Monday, July 14, 2008

The Week Ahead....

I don't expect this week to be easy. Friday's trading session was extreme to say the least. Presently I think that a large majority of small investor's are shorting the market. I have recently been receiving calls from friends telling me how much money the are making in these markets. Their current strategy is to buy puts on individual stocks as a daily trade. Great idea and one which is working, but it is very similar to the calls I was getting in 1999-2000, but then it was being long Technology stocks. Back then "Everyone" (except Buffet) was buying Technology stocks and making a fortune (at least on paper). I was one of those people also, but it all ended badly. Shorting stocks has proven to be a poor investment over the medium to long term, will this time around be any different, time will tell.

In yesterday's WSJ there was an article titled Stop worrying and learn to Love the Bear. In it it describes how after a Bear market stocks become so cheap that in the ensuing Bull run you more then make up for it, or so that is how it has worked in the past. I am an optimist and believe that over time (I sure hope I have enough time!) things will come back, but I think this market highlights the need for diversity. Real Estate, Great. Some stocks, bonds...very important. Just don't forget to have some cash around to provide the all important Sleep Factor.

This week will be trying, IndyMac failing, North Korea pulling out of talks with South Korea, tensions in the Middle East (Israel,Iran...not to mention U.S./Iraq)all will be weighing on the market. Inflation numbers are also out this week and look for them to be bad, VERY BAD. I am not happy about any of this but think this is another case of excesses in the market working their way out, think Tech stocks in 2000.

Good Luck and Good Currency Trading



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