Tradier1,For those who have a large portfolio, this is the...

Tradier1,

For those who have a large portfolio, this is the mother of all bad positions to be in and I fully understand where you are coming from.... This is definitely not like 87. To me you need to look at the fundamental differences and they are more like a Japan 1990 or USA 1929. We haven't seen the mass unemployment, but you just get the feeling that it is right around the corner and it is hard to see any reason to be optimistic at the moment.

The problem with selling is that markets tend to be able to stage recoveries just as everyone thinks it is time to sell. It is almost as if the market inflicts as much damage as possible.

The problem with holding is that the situation can get a whole lot worse. Earnings are going to go lower and P/E's are also going down. I think Australian stocks are generally trading at more attractive P/E's compared to the US, but in a bear market, they can get a lot worse.

For those considering entering, here is something to think about. Let us call the top of the market 100. Let us say that we are going to hit 20 at the absolute bottom (not an unreasonable assumption if it is a Japan 1990/US 1929 crash). We are currently around 50. Getting in now looks attractive if the market is going to go back up to 100, but if it goes to 20, you are going to be 60% down (50->20 = 60% haircut). This is still horrible - and if you had made the same play back around 1992 in Japan and held, you would still be way down. My thinking is that if this ends up being a big bear market, you are much better buying on the upswing. Here is an interesting article that discusses some reasonable indicators for more long term investors to analyse a good time to get into the market who are sitting on the sides with cash:

http://www.ciovaccocapital.com/sys-tmpl/movingaverages/


The time will come and those who get in on the lows are going to get well rewarded. Good luck picking though!