Nothing to Worry About?

On April 24th, 2007, the S&P was trading at 1483 and the Dow Jones was at 13,060.
Minyanville's Kevin Depew recapped the policy makers who said sub-prime mortgages were contained.

"I'm waking up less at night than I was [over the
slowdown in housing]. So far, there's been remarkably little effect
[from housing] on the rest of the economy."--Jannet Yellen

"At this juncture...the impact on the broader economy and financial markets
of the problems in the subprime markets seems likely to be contained." --Ben Bernanke

"The damage from the subprime market has been largely contained."--Richard Fisher

"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."-Hank Paulson

"We do see some stabilization of demand in the housing market ... there is
some indication that the market could be bottoming out."--Frederic Mishkin

These experts said there was nothing to worry about when the bank stocks were 80% higher than current levels.

At what point to you ignore their expert advice and predictions?

MARK HULBERT The value of doing nothing

excerpts and summary from article link to article-

I think we as investors have to face squarely the many lessons to be drawn from this newsletter rather than try to wriggle out from under them.

One of the most profound of these lessons is that you don't always have to be doing something in your portfolio in order to make money. Indeed, I suspect, constant fine-tuning is done more for psychological reasons than rational investment reasons.

Believe it or not, in every year I have examined, the average newsletter would have been better off doing no trading and just staying with their original investments.

The average newsletter model portfolio in 2006 gained 11.35%, according to the HFD. If none of these model portfolios undertook any transaction in 2006, however, this average would have been 12.15%, or 80 basis points higher.

In terms of proportions, 53% of the newsletters would have done better by doing nothing.

Note ... calculations don't take taxes into account; if they had been, then the percentage of newsletters that would have been better off doing nothing last year grows to 72%.

Let's Get Lazy

excerpt from article-


Unless you're working full-time in the financial world, you don't have the skills, tools, information, time or interest in playing the market, especially the bond market. And even if you do play the market, the odds are you'll lose because the more you trade the less you earn; transaction costs and taxes kill returns. So for 94 million out of America's 95 million investors, being a lazy investor is the best defensive strategy.


In fact, even the hotshots working full-time in the financial world follow the same strategy with the bulk of their assets. It's their biggest secret. Mutual fund managers making an average $400,000-plus playing the market with your money, often lock away the bulk of their retirement assets in safe, untouchable portfolios using a variation of a lazy portfolio strategy. Why not, they're no dummies, they've got families to protect too.


Lazy portfolios are simple, well-diversified portfolios of three to 11 no-load index funds, either mutual funds or ETFs. But, unfortunately, Wall Street doesn't want you to use this Nobel Prize-winning strategy because it can't rake off enough in transactions fees from index funds.


link to lazy portfolio article