Stock Trading: Rethinking The Gameplan…Again!

With the Volatility Index VIX (^VIX) at 100 (almost), I’ve come to the conclusion that it’s impossible to trade this market short term.  The volatility is just too high.  It’s really time to go back to thinking about some sort of longer term investment strategy to accumulate wealth without burning up all your capital.   My thought is to start putting money to work in stages.
From October of last year to October of this year, the markets are down 43%.

During the Great Depression, the markets were down approx 89% from 1929 to 1932.  It took approx. 1039 days for the market to move from its high to its low.

If you assume that this decline will be as bad as the Great Depression, which I’m not sure that it will be, but let’s be conservative and assume that it will be as bad. From the market high in October of 2007, we would be making a  bottom on August 15th 2010 at a level of 1516 on the DJIA (^DJI).  This would represent an 89% decline from the high.

If we focus on the 1039 days that it took the markets to go from high to low during the Depresson, then we’re now 36% of the way through this decline.  It’s definitely time to start nibbling and looking at some equities.  We don’t know whether or not this decline will be worse than the Great Depression.  If it’s not as bad, then we could be closer than 36% of the way to the bottom.  That’s not to say that we could have a dramatic quick overnight selloff and get there right away.  I think it’s time to start putting some money to work in this market now.

These are names in my portfolio now.  Again, I’m not looking to trade these names.  I like them fundamentally and will start to accumulate them slowly to hold over the long term.  I bought the names that are highlighted in yellow today. I accumulated the other names over the last week.

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