the market. It would appear that caution is still the buzz word. That makes the Wall Of Worry that much higher. For fundamental investors this seems to be a good thing. Maybe my "Speculation" IW component is telling us this in a different way. There's just plain not much speculation around right now.
Have a great weekend,
Tom
Port Washington, WI 53074
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