Quote:
Originally Posted by Slava
I wouldn't say that Claeren is my arch-nemesis (can't speak for moneyguy!). I do understand the sentiment that he sometimes posts...but if you aren't looking at buying in the near future you have to have some very good rationale for missing the enormous potential gains.
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Well that is admittedly a lot easier to say (in DOW terms) at 7500 than at 8300 and easier at 8300 than 10,000, 12,000, 13,000.
Obviously after the market gives up another 10% buying is better than it was before giving up another 10%.
My concern is more about people holding enough cash to ride out any pain they might have coming their way. Cash will allow you to ride a bit if you lose a job or if your parents or siblings need financial help. After that it is about being able to jump on the BIG opportunities that are going to start popping up as many/most people are seriously over-extended and need to liquidate, whether it is houses, toys, cars or stocks (etc).
Cash is not such a bad thing in this market and I really do not see massive gains any time soon. This market is not going to shift back positive and climb 400 points/day for 10 days straight. We are talking about an American financial system on the brink of collapse. If this were ANY other country on earth it would have already crumbled.
I look at it this way: AIG, ALL of the major iBanks, and at least one of the big banks (if not two or three) should have failed already and at least 2 out of 4 of GE, GM, Ford and Chrysler will also fail before this over. I am not sure how anyone is going to miss out on anything without those questions answered.
The only way I can see people being well off investing heavily right now because 'it is bottom' is because they believe NONE of those companies will fail AND the cost of keeping the remaining afloat holds no long term cost to the economy.
I know I believe otherwise, that whether they fail or whether american-corporate-welfare/socialization holds them up, this market is totally fubared.
Easily another 5%-20% drop if just one(!) fails.
That is when I am looking to buy. Assuming none of the other 3 look doomed at that point (which they probably will, Chrysler especially IMO). As millions face unemployment and the junk bond market losses billions (trillions?) the markets will buckle and real opportunities will be there for those with cash.
Inversely, if the government keeps printing trillions(!) to cover all of these holes it looks better short term in terms of the markets, but starts to look arguably even bleaker over the long term. At least if they fail outright America can take that tough look in the mirror that they need to take and start looking at the root problems of this financial breakdown. Bailouts just put off the inevitable IMO.
Claeren.