Countdown: Only 12 more days to Dow 0

Justin, pretend for a moment that you are the current President of the U.S.

What would you do between now and the election?

The current President will not do much of anything, except perhaps show up on the lawn from time to time to wave and say "Courage." He is a spent force. He should crawl back to Crawford right now.

re: buying opportunities in the broad market, I agree, Justin, soon but not yet.

Question is what to buy into?

GE? Ford? GM? All are incredibly low and are presumably safe since they are too big to go under, sound familiar?

What about companies positioned to profit from a favorable clean energy policy when Obama wins?

I'm going to invest in stocks as they go down, using ETF indexes. However, when it gets to zero, I'll really dive in.

http://cityroom.blogs.nytimes.com/2008/10/09/hfo-as-the-markets-sink-one-club-introduces-the-1000-lap-dance-done-with-art/?hp

Where To Invest In A Meltdown
I'm glad that someone's prospering:

"The implosion of the financial markets seems to mark the twilight of the second gilded age. History may look back with scorn at $30,000 couches, $600-an-hour therapists, $25,000 hot chocolates and super Sweet 16 parties.

The Wall Street folks, you'd think, seem to be saying goodbye to all that.

Except, apparently, in one area: strip clubs (or “gentlemen's clubs,” as they like to brand themselves).

“Since the market has been going down, our business has been going up — it's unbelievable,” said Sam Zherka, the owner of the V.I.P. Club in Chelsea, who estimates that about 80 percent of his clients are Wall Street types. (You'd think the lawsuits would have dampened that, but it seems fine as long as they're not entertaining clients on their work-related expense accounts.)

Mr. Zherka added, “A lot of guys are losing their shirts in the market, and they are coming in droves.”

Sounds like a great investment opportunity!

With the Dow below 8,000 or S&P below 835, I think it would be time to go all in.

What about a second stimulus directed to infrastructure? Why are we waiting?

Deference to Joe Klein.

http://www.time-blog.com/swampland/2008/10/consumer_credit_crunch.html

"Yes, we need better regulation of Wall Street in order to avoid the sort of bubbles and distrust that have generated a credit crisis. But even more than that, we need to get money back into the pockets of average American consumers -- including major investments in infrastructure, affordable health care, and a more progressive tax code."

--Robert Reich

Speaking from Asia, I see some differences and similarity between you guys and us then.

Similarities,
- Over expanded credit, artificial value of assets (both property and commercial papers)
- Problem began in the the financial markets rather than the real economy but that trickle down later.
- Panic selling, irrationality, inept response (in the initial stage) from the office bearer and politicians.
- Sudden flow of funds (though in US the funds was curbed by FED since two years ago in the last days of Greenspan but nobody cares.)

Differences,
- Less external forces (like outflow of funds to overseas).
- Currency rate adjustment has been carried out in the last one year instead of now (surprised by the strength of USD?)
- More flexibility in the economy.
- Household are more highly geared in US/UK then Asia.

The above are just general top of the mind, there would be more if more detail research is done.

If Asia could recover (both the real economy and financial markets) to a certain extent, how many of you think US (& UK & Europe) would not? Unless these countries have lost their senses of how to deal with problems (why we all flock to US and Europe to learn the business strategy and economics theories?), and people became too selfish (and lost confidence in the authorities) just to protect themselves; massive bank run!

But where is the all the money going to go?

Inject confidence in the market and the household. Protect the savings and keep liquidity in the money market. Stop the panic. Deal with the rod and punishment on those responsible later.

For me, is time to buy US stocks.

We may have broke 8000, but we are only in the middle of a downward trend. De-leveraging means getting all the leverage out of inflated equity prices. You know, just like the price of your house. All the talk about this being the time to dive in is wishful thinking. The time to dive in will precede a return to growth based on fundamentals as opposed to leverage and gimmickry.

Of course we will never hit zero according to Zeno's paradox. That explains why AIG is still trading. You can drop 50% every day and still have 50% left.

"Justin, pretend for a moment that you are the current President of the U.S.

What would you do between now and the election?"
-----------------
two things:

1. tell everyone to vote democrats out of office at every level of government and refuse to vote for their junior senator.

2. tell everyone that there is nothing to fear but fear itself ... as long as they vote democrats out of office at every level of government and refuse to vote for their junior senator.

...The problem with those answers, with most answers, is that they strive to contain cause and effect within a single trading day when the real story is much, much bigger......And confidence, unfortunately, is much easier to lose than to gain.

Barbara, nicely done!

I agree that a multiple of factors likely led up the the sell off. However, it is likely being made worse by short selling. It sickened me a few days ago to hear a talking head on CNBC talk about shorting the S&P and expecting to wake up to a "Christmas present". Is the ability to borrow and sell other people's stock really a right and/or necessary to the efficient functioning of the market? In any case, it seems that we should strongly enforce the ban on naked short selling and restore the uptick rule. This will at least curb the more destructive forms of short selling.

given all the funny money being thrown at the "financial infrastructure" right now, Fox may be right about the stock market not being a bad deal right now -- the inflation caused by throwing trillions of dollars trying to rescue what is essentially a pyramid scheme will result in higher stock market prices relative to interest bearing investments.

The fun part is that we're going to be seeing a default by literally every bank in the not-too-distant future. The 22,000 banks that are part of the "MasterCard" partnership, and the 21,000 banks that are part of VISA, are all going to sustain considerable losses as more and more people default on their credit card debt... the chaos among the big financial institutions is just the beginning of the end here....

Thanks, Adam Florzak!

BREAKING REPORT:

TOKYO--Financial Godzilla has arrived...

You have your fear, which might become reality; and you have Godzilla, which IS reality.

What is the uptick rule? I keep hearing people talk about it.

Following is a definition of the uptick rule from http://www.investopedia.com/terms/u/uptickrule.asp :

A former rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines. The SEC eliminated the rule on July 6, 2007.

Maybe now that we are not hiring hordes of people to staff the corner loan offices or mass marketing phones to peddle the ever expanding innovative credit schemes marketed during the last few years we may see a willingness for creative people to work in our factories to truly design and produce products the world is prepared to purchase from us rather than the converse. In my opinion, as we consider our balance of trade this is the only long term solution to the market's problems. Anything else just delays inevitable market forces. We must return to being a nation that can sustain itself and live on the fruits of our labor without financing our way of life by subjugating ourselves to the various world powers that control our destinies. The horrific way out of this dilemma is a well honed capitalistic free market method. Settling for less, allowing rampant inflation to return, and hard work by the population will set us free. The pain will be real and difficult, however it is the only way. We Americans will never repay what we already owe China and other financiers of our lifestyles in current dollars. They will only be repaid with dollars worth much less than they are today. Seriously, our system is by design programmed to work this way, whether we like it or not. In spite of how the rest of the world views the U.S.A., it is a system that has been tried and tested over and over. So are we ready?