10 Observations About This Financial Storm
history in the making! granted, it’s not the approachable of telling we’d all like to see, but the fact remains that the upheaval in the pecuniary world during the ago few days–in stocks, bonds, currencies, and, oh yeah, in the real world as well–is going in the report books. we’ll be reading about this choke for years to come.as always, we want to keep you in gear with our latest thoughts, so i unmistakable to jot down a few quick notes about what i sight–call it a stream of consciousness.1. it’s during these tumultuous times that investors non-standard like to her out all the stuff they’ve learned in recent months. i’ve already answered emails from subscribers who yearning to buy, buy, bribe, and those who are really shorting into this disaster. in other words, the news and volatility makes people want to be involved.but oftentimes the opposite approach is best. right now, i’m sitting in cash, avoiding the market’s mayhem, and, importantly, keeping a level head so that if the market happens to form a bottom, i’ll be able to recognize it.2. while it seems like today’s the the greatest of the world, it’s not. we’re in the midst of a bear market, and simply, the fiscal system is being tested. while there are going to be plenty of losers, our economy is actually hanging in there relatively well–i’m not saying things are good by any stretch acheter cialis, but i’m almost surprised that the dow and s&p 500 aren’t down more donn?e all the woes. many sectors, such as retail and medical, are actually growing nicely.3. yesterday, as the dow and s&p 500 broke below their mid-july lows, there were 792 stocks on the nyse that reached new 52-week lows. that’s high fewer than the 1,304 seen in mid-july … a satisfied divergence, something usually seen at major lows. of course, this morning opened unsightly as well, so we’ll see if this divergence holds after today.4. echoing that point, i can say that, as opposed to mid-july, when i couldn’t find a single cows that i unusually wanted to buy, today i’m closely following a register of 10 good-looking stocks that are, even after monday’s disaster, holding very well. and these aren’t “defensive” names like colgate or phillip morris; they’re real cultivation companies that are showing big increases in sales and earnings auspicious now. i find that encouraging. 5. i believe the effectiveness of this financial mess is emphasizing the stand up to be biased in commodities–slower economic growth/higher uncertainty/less liquidity means less gelt will stream into commodities. looking at oil, natural gas, gasoline and gold, they’re dotty 37%, 48%, 31% and 21%, respectively, just since early july. those seem like abnormal drops to me, not normal corrections. while sharp rallies will come, a pointed top weight compel ought to finally been put in. translation: don’t buy commodity stocks (even gold) as a “hedge” against this uncertainty.6. another area i cadaver worried about: nasdaq 100-type stocks, especially the big winners of the form advance. apple (aapl) looks like it’s completing a very long, profoundly sloppy topping mimic, first solar (fslr) is in the same boat, and stocks like baidu (bidu), dell (dell), cisco (csco) and most chime in stocks are looking unbearable. i don’t see this group leading if a new bull peddle gets underway in the weeks ahead.7. always remember that defense is a necessary part of the investment ballgame, especially with growth stocks. as of last round-the-clock, i see that calamos vegetation fund is down 25%, cgm focus is down 18%, fidelity vegetation & income is down 29%, and many hedge funds are down 20%+ … with some already folding up shop. a 20% plunge in your portfolio requires a 25% advance just to get back to where you were; a 30% drop requires a whopping 43% move to get back. as one subscriber said, “it’s all about advancing, and protecting.” too many people consign to oblivion the second part of that. cabot market letter, which i reorganize, has been 65%+ in cash since early july, and has been 90% cash cialis during the last four of weeks. you can time the market and avoid situations like these!8. as for the real world … i’m glad to think over the government draw a line in the sand with lehman, allowing it to fail. and, yes, i know someone who works there, and bromide of my best friends works at merrill lynch, and i feel rotten that the as a rule employee is getting whacked like this. still, bailing out everybody was no more than prolonging the agony, and aside from, the federal reserve is there to be lender of last reserve. i’m not so sure lehman was suffering from perfectly liquidity issues–they had a droll amount of distressing debt, so they were likely contemporary the method of the dodo bird eventually.as in the service of aig’s potential bankruptcy, yes, i do think it could deceive a bigger impact than lehman. but i also think that, …
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