From a newsletter. Couldn't have said this better -->
A lot happened in the past year. 4 Trillion dollars disappeared from the market. Naturally money doesn't just disappear, it "changed hands". Basically it went from honest hard working people into the greedy hands of Wall Street professionals who were very happy to take it. To a large extent you were lied to and cheated by them.
How? Easy. On television, in magazines and on the radio we heard day after day that you should stay the course, bear the inevitable dips, have "long range goals". What hogwash. While they were telling you to buy and hold, they were selling for all they were worth.
So, we watched the market melt. Families were hurt, 401K plans cut in half, IRA's slashed, retirements put on hold. It was disgusting to see the same investment houses who were selling so hard, parading their analysts on TV telling you that cowpoop.com was worth 400 dollars per share.
The truth is not always pretty. So, we fell like a rock hitting a low on April 4th on the NASDAQ. Since then we have seen a mighty impressive rebound in the technology sectors. The DOW also pushed higher, almost flirting with an old high. Is it all over, and it's on to better times? Maybe, Maybe not. We have our suspicions.
We have had a lot of fun trading into and out of this rally. But we aren't convinced that the worst is comfortably behind us. Debt levels are at all time highs, bankruptcies are up 24%, Manufacturing is in a deep recession, and tech companies are singing the blues. All of the recent run up has been in the "hopes" of better times to come. Every "talking head' on TV is telling you to buy now, the better days are coming. But each day we see the better times getting pushed further away.
At first it was "the second half recovery". Well considering the second half starts in three weeks they have pushed it to the "fourth quarter" recovery. Some are already talking about the second half not happening until July of 2002. But the market is ignoring bad economic news each day.
The market is avoiding the bad and focusing on anything that resembles good news. For instance XLNX said, "order cancellations have slowed". Notice they didn't say they stopped or business is increasing. But the Street accepted that as "good news" and bid them higher. Are we getting lied to again?
Maybe friends. Here is our point. The market has come a long way since April and its all built on hope. If the hope fades, we could be looking at another very serious sell off that would hurt your IRA, your trading accounts and your 401K plans.
One might consider this: Once this "hope" rally runs out of gas, If the market starts to fade, why not make the phone call and transfer YOUR money out of the hands of money managers who have an agenda (namely to keep getting your cash) and place it in something safe like money market cash accounts? What is the worst that could happen? Not much and you could be ahead of the curve and locking in the healthy rebound gains you have just gotten. |
