Investment Club: San Jose talks market
TESS VIGELAND: Earlier this week I paid another visit to our San Jose investment club. It was time to check in again — and we’ll have their update in a few weeks.
But I wanted to share part of that conversation now.
I asked them for their thoughts on the huge market movements we’ve seen this year — the Dow hitting 13,000 back in April and then 14,000 this month.
What did that signal to them as average investors?
Now bear in mind that our visit was on Wednesday, the day before this big plunge we’ve been reviewing with Bob and Chris. But I think their answers are instructive.
We’ll hear first from Martha Alderson, then Marvin Kohn and finally from Kathy Tegtmeier.
MARTHA ALDERSON: Well, I agree with people who are thinking that a correction is coming. I think the market has gotten a bit more over-valued, and it’s doing it on the backs of fewer and fewer companies. It’s certainly not as extreme a situation as it was in ’99, but it’s starting to quack like a duck and looking like it’s walking like a duck, so . . .
VIGELAND: I think you used that exact verbiage, though, when it hit 13,000.
ALDERSON: Even when I’m expecting there to be a correction, it doesn’t necessarily come when I think. My crystal ball is as cloudy as the next person, and I certainly didn’t at 13,000 pull all of my money out of the market. But I am looking at 14 and crossing 14, and a slight pull-back, but we’re still pretty close to 14. As kind of a cautionary flag and a reminder, as we as a club and myself as an individual start looking for more and more new stock to purchase to be careful and not overpay. A lot of stocks have become expensive right now.
MARVIN KOHN: I’m glad when I see a pull-back like we had yesterday, a 200-point pull-back. I feel that when those come as they do, with a growth of the market, it blunts potential for a big correction. So I’m happy with small corrections. And frankly, if it doesn’t go back to 1,400 for another month or so, I wouldn’t be at all unhappy . . .
VIGELAND: . . . 14,000
KOHN: Ah, 14,000 rather.
VIGELAND: How about you, Kathy?
KATHY TEGTMEIER: We watch stocks, and as a club we’ve watched stocks go up and down and the market as a whole go up and down. When it’s down, actually we get more excited, because we can buy good companies at good prices. When it goes up, it becomes much more difficult to find a good company that we want to own at a reasonable price. I don’t want to say a big correction, but on this dips, we love them, because that’s our opportunity to buy.
KOHN: Amen.
VIGELAND: Martha Alderson, Marvin Kohn and Kathy Tegtmeier of our San Jose investment club. We’ll hear more from them — and our Seattle and Virginia clubs — in a couple of weeks. This is Marketplace Money from American Public Media.
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