Originally Posted by ILpb4ll
I just read the wall street digest last night and they are seeing right now as a great buying opportunity. They are bullish until 2009. After that they talk about maybe even a recession as some of the real problems like our debt, social security, medicare, and medicaid liabilities begin as the baby boomers really start to drain our budget. If the market would just get over the miniscule sub-prime scare, and focus on the market being undervalued by 35%, things should turn around.
Maybe if you are going really long like 10+ years its a great opportunity, but the near term it is most definitely not. We will see a decline, there is no question. It is just how long that decline will actually be. Some are calling for a simple and quick 6 month correction. Others are saying we are going to hit recession until about 09-10. As I posted earlier, institutional buying is very high right now and institutional confidence is also high. Do you trade like and institution? If so then maybe you can play like they do but chances are you do not move markets with single trades.
If you are trading, then I would look short. No question, maybe there are some exceptions are far as Pharma and tech go. Other than that I don't see to many other strong sector plays. If you are looking to go long, then employ a strategy similar to Tom's which is not to drastically change your plan. The market will go down and you will buy it all the way down. Then the market will go up and you can trim gains, and ride it down again. That is how the game is played, buy low, sell high. I really don't understand how the Wall St. Digest can suggest that this is great time to get stocks cheap. I think the last run up we had was from to many retail investors climbing onto a rally. Now they will all get hosed, dump their shares lower than they bought them and curse the market for another 4-5 years. The market is finally starting to correct just from the rally, add the sub prime crisis we are in for a bear market.
2 Main reasons the crisis has barely begun.
1. LIBOR hits new highs every day.
2. The majority of resets are going to happen in January.