The markets are in freefall now, with today's close being the lowest in more than a decade. All trends have been broken and the market is going straight down.
Everybody keeps saying that the markets don't go straight down, they bounce. When this went straight down in October, it bounced because volatility was high. Volatility is low and earnings are collapsing. There is no reason for the market to bounce. To make matters worse, those who can invest broadly across asset classes are now viewing equities in any company with leverage as nothing more than an option on the underlying companies continuing as going concerns.
Old rules are no longer applying. This is not only unbelievable, it is unprecedented. It is time to accept it.
I miscalled the bottom at the beginning of the month. I took my breaks and sold a ton today and it was painful, but I will sleep much better tonight.
Aside from a handful of stocks in the energy sectors, technology and biotech, I am out. I'll think about getting back in at Dow 6000.
Comments
Herman Kline
February 24, 2009
The extraordinary thing is that so many thought that we were near the bottom in January and didn't think that the market would fall so much over the last month. Some of the most visible shorts, including Paulson, Doug Kass and Jim Chanos, all of whom minted money last year, publicly expressed skepticism about a fall far below 8000 on the Dow.
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