Sector Investing

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I have been holding a number of long term positions bought too quickly after the market began to sell off in 2007.

I'm actually above water now overall but I don't expect smooth sailing going into the future.

The DOW and S&P 500 managed new highs a few years ago if we overlook the effects of inflation however low the rate may appear now. But we who have posted here for most if not all of the 47,000+ posts know that the NASDAQ and SOX were not anywhere near new highs in 2007.



How can anyone who is capable of making a dispassionate look at the market including all fundamental data think that our stock market must eventually reset by seeing the kinds of P/E's that were paid for stocks prior to the excesses of the bull market that reached unbelievable bubble highs in 2000?

There is money to be made in this any any time of stock market but until we reset at those lows on P/E's we cannot expect another long term bull market to start. Since 1900, the average P/E ratio for the S&P 500 index has ranged from 4.78 in Dec 1920 to 44.20 ...

http://www.tradersnarrative.com/sp-500-price-earnings-ratio-long-term-chart-2330.html

http://www.investorsfriend.com/S%20and%20P%20500%20index%20valuation.htm

Until we reach those kinds of lows on the P/E ratio of the S&P 500 then I will continue to play shorter term trends. Days, weeks and even years can bring profitable trades even in a bear market like we have seen the last ten years.

Election years cycles, contrarian sentiment analysis, technical analysis and fundamental analysis are all useful.

But fear and greed both rule at times. Greed in the 90's in the stock market. But for the NASDAQ and SOX it has been fear ruling now for ten solid years with no chance of new highs.

We are a lot closer to new lows than new highs and waiting for a P/E of say 10 on the S&P 500 before expecting to make money off the next 20 year long term bull seems logical to me.

By the time we see those former long term market low P/E's for the S&P 500 most people will be entirely sick of the stock market.

Many here already are. It's true that programming trading is responsible for the majority of the trades going on today but we have more predictive data available to us as small investors than ever before if we just use it.

It's still possible to make money. It just is not possible to do it the way it was done from 1980 to 2000 by long term investing....

YET

RtS