Storm A Brewin?

Fear seems to be escalating as we move closer to the final bailout which leads to concern for what the consequences will be. How long will this take to sort out? One reader expressed concern for an L shaped recovery, which is to say stocks not going up for a long time. One thing is certain, having an emotional reaction will not make things better. We know a couple of things about the big picture. The crisis is such that there will be big failures. Hang with me on this. There are always big failures during events of this sort. The failure of WaMu seemed to not matter to markets. The shock of big failures on this go around is over. This may help toward easing apprehension which IMO contributes to the idea that in terms of points lost we are much closer to the bottom than the top (my thought all along has been a bottom around SPX 1095), the timeline for a bottom is anyone’s guess I’ll go Q2 2009. We know that dramatic action is at hand, either a bailout comes through or it does not and if not we may have a bit of a panic as a reaction (a no-bailout-panic might actually resolve this a little faster). So that is my opinion about what will happen (nothing new). It will either be right or wrong but hopefully I have conveyed my being less concerned with being right about bear market magnitude and more focused on sticking to the defensive strategy I laid out long before the crisis began. If you did the same then...

Storm A Brewin?

Fear seems to be escalating as we move closer to the final bailout which leads to concern for what the consequences will be. How long will this take to sort out? One reader expressed concern for an L shaped recovery, which is to say stocks not going up for a long time. One thing is certain, having an emotional reaction will not make things better. We know a couple of things about the big picture. The crisis is such that there will be big failures. Hang with me on this. There are always big failures during events of this sort. The failure of WaMu seemed to not matter to markets. The shock of big failures on this go around is over. This may help toward easing apprehension which IMO contributes to the idea that in terms of points lost we are much closer to the bottom than the top (my thought all along has been a bottom around SPX 1095), the timeline for a bottom is anyone’s guess I’ll go Q2 2009. We know that dramatic action is at hand, either a bailout comes through or it does not and if not we may have a bit of a panic as a reaction (a no-bailout-panic might actually resolve this a little faster). So that is my opinion about what will happen (nothing new). It will either be right or wrong but hopefully I have conveyed my being less concerned with being right about bear market magnitude and more focused on sticking to the defensive strategy I laid out long before the crisis began. If you did the same then...

Sunday Morning Coffee

Just a few stray thoughts this morning. What did you think about the presidential debate? I watched so I wouldn’t miss anything as opposed to expecting to hear something great. I think I have been consistent in expecting that Obama is going to end up winning (not a preference just an expectation) but one thing I just don’t get and am surprised that we don’t hear more about, but why do so many people think that a senator in his mid 40s serving first term (of which he has spent a lot of the time campaigning) is the best choice for the job? My dad made a comment about Palin lacking experience and having her only be one heart beat away makes him uncomfortable. Fair enough but Obama is only a couple of years older and he would be the heartbeat. Is Fox all done with the Business Block on Saturday morning? For several weeks now the shows have been preempted (maybe they were shown later in the weekend?) for special crisis coverage. At some point the special coverage becomes the regular show, doesn’t it? As I write this there is no deal yet on the bailout. There is a consensus that says if they announce a deal that the market will then rally. It certainly could but if everyone thinks it will go up I’m not sure how it can go up. One reader noted that muni money markets are yielding more than taxable money markets and wonders if that is where money should be placed. I tend to be very conservative with this sort of thing. In...

Sunday Morning Coffee

Just a few stray thoughts this morning. What did you think about the presidential debate? I watched so I wouldn’t miss anything as opposed to expecting to hear something great. I think I have been consistent in expecting that Obama is going to end up winning (not a preference just an expectation) but one thing I just don’t get and am surprised that we don’t hear more about, but why do so many people think that a senator in his mid 40s serving first term (of which he has spent a lot of the time campaigning) is the best choice for the job? My dad made a comment about Palin lacking experience and having her only be one heart beat away makes him uncomfortable. Fair enough but Obama is only a couple of years older and he would be the heartbeat. Is Fox all done with the Business Block on Saturday morning? For several weeks now the shows have been preempted (maybe they were shown later in the weekend?) for special crisis coverage. At some point the special coverage becomes the regular show, doesn’t it? As I write this there is no deal yet on the bailout. There is a consensus that says if they announce a deal that the market will then rally. It certainly could but if everyone thinks it will go up I’m not sure how it can go up. One reader noted that muni money markets are yielding more than taxable money markets and wonders if that is where money should be placed. I tend to be very conservative with this sort of thing. In...