Wednesday, October 1, 2008

Buy The Rumor SELL THE FACT?

The futures turned downward as soon as it was confirmed that the Senate had passed the bailout package. The vote of 74-25 seemed to send a clear message that there was a bipartisan movement to fix the problem. Many were saying that after Warren Buffett bought a huge stake in General Electric today the free markets could fix themselves.

Quite honestly I don't think the markets are going to know anything until the bailout gets done and we can see the results. Gold is not tunning that much higher right now and that is a good sign. We definitely don't need to see the markets get back down to Monday's closing level. If we do, I think we are going to see some more pain---FAST.
I really hope we don't get there and after we bounced today I saw that as a good sign.

As far as how I am trading, I am doing nothing but sitting tight. I have pinned my hopes on Natural Gas (i am sitting on the UNG). I still think FLR which I am holding has to benefit once we get growth going again, but the market has been telling me that I am wrong----very wrong. I am going to be stubborn and keep sitting on FLR for a while longer.

I have mentioned Southwest Securities (SWS) before and I like the recent action in this stock. I am sitting on it and am happy that it is within 10-12% of its 52 week high.

If the change in the mark-to-market rule stays in both the Senate and House bills, that could be a HUGE ASSISTANCE. I think that could be the shocker that refuels liquidity faster than most expect. It would certainly make me feel better about the financials immediately. It would make me take a look at AIG---even though I have said I don't want too own a company that the government will control. The question in my mind is If we change the mark-to-market will AIG bounce back much quicker?

We will see how things shape up and give you an update soon.

Even though we got the bailout is anyone else as disgusted with the political process/pandering/power playing as I am? Leave your comments.