Saturday, October 11, 2008

Capitulation or Head Fake? Capitalism or Socialism? Recession or Depression? Reality or Hype?

It looked like capitulation, but how many of us are so jittery that we are scared to test it. Many pundits are now saying that markets get undervalued just as they get over valued. I am certainly not ready to jump back in full force, but I also do not believe that every company in America is going to be worthless. This is not the end of the world, and I have heard some very interesting ideas as to why there is so much panic on the street. I was talking to someone yesterday that said the politicians need for everything to look bad so they could pass the bailout bill. Sound totally unreasonable? I have heard stranger ideas. Look at what happened when the house first tried to pass the bill, they got so much negative feedback from their districts that they could not get the votes to pass it. Then in the following we days we say the credit markets get worse and yes the mainstream media has enjoyed the heck out of this. Nothing is a better calling card for viewers than to preempt your regular programming to have a discussion about A FINANCIAL CRISIS. Nothing would reach the minds of as many people in our country except some type of major health epidemic. So we have it pounded into our heads over and over---people who normally don't even think about the economy begin watching and waiting, listening to the next so-called expert to see if their money will be safer in the bank or the mattress. We get a crisis of confidence and hence a bailout bill is passed and signed by the President. Every day consumers are still out spending. NOW I AM NOT TAKING LIGHTLY THAT SOME HAVE LOST THEIR JOBS. I UNDERSTAND AND RECOGNIZE THAT UNEMPLOYMENT IS INCREASING. I am however mindful of the fact that unemployment is not nearly at crisis levels let in terms of the entire economy. Normal economic cycles include recessions and when you have excesses prior to the recession, you can expect it to be deeper. Alan Greenspan fought the normal economic cycles and contributed to the nations level of excess living. Now we have to pay for it, but we will survive and we will grow again.



moneymaniac said...

Look at the levels seen in the great depression and the 87 crash. We are at those levels and it will rally from here especially once we get past these elections. Short Gold and Buy Amercian.

Dollar.Discipline said...

I believe we may still see some wild swings but hopefully not as pronounced as we've seen this past week. People will begin to realize that this is a good time to buy because there is real value in this market at these levels.

Dollar cost averaging and discipline are the keys at this point. If you move much of ANYTHING now, you have surely lost value. Hold what you have, wait for the gradual return and re-assess your level of diversification as well as risk tolerance for future planning.

The thrill of victory does not nearly equal the agony of defeat. Look LONG and stay on course.