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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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It is the Monday morning after the 800 point gain on bailout news. We are down 156 because nothing has changed except a little confidence is up. PRESERVE YOUR CAPITAL TO LIVE ANOTHER DAY. Too much risk and little reward. Allow yourself to be there when we are Dow below 10,000.
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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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Picture this scenario:
-the biggest bank in history fails and is seized by the government on a Thursday evening. This always happens over the weekend to give the public and the Fed time to accept and get organized. On Friday, Washington Mutual will open and be under the control of JP Morgan because Washington Mutual is gone and all stockholders and bondholders have lost all their money.
-the market rallies Thursday in anticipation of an agreement on the bailout.
-in the afternoon, Congress states that we are near a bailout solution. In the evening the Democrats and Republicans meet with the President and have a tense meeting and only say to the press, there is no agreement.
-the credit market is now completely frozen with banks not lending money in anticipation of the problems to come.
-businesses are having problems with credit lines and may have problems meeting payroll and cash flow needs with the possibility of having to lay off workers.
-the unemployment going up, sales will go down further aggravating the economy.
I believe the market will go down and I implore you to preserve your money for a better day. If we go down 1000 points in the next days, weeks, or months, you will be able to buy stocks much lower. Live to invest another day. When the market turns in a year or two, you will ride the crest of money higher. This is not the time to be gambling in the market.
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Rank: Advanced Member
Joined: 8/11/2008
Posts: 82
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stockman wrote:Picture this scenario:
-the biggest bank in history fails and is seized by the government on a Thursday evening. This always happens over the weekend to give the public and the Fed time to accept and get organized. On Friday, Washington Mutual will open and be under the control of JP Morgan because Washington Mutual is gone and all stockholders and bondholders have lost all their money.
-the market rallies Thursday in anticipation of an agreement on the bailout.
-in the afternoon, Congress states that we are near a bailout solution. In the evening the Democrats and Republicans meet with the President and have a tense meeting and only say to the press, there is no agreement.
-the credit market is now completely frozen with banks not lending money in anticipation of the problems to come.
-businesses are having problems with credit lines and may have problems meeting payroll and cash flow needs with the possibility of having to lay off workers.
-the unemployment going up, sales will go down further aggravating the economy.
I believe the market will go down and I implore you to preserve your money for a better day. If we go down 1000 points in the next days, weeks, or months, you will be able to buy stocks much lower. Live to invest another day. When the market turns in a year or two, you will ride the crest of money higher. This is not the time to be gambling in the market. What stockman is suggesting is for new traders who are still learning. If you are short you might want to play this market on a day to day basis and not hold your position for any surprises. Personally I would keep my money in safe and for the next bull turnaround... sti
STI, Stock Trading Ideashttp://stock-trading-ideas.com
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Rank: Advanced Member
Joined: 6/22/2008
Posts: 51
Location: Santa Clara
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Stockman!
You da man!!. Perfect timing again. What would you suggest for capital preservation and/or for speculation? Looks like the Ultra Short ETFs are all rigged now, as you can no longer short the underlying securities, they are not creating new shares for these ETFs. Look at how the options are trading on these, absolutely low volumes and open interests plus huge gap in the bid/ask spreads. What do we commoners do in this new Socialist/Communist America?
Frustrated. My 401K is in shambles and there are no safe place to move those funds. Its disheartening to see this "pooring" of America. How bad can it get??
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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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netbacker:
I suggest you put your 401k into interest income if it is available in your 401k. Stay away from bonds as I don't trust in this market. Worst case scenario to your question of how bad could it get is a depression. None of us were alive during the last one so I suspect that money markets may lose their value in a depression and even in interest accounts, the value of your money will go down. I am watching the interest in my 401k interest account and it has gone from 4% to 3% in the last few weeks. If it starts approaching zero interest, I plan to rollover all my money into an IRA bank account. The only safe haven that I see is in a bank account where the FDIC insures your money from complete loss. There would be no interest, but at least you are protecting the money you have left. I invite any experienced, educated readers to agree or disagree with me and give your thoughts on a worst case scenario and what should be done.
I suggest that you go into interest income asap. Don't let yourself feel bad when you miss a bear market rally because the long term trend is down and you must preserve capital for your long term interests of being able to retire. We can all ride the bull in the future when it arrives and the more money you have left for that day, the more you will make because the DOW will work its way back to 14,000. As the market goes lower, the net worth of everyone else goes down while you stay even and you become richer than if you had been in the market. It is the right thing to do so don't hesitate.
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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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Volume in the market is drying up and the Fed stopped selling gold coins today because demand exceeds supply. Treasuries are close to zero because everyone looking for safety. Are you prepared? I am not trying to say the sky is falling, but wanted to make sure I am not missing anything. Don't be surprised if another bank fails this weekend because there was a discussion of speculation on regional banks on CNBC.
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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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News this weekend is that Wachovia is going down next, but don't worry because it is only the sixth biggest bank. Remember that the biggest one went down on Thursday and the market went up 120 points on Friday. We are comfortably numb now to bad news. See my note in the news section on Washington Mutual and Pink Floyd. We may get a bear market rally on news of the bailout and this is a good time on the rally to sell and get into interest income. All the problems are still there except they are trying to revive the credit market and we will go lower after the rally. I am starting to see articles on Dow at 8000. So don't stay on a sinking ship.
Here is my note that I saw on a blog in the news section on Washington Mutual and Pink Floyd:
When I was a child I had a fever.
My hands felt just like two balloons.
Now I got that feeling once again.
I cant explain, you would not understand.
This is not how I am.
I have become comfortably numb.
-- "Comfortably Numb", Pink Floyd
If I had told you a year ago that the largest bank in U.S. history to fail would do so yesterday, how would you think the market would respond today? And by way of more facts, it would essentially be a bankruptcy, and while people knew things were bad, the actual event would happen so fast that the company's CEO would apparently be on an airplane between Seattle in New York as the FDIC shit came down.
Right. Pretty much no reaction at all to the Washington Mutual bankruptcy last night. The market is officially comfortably numb, which doesn't make things an iota less dangerous.
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Rank: Advanced Member
Joined: 6/15/2008
Posts: 240
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If you have been reading my comments on the market going lower and disagreeing with me, how much money are you willing to lose before you say enough? We are now at 10,900 and heading lower. Draw a line in the sand and end the pain because now I think we will go to a range of 7-8000 in the Dow. The world is starting to realize how bad things are. Your retirement money is going down the drain.
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Rank: Member
Joined: 9/17/2008
Posts: 13
Location: cyberspace
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stockman wrote:If you have been reading my comments on the market going lower and disagreeing with me, how much money are you willing to lose before you say enough? We are now at 10,900 and heading lower. Draw a line in the sand and end the pain because now I think we will go to a range of 7-8000 in the Dow. The world is starting to realize how bad things are. Your retirement money is going down the drain. I agree.
d-sevenAnalyst at FreeTradingVideos.com
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Rank: Newbie
Joined: 10/1/2008
Posts: 4
Location: CA USA
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Ditto.
My indicators say "The Bear is still in the Air".
Disclaimer: As you know indicators only indicate; not vindicate.
Does anyone know what the historical DOW and S&P500 P/E ratios are? If so, can you post?
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