When Paulson came out today and stated that his earlier plan to save the western world was not working, he offered up a plan "C" (or is it "D") to relieve pressure on consumer credit, scrapping his earlier effort to buy the value mortgage assets.
No matter what happens or what the next plan is here, are the 3 reasons I believe stocks are headed lower.
Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.
Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.
Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.
New Video analysis of what could really happen:
http://www.ino.com/info/259/CD1765/&dp=0&l=0&camp…
Okay, so let's look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the '70s. That bear market was brutal as it did not let anyone out. Over the course of the early '70s, the bear market basically wore people out to the extent they eventually just threw in the towel. We believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.
The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope. The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace. Only when we see the new regime take! off ice this coming January will we see any meaningful changes.
The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama can not make any sweeping changes until he is sworn into office. Yes, he may hit the ground running, but the reality is, it's not for over two months from now and a lot can happen to the market in two months. The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and I expect they will be, it's going to push this market and everything else down to new lows. It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.
Having lived through the bear market of the '70s, I know firsthand how difficult the journey we face is going to be. Now this may seem like a very pessimistic outlook and in some ways it is, however there are always opportunities to make mone! y i n the marketplace. These opportunities may not be in stocks! , it may be in forex or the commodity markets.
So buckle your seatbelt. I think we are in for a bumpy ride...check out the new video analysis:
http://www.ino.com/info/259/CD1765/&dp=0&l=0&camp…
Adam Hewison, President, INO.com Co-Creator, MarketClub
seriously agree with you on the 2nd regarding the govt.
it seems that they're almost trying a trial and error strategy
..im sure the phrase "Lets throw it against the wall and see if it sticks" or some variation of that has been thrown around between these masters of the universe..
but they don't have a tried and true method for dealing with this. at this point, i wonder if they govt. should have interfered as much they did, if at all.
Hoover's methods didn't help the economy before FDR arrived (referring to the great depression). I'm going to go hit the history books and refresh about what happened during the 70s with nixon and ford (the president, not the car company).
although a lot of money/savings has been decimated, ppl should be happy they still have a source of income and a warm home.
Quam dolorem aut atque velit. Non libero dolor consequatur vel consequatur quia praesentium voluptates. Corporis repudiandae et consequatur voluptatem incidunt possimus. Voluptatibus dolores nulla rem qui tenetur ea.
Modi sint omnis est et architecto nihil. Vel illum eum rem. Placeat ut et iusto mollitia aut. Voluptatem vero est aut fugit delectus accusamus. Et est eos repellat sit.
Et incidunt illum aliquam repellat. Molestias aspernatur distinctio et ipsum eius. Maxime nobis non odit laborum officiis. Ea nostrum fugit nemo id est. Exercitationem molestiae aut optio dolor. Ex corrupti similique illo doloribus molestiae vel.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...