# Market is crap



## stockwhizben (8 January 2008)

Market is crap. I had 600k in with a 450k margin loan. Now ive only got 98k equity. Im finding it goes down then up but not as up as it was and so the highs arent the same highs as previous and slowly the cash gets chipped away.
This was meant to be my house deposit. I only hope houses in melb stop going up and go down a bit as well.


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## numbercruncher (8 January 2008)

I love Gold


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## prawn_86 (8 January 2008)

While i feel for people in your situation, you must realise that sometimes the market is like this.

Never play with cash you cant afford, unless you are a seasoned professional. Perhaps you should consider getting out now...


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## So_Cynical (8 January 2008)

numbercruncher said:


> View attachment 16651
> 
> 
> 
> ...




Beat me too it by 5 minutes.... new all time highs tonight :casanova:


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## M34N (8 January 2008)

Is this guy for real or what? LOL

Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.

Oh, the market is a risk? Geez, and I thought it only went up? LOL 

Absolute gold.


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## BSD (8 January 2008)

Is this a wind-up?

Who would have thought a 75% leveraged exposure to the equity market could be risky?

Ben, you may wish to revisit your strategy.


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## M34N (8 January 2008)




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## Nyden (8 January 2008)

M34N said:


> Is this guy for real or what? LOL
> 
> Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.
> 
> ...




Comparing the market to tattslotto is a little out there buddy :

I can understand where he's coming from - conservative stock investment is almost always part of a portfolio, but lately even conservative stocks are falling hard.


Being so heavily on margin in this market is of course unwise; especially if you don't really have money to burn.


When a lot of people hear the term _diversified portfolio_, they believe that refers to a diverse range of stocks. Which is utterly wrong. You should be diverse in your *investments*; a mixture of cash, stocks, property (if affordable), & possibly even gold!

Unfortunately; people have become accustomed to stocks doing nothing but rise, & a lot quite aren't used to seeing these irrational declines. Which is why I refuse to be on any sort of margin loan at the moment, & as a result all my stocks are bought with money I can lose.


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## grace (8 January 2008)

I am just wondering.....when did the general investment community start taking out margin loans?  How many years ago?  Was it prior to the last recession or since?  Could it be that a lot of new investors have got so confident with this bull market and are too highly leveraged? Could this leverage in itself lead to a big correction in the future?


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## stockwhizben (8 January 2008)

nah i wont be getting out until i get my $200k profit, i want to be there for the next rally too - who knows when thats happening, market going sideways and down'ish. i have had to sell a bit as was in margin call position - spoke to NAB and they said loads of people are getting hit so made me feel better. yeah nyden i like your point and at 25 yo i think i need to take some risks to get a leg-up, its better than buying a flash car and drinking it up i reckon tho. i get the points about pretty highly geared but if i was to buy a house somewhere i would be geared much higher and i dont want that. (I reckon must have a missus nowadays to afford a first home and repay it comfortably). no its not a wind up either. yeah i thought about getting a bit of gold and rang the perth mint a couple of months back.  didnt know whether to store it there or under my pillow.sounded good but never got around to it.
yea i still think i know a bit about markets - was there in tech wreck, stayed up to watch them ring the bell and open the USA up after 9-11 so i do have a keen interest in it - was just venting my annoyance at the recent volatility i guess.
and thats my story so far


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## CATAPILLAR (8 January 2008)

M34N said:


> Is this guy for real or what? LOL
> 
> Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.
> 
> ...





HAR HAR HAR Falling off my chair laughing  Can't believe someone could put 600k into the market without nderstanding or expecting the downside.
CATAPILLAR


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## dombat (8 January 2008)

You really worry me...do you know what a liquidity crunch does to all asset markets particularly the stockmarket in times when inflation is also a problem?  Go back and look at economic history and consider that the savings and loans between 89-94 was but a mere baby to the subprime.  If you want to hold be prepared to hold for a couple of years - up to 4 years before getting your capital back and that things are going to get a whole lot worse and you will get more margin calls.  We are not going to see 6800 for a long long time.  There will be a bounce but it will be small as people will just sell into it and short the market...this is not a correction. Liquidity gives birth to market booms and liquidity crunches kill them..or at the very least also start reading about how to short at least you might preserve the capital you have left.


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## wayneL (8 January 2008)

dombat said:


> You really worry me...do you know what a liquidity crunch does to all asset markets particularly the stockmarket in times when inflation is also a problem?  Go back and look at economic history and consider that the savings and loans between 89-94 was but a mere baby to the subprime.  If you want to hold be prepared to hold for a couple of years - up to 4 years before getting your capital back and that things are going to get a whole lot worse and you will get more margin calls.  We are not going to see 6800 for a long long time.  There will be a bounce but it will be small as people will just sell into it and short the market...this is not a correction. Liquidity gives birth to market booms and liquidity crunches kill them..or at the very least also start reading about how to short at least you might preserve the capital you have left.



But Australia is immune from recession... strong economy, China, blah blah.


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## M34N (8 January 2008)

Nyden said:


> Comparing the market to tattslotto is a little out there buddy :
> 
> ...
> 
> Unfortunately; people have become accustomed to stocks doing nothing but rise, & a lot quite aren't used to seeing these irrational declines. Which is why I refuse to be on any sort of margin loan at the moment, & as a result all my stocks are bought with money I can lose.



But that was my point exactly, buying Tattslotto is a risk, just like shares trading. Since 2003, the market has gone from under 3,000 points to over 6,100 now. That's crap now is it? Sounds like people want to have their cake, and eat it too.

Markets are irrational, they always have been and its been happening since before all of us were born, and will keep happening. But to put money you _don't own_ and to literally put your house on the line on the stock market, you may as well be at the roulette table picking red or black!

This is exactly why I dumped my last accountant / 'financial adviser', they were suggesting to me to be "fully leveraged" and to "buy in every dip". Apparently they bought during the August crisis and were laughing in October at the new all-time highs the market hit. I had better sense than to go all into the market with _other people's_ money that I would eventually have to repay. Now stockwhizben is a prime example of exactly what happens when you follow that risk.

Lesson learned, hopefully.


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## Real1ty (8 January 2008)

Nyden said:


> I can understand where he's coming from - conservative stock investment is almost always part of a portfolio, but lately even conservative stocks are falling hard.




But do you expect conservative stocks to continue to go up or stay in a sideways pattern while the rest of the market gets smashed?

It doesn't work like that. 
I was criticised by a few when in December i sold every stock i had in profit, apart from Gold stocks and cashed in a geared managed fund as i was "panic selling".

I also recall all the bulls ranting about "buying opportunities" "Decoupling" etc etc.
We live and die by our own decisions, right or wrong, and many of the Bulls have been ignoring the warning signals that have been there for a very long time.

That is their right but they also have to be prepared to suffer the consequences of their actions when wrong.


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## nizar (8 January 2008)

BSD said:


> Is this a wind-up?
> 
> Who would have thought a 75% leveraged exposure to the equity market could be risky?
> 
> Ben, you may wish to revisit your strategy.




LOL *strategy*?
You're too kind


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## Rainmaker2000 (9 January 2008)

Mate, I'm having real trouble believing this situation.......just for one thing, to start off with LVR 75%, I really fear for the stocks you have to own........all large caps, so called 'blue chips'...all pretty popular and well valued..and how pleased is the bank now that you have 98k when you started off so close to lvr limit for even the 'safest stocks', even after you sold some.....

I probably love margin more than anyone on this site but the whole point of margin is outperformance........if you are fair dinkum, all I can say is too dump stock and get out of the situation cause you have probably done well to still have 98k.....margin is about outperformance.......how can you outperform if you buy all the stocks with 75% lvr.....a good result for you would be to beat your interest rate..

I'm in my 20's and love risk and margin more than most, but you got to take risks based on your skill and your value add.....not just buy from the set menu.....anyway that's my rant and I admire your goals...just remember your goal of a house or $200 000 profit has nothing to do with your investment strategy........if you looked hard enough you could probably find a stock which  will turn $20k into $200k in five years.......that's what investment and risk is about, not taking out a 450k loan and buying off the set menu


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## stockwhizben (9 January 2008)

rainmaker i started with $zip. Got a couple of thousand worth of telstra shares from my folks for my 18th or 21st birthday i think then i got a couple of more thousand of australian foundation invest coy around that time as well. Began to gear up off this and put some of pay chq into my loan every now and then regular savings i'd say about 3 years or something ago. so nope i didnt start with $150k, that was just the highest i had a couple of mths back. when i look back - havnt really analysed how i got to get 150k (or now 98k), i should look at the stocks which made it happen. i bought and sold leighton and mac bank a fair bit i know that much. 
so of course im not that happy, my savings using this strategy have gone up by way more than i could ever have hope to save and i am on no means a big salary. quite small actually.
probably what i need to do now is to protect what left i have of this 98k, keep my powder dry. have looked at options but found to be expensive. and not too optimistic about reporting season and prob more loan write downs to come. 
and i feel for the retirees and their super funds dropping too. 
and everything i read in the paper from the economists reckon the market will be pretty solid but more likely in the second half of this year. (and now some smart as* will come back saying dont believe the paper - but whats the answer then ...dont read anything or do your own research. but that is doing your own research!)
and to catapillar hope you bumped your head falling off the chair. your time will come mr smarty pants


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## stockwhizben (9 January 2008)

hey does anyone please advise when US reporting season kicks off for this quarter. Cant find info on net. tah


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## ithatheekret (9 January 2008)

Wednesday , Alcoa comes in with its numbers for starters .


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## korrupt_1 (9 January 2008)

stockwhizben, i feel for you... i am in a similar position as you - so you're not alone, but I have no where near as much funds as you have committed. - yikes!!!

i just cant understand why the fundamentals in AU (and Asia) is strong, yet it still dumbly follows the US fallouts... arrgh.... !!

i'm sure i'm not the first to mutter "bloody greedy american banks"

how low do you guys think this could go? Market is down by 11pc since November. Crikey... isn't that enough?!!!


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## Wilson! (9 January 2008)

Just on the whole LVR thing. 
I think in this market it's important, as said to play with money you can afford to lose

3 months ago, I plucked $1000 out of my portfolio, basically profit from one trade, just to see what I could do with it on st trading

3 months later, it is now worth just over $11k 

Now I wish I could do that with all my funds. 
But I guess the point I am trying to make is, this is a volatile market so it can work in our favour if we watch the market movers, try to see the trends emerging, and just throw caution to the wind, with a trading plan in place, and see what happens. 

I may apply for a margin loan soon, but wont use it until I see the market bottom out. 

Cheers,
Wilson!


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## tronic72 (9 January 2008)

M34N said:


> Is this guy for real or what? LOL
> 
> Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.
> 
> ...




I gotta agree. If EVERYONE made money all the time on the stock market no body would sell! The market HAS to decline for it to work. 

Just like Tattslotto you have to be in it to have a chance of succeeding. The Market is down but it only recently reached record highs.

If you aren't able to loose all your money then don't trade. Sounds to me like you've been gambling rather than trading or evening investing.


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## Rainmaker2000 (9 January 2008)

stockwhizben, it's good you shared your situation cause a lot of Aussies now have margin like mortgages, myself included, my greatest challenge is stopping myself buying too much stock...I've used margin very well so far but it's like a drug for me.......I'm currently about 28% lvr which is where I have pretty much always been......

I think the current market volatility and apparent correction is totally justified and I'm not that bullish on the Aussie index or the Aussie economy as a whole in the next 5 years....not that we are in such a bad spot, we are just going off such a high base..17 years of economic growth, just unprecedented..there are however some outstanding investment now available I think, but for me, they are not in the SP 100 or anything..

Best luck to ya, with the Aussie reporting season next month, market should refocus on strong company earnings


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## M34N (9 January 2008)

I would just like this cleared up; what exactly makes the market "crap"?


Because you're not winning?
You're picking the wrong stocks. Look at gold and oil related stocks lately, ie. NCM, LGL, NEM, WPL, STO, OSH, AED.


Because it's going down lately?
Over the past 5 years, the market is up 100%. That's on average. Some quality, blue-chip stocks are well above that.


Are you using CFD's?
You can short stocks and sell them to make money when the market goes down.


Are you getting too greedy?
Sell into the highs if you don't feel confident and re-group. Perhaps this is the best thing you can do now.

Rethink your strategy. If you're investing only into banks and other supposed "safe stocks", you'll be down on average some 10% from your highs if you bought a few months ago (ie. MGQ, NAB, ANZ, BNB). Look at where the growth is in the market at the moment; resources, oil, gold and even some 'safe' health stocks (ie. COH, RMD), and diversify your portfolio into the growth areas _without_ margin lending at risky times!

Again, DYOR as this is just my advice 

Best of luck to you, Ben.


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## wayneL (9 January 2008)

M34N said:


> I would just like this cleared up; what exactly makes the market "crap"?
> 
> 
> Because you're not winning?
> ...




Good points. eg Index traders are having a lot of fun lately. It's a great market for day traders. As are gold an oil bugs.


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## The Red Baron (10 January 2008)

stockwhizben said:


> Market is crap. I had 600k in with a 450k margin loan. Now ive only got 98k equity. Im finding it goes down then up but not as up as it was and so the highs arent the same highs as previous and slowly the cash gets chipped away.
> This was meant to be my house deposit. I only hope houses in melb stop going up and go down a bit as well.




If you really want to protect your captial take a look at Bankwest Telnet saver 7.2%. Should be making around $600 a month interest.

Sure you could get better returns elsewhere but least you wont go backwards.


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## stockwhizben (10 January 2008)

thanks for the advice folks. much appreciated. 
i will be re-thinking how i do things. M34N the comment about regrouping certainly rings true. i may need to do that for a while to refresh and take a step back. it is quite tiring having so much on the line (up at 6 to check what the dow did, reading reading reading, weekend fin review, up at night to watch lateline business - quite exhausting). if i had say 100k in the market it could drop a few percent and i wouldnt blink but with this margin it does get pretty stressful. 
maybe i should have done what it seems a heap of consumers are doing and get a loan for a BMW/VW golf and monster plasma tv to watch the NBA finals. all on credit cards.
anyway i know ill be rewarded for saving in the long run and with some good stocks. just volatile atm
cheers , Ben


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## Uncle Festivus (10 January 2008)

The Red Baron said:


> If you really want to protect your captial take a look at Bankwest Telnet saver 7.2%. Should be making around $600 a month interest.
> 
> Sure you could get better returns elsewhere but least you wont go backwards.




I'd stay away from Bankwest - isn't that 'high' interest rate telling us something? The calm before the storm?


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## ajoz (10 January 2008)

Wilson! said:


> Just on the whole LVR thing.
> 3 months ago, I plucked $1000 out of my portfolio, basically profit from one trade, just to see what I could do with it on st trading
> 
> 3 months later, it is now worth just over $11k




Do you realize the nature of this return? Lets change the starting figure to  $10,000 and repeat your performance over 12 months and you would have had a return of $440,000 or a 4400% return.  That's almost half of what Larry Williams did in the traders challenge where he is reported to have turned $10,000 into $1Million.

Well done.


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## JTLP (10 January 2008)

The real reason the market is crap is this:
The Dow gets smashed, we jump on for the slaying.
The Dow has a rise, we just languish in the shadows.

ASX = Worst


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## dhukka (10 January 2008)

JTLP said:


> The real reason the market is crap is this:
> The Dow gets smashed, we jump on for the slaying.
> The Dow has a rise, we just languish in the shadows.
> 
> ASX = Worst




Boo Hoo, the market isn't doing what I want it too. Why do people expect our market to move in perfect synch with the US market? In addition to your inability to deal with reality we only one need data point to prove that what you say is false and driven more by emotion than facts.

Tuesday US market indices: 

Dow      *down -1.9%*
S&P500  *down -1.8%*
Nasdaq  *down  -2.4%*

How much was the XAO down on Wednesday? *-0.7%*


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## dhukka (10 January 2008)

Year to date:

XAO      down *-4.1%*
DOW      down *-4.0%*
S&P500  down *-4.0%*
NASDAQ down *-6.7%*

Our market has performed no worse than the major US averages since the beginning of the year. So how does ASX = worst? Answer: It doesnt


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## prana (10 January 2008)

ajoz said:


> Do you realize the nature of this return? Lets change the starting figure to  $10,000 and repeat your performance over 12 months and you would have had a return of $440,000 or a 4400% return.  That's almost half of what Larry Williams did in the traders challenge where he is reported to have turned $10,000 into $1Million.
> 
> Well done.



it's actually better than that. Since in 3 months he made 1000% gains, and so compoundingly, in 12 months, it would actually be 14,640x his original gains.

Because, capital is $1000
3 months, worth is $11,000
6 months, assuming same gains, $121,000
9 months, assuming same gains, $1,331,000
1 year, assuming same gains, $14,641,000

lol well done is an understatement.


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## JTLP (10 January 2008)

dhukka said:


> Year to date:
> 
> XAO      down *-4.1%*
> DOW      down *-4.0%*
> ...




2nd worst? Does that make you happier?

Really just wanted to vent frustrations 

Take it easy


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## >Apocalypto< (10 January 2008)

JTLP said:


> 2nd worst? Does that make you happier?
> 
> Really just wanted to vent frustrations
> 
> Take it easy




Before you make rubbish posts maybe you should think to add joking to end of it, if that's the case!

Hate to say it guy's but markets move in cycles and waves they always have and always will, so get used to it. it's up to you to work out what point the market is at in the current time, then you have to ask yourself is this the right time for me and my trading plan/direction to enter. Blame no one and nothing but yourself.

I can see here is wah wah wah, blame blame blame, the market is not being good to me, it can't be my fault, jeeeezzzzzzz!

*This thread = the worst!*


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## chops_a_must (10 January 2008)

Trade_It said:


> Before you make rubbish posts maybe you should think to add joking to end of it, if that's the case!
> 
> Hate to say it guy's but markets move in cycles and waves they always have and always will, so get used to it. it's up to you to work out what point the market is at in the current time, then you have to ask yourself is this the right time for me and my trading plan/direction to enter. Blame no one and nothing but yourself.
> 
> ...




This market has is fantastic, it has everything: big ranges, big gap fills, volatility, fast paced, pivot respect.

It would be great if the SPI decided more often to join in the range though, rather than relying on the gap for movement.

SPI = Worst! 

ROFL!


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## >Apocalypto< (10 January 2008)

chops_a_must said:


> This market has is fantastic, it has everything: big ranges, big gap fills, volatility, fast paced, pivot respect.
> 
> It would be great if the SPI decided more often to join in the range though, rather than relying on the gap for movement.
> 
> ...




ha ha ha, now that's more like it!

great to hear you're having fun Chops! I am 98% in FX so I am not to concerned about the local bourse.

Normaly I would not make a comment but the heat got the best of me!

No Aircon = worst! :evilburn:


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## M34N (10 January 2008)

JTLP said:


> The real reason the market is crap is this:
> The Dow gets smashed, we jump on for the slaying.
> The Dow has a rise, we just languish in the shadows.
> 
> ASX = Worst



Mostly the fact that people here aren't willing to jump on board every time the US goes up because they *know* the US will *most likely* tank the next day. When we get some stability back, that is when you re-invest. If you want to lose money fast, now is a good time to invest :



Trade_It said:


> No Aircon = worst! :evilburn:



Trade_It knows what he's talking about, listen to him


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## mime (10 January 2008)

I feel for you stockwhizben and if it means anything I think the market will get back up because the US economy is not is as bad shape as people seem to think. It will probably at least take a year though.

I saw you guys mentioning gold before but it's funny to oil is also bucking the trend of the declining market.


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## wayneL (10 January 2008)

mime said:


> I feel for you stockwhizben and if it means anything I think the market will get back up because the US economy is not is as bad shape as people seem to think. It will probably at least take a year though.
> 
> I saw you guys mentioning gold before but it's funny to oil is also bucking the trend of the declining market.



Mime,

How bad to people think the market it is? And how do you know it's not as bad as that? Some figures or logic would be fine. 

Also, maybe gold & oil can run countertrend to the economy, or indeed be symptomatic and/or causative in recessions?


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## >Apocalypto< (10 January 2008)

mime said:


> I saw you guys mentioning gold before but it's funny to oil is also bucking the trend of the declining market.




Ever heard of supply and demand Mime, If you haven't I suggest u look into it. some crazy cats say, it can actually determine a price!


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## jman2007 (11 January 2008)

tronic72 said:


> I gotta agree. If EVERYONE made money all the time on the stock market no body would sell! The market HAS to decline for it to work.
> 
> Just like Tattslotto you have to be in it to have a chance of succeeding. The Market is down but it only recently reached record highs.
> 
> If you aren't able to loose all your money then don't trade. Sounds to me like you've been gambling rather than trading or evening investing.




Hehe,

Nice one tronic, couldn't have summed it up better myself.  I would much rather be trading in a realisticly priced market place than in a chronically overvalued one, which is asking for trouble.

Of course there will be periods of volatility, and if you aren't prepared to ride them out then trading is not for you, and being a value investor myself it's important to take a long-term approach to the market place.  Periodic rises and falls go hand in hand with a normal, healthy functioning market place.

Wow, if I had 600K I wouldn't be splashing it around unless I had some serious underlying fundamental knowledge of trading. The golden rule is never invest more than you can afford to lose!

jman


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## stockwhizben (11 January 2008)

i had a cool 600k and didnt splash it round willy nilly. I do have skills in the market and ill be back in when i regroup.

i dont really think (and a lot may disagree) that just because i have lost heaps on the market lately that i dont have fundamental knowledge of trading. you would then have to apply that to everyone that has been losing lately and say they have been losing because they dont have knowledge of markets. wrong. eg US bank chiefs, super fund chiefs, other traders.


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