Late last year my colleague Joseph Lazzaro posted a story about NYU's 'Dr. Doom' Roubini: Stocks may fall another 20% during recession. That has to make one take pause when considering an investment in the stock market today, even after a major drop retesting November lows this week. On the other hand, Warren Buffett went out of his way to encourage the investing public and money managers alike that it was safe to go back into the market.

However, today it has been widely reported that Buffett sold off half of his holdings in Johnson & Johnson and trimmed his stake in Procter & Gamble.

Continue reading Buffett says buy, then sells, Roubini says wait -- what's an investor to do?

Buffett says buy, then sells, Roubini says wait -- what's an investor to do? originally appeared on BloggingStocks on Wed, 18 Feb 2009 12:55:00 EST. Please see our terms for use of feeds.

A piece in The Wall Street Journal laments that the day to day gyrations of the market are hard to predict. Duh. Furthermore, the methods that once appeared to be effective in making predictions no longer work. Double-duh.

It's an interesting piece, and a good one, focused on the role that hedge funds may be playing in increasing market volatility. The problem is this: who really cares? According to some, days where 90% of shares traded in the same direction, was a good indicator of a bottom:

"This used to be a good signal of a major bottom," says Tim Hayes, Ned Davis's chief investment strategist. "Now, it could be turning into a signal of the end of a less-significant market correction -- or it could be turning into an inconsistent signal" that simply means investors are anxious

Well wasn't that enlightening?

There have been very few market prognosticators, and not enough to make me think it's anything other than luck, who have correctly predicted the markets swings over an extended period of time. Does any of this volatility matter for the long-term investor? No, and the long-term investor is the only one who's likely to do well over the long-term.

So sit back, dollar-cost average, and count on the long-term growth of the economy for long-term returns. And don't pay attention to investment strategists who use the word could twice in the same sentence.

Wall Street Journal ponders difficulty in finding a bottom: who cares? originally appeared on BloggingStocks on Tue, 11 Sep 2007 18:32:00 EST. Please see our terms for use of feeds.