Capitulation!
The VIX is pretty darn whip lashed. This is nothing new to anyone not under a rock for the past months. However, this is like saying the shingles on the house are blowing off when all you have to do is look out the window at the tornado tearing up your prized green, green grass.
Many are starting to say that a stage of panic has passed, that Wall Street is curled in a ball, wallowing. Hedge fund managers are unloading equity positions that if kept will give them the boot. The DJIA today, within the first ten minutes of trading had dropped 400 points. The USD stacked up against the Yen today is a 13 year low, 95 Yen to 1 USD. USD to B.P. and Euro? A five year high of $1.55 and a two year high of $1.25 respectively. There is also an election that is seems more epic as each day passes.
The condition of our economy, government and situation in the world is ridiculously impossible to wrap a logical thought around. I've heard ad nauseam how we got here, many different viewpoints, with many hypothesizes making much or no sense at all. This current state that we are in, makes me increasingly glad I am majoring in economics. I am no fool, I do not think by getting a paper and taking economic classes at a university will make me Greenspan (wait, he's no longer an idol). I do believe however, whatever I learn will be more knowledge to me than is currently had. This is an aggravating time not to know the groundwork behind our economy's position in greater detail.
Saying all of this, I think it is an amazing opportunity to invest in the market. I do not say this lightly, much research has to be done before anyone invests in anything as "Risk Comes from Not knowing what your doing" (Warren Buffet). Not to say anyone, even Buffet knows the entire situation of the current market. I believe, there will be a recession lasting halfway through 2009 if not more and during this time buying opportunity of great companies that are mired by these conditions. This has been said by many, many people, I believe in history as a good indicator of the future as well. It is really just stating the obvious.
I am not saying that buying into an unstable, volatile market should be done on a whim though, with the logic that "All equities should go up, they can't get any lower right?" Many, many companies, esteemed and not so esteemed will not be around in 2 years, or still alive, bankrupt, and obliterators of you hard-earned money. Be very wary of companies that are a value trap. They seem like an amazing steal, they are down 60-80% of their value from 3, 6, or however many months ago. Oh, and they are riddled with debt problems, payments are due in months with nary bit of capital to be seen.
Finding a company trading less than it is worth is not a hard thing to do at this time, but you have to be able to stomach a possible steady decline in price over the short to mid term. I believe thinking down the road by a few years is the wisest thing for any unexperienced (myself) and experienced investor to do. If anyone is looking for short term gains they need to be in the know to have a fighting chance, and the time and wherewithall to do it. Both of which the majority of investors do not have, myself included. For heaven's sake, do not take Jim Cramer or any other clown's, who think they can predict the markets, advice as the Rosetta Stone to investing.
Do your own research, treat everything with a skeptical caution, use logic and whatever method works the best for you at breaking down what you read and what you perceive as truth. Then take that perception of yours and analyze it's own merit. The internet is an amazing creation, you have the world at your fingertips, > good and < bad information is bountiful and it is your duty as an informed person to find the point of truth in the middle of each claim.
A few sites that I like to read and are good at getting your feet wet are:
Investopedia
Market Watch
Conde Nast
Seeking Alpha
Blogging Stocks
Remember, that every site you ever encounter has an agenda. It is your duty to figure this agenda out, further understanding what slant it has. People will always recommend stocks, strategies and general ideas that benefit themselves in some way.
Understanding this, is a critical step to researching intelligently.
Many are starting to say that a stage of panic has passed, that Wall Street is curled in a ball, wallowing. Hedge fund managers are unloading equity positions that if kept will give them the boot. The DJIA today, within the first ten minutes of trading had dropped 400 points. The USD stacked up against the Yen today is a 13 year low, 95 Yen to 1 USD. USD to B.P. and Euro? A five year high of $1.55 and a two year high of $1.25 respectively. There is also an election that is seems more epic as each day passes.
The condition of our economy, government and situation in the world is ridiculously impossible to wrap a logical thought around. I've heard ad nauseam how we got here, many different viewpoints, with many hypothesizes making much or no sense at all. This current state that we are in, makes me increasingly glad I am majoring in economics. I am no fool, I do not think by getting a paper and taking economic classes at a university will make me Greenspan (wait, he's no longer an idol). I do believe however, whatever I learn will be more knowledge to me than is currently had. This is an aggravating time not to know the groundwork behind our economy's position in greater detail.
Saying all of this, I think it is an amazing opportunity to invest in the market. I do not say this lightly, much research has to be done before anyone invests in anything as "Risk Comes from Not knowing what your doing" (Warren Buffet). Not to say anyone, even Buffet knows the entire situation of the current market. I believe, there will be a recession lasting halfway through 2009 if not more and during this time buying opportunity of great companies that are mired by these conditions. This has been said by many, many people, I believe in history as a good indicator of the future as well. It is really just stating the obvious.
I am not saying that buying into an unstable, volatile market should be done on a whim though, with the logic that "All equities should go up, they can't get any lower right?" Many, many companies, esteemed and not so esteemed will not be around in 2 years, or still alive, bankrupt, and obliterators of you hard-earned money. Be very wary of companies that are a value trap. They seem like an amazing steal, they are down 60-80% of their value from 3, 6, or however many months ago. Oh, and they are riddled with debt problems, payments are due in months with nary bit of capital to be seen.
Finding a company trading less than it is worth is not a hard thing to do at this time, but you have to be able to stomach a possible steady decline in price over the short to mid term. I believe thinking down the road by a few years is the wisest thing for any unexperienced (myself) and experienced investor to do. If anyone is looking for short term gains they need to be in the know to have a fighting chance, and the time and wherewithall to do it. Both of which the majority of investors do not have, myself included. For heaven's sake, do not take Jim Cramer or any other clown's, who think they can predict the markets, advice as the Rosetta Stone to investing.
Do your own research, treat everything with a skeptical caution, use logic and whatever method works the best for you at breaking down what you read and what you perceive as truth. Then take that perception of yours and analyze it's own merit. The internet is an amazing creation, you have the world at your fingertips, > good and < bad information is bountiful and it is your duty as an informed person to find the point of truth in the middle of each claim.
A few sites that I like to read and are good at getting your feet wet are:
Investopedia
Market Watch
Conde Nast
Seeking Alpha
Blogging Stocks
Remember, that every site you ever encounter has an agenda. It is your duty to figure this agenda out, further understanding what slant it has. People will always recommend stocks, strategies and general ideas that benefit themselves in some way.
Understanding this, is a critical step to researching intelligently.
Labels: Bernake, Capitulation, Debt, Investing, Market Volatility, Recession, Value
posted by Andrew at
10:31 AM
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