Its not over yet. Even after the banks partially nationalised, The US economy is still contracting.
Good news? For banks? Maybe, we’ll have to see. These are very unusual times, and the US is becoming more Socialist every week. The banking system is to be partially nationalised. This is huge. The Government will have to nationalize all of the companies doing bad because of the economy, and then nationalize all of the personal debt consumers have too to completely fix what is going on right now. Communism?
Even though the market is still in a downward trend, I liked Jim Cramer’s take before Monday. Buy a little, and if it goes up, buy a little more. And for me, after that I would sell again if it went higher. Jim Cramer is totally against the buy and hold mentality for the reasons of the last ten years, and I agree. Buy and hold forever is silly because you miss out on all of the movement, which is where the real opportunity is. Also the risk, but clearly there is a risk when buying and holding as well. Imagine if a 401k holder, who is still a very prudent investor, just brought a majority of their stake to cash or bonds a year or a month ago, and slowly bought back in at the end of last week? They would have been taking profits and allowing for much higher future profits, or much lower losses. Of course this is hindsight, but it is an example of how even a 401k investor can make use of the trade, not hold mentality with little interaction.
This is a perfect time to be continuing to hold (if you waited this long, it doesn’t make as much sense to leave now), short selling, or selling (at least part of what you have), but not buying. Buying was to be done friday or monday. The economy is still contracting and Mondays rally was only necessary from the events that occured. The government making such a huge move was unignorable, and the market was ready to buy. This market is clearly so unsure that it had its worst week ever last week and its best day ever this week. This is not the time to be complacent with investments, but very very active. With weeks like last week and days like last Friday and this Monday, this is the time of the day-trader. Volatility breeds opportunity, and there is now another major opportunity to make or lose serious money within the course of a few days. I’m still betting against the dollar after all of this capital flooding the market.
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