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Re: Random Observation #5

Concerning Peter’s Random Observation #5 below--yes, the stock market is really bad. I’m not a rich guy, but I crossed the six figure loss mark several weeks ago, and you don’t even want to know how ugly today’s 700 point loss was. I won’t know to total for another half hour yet, until mutual fund prices settle and are posted for the day. BUT, I’m drooling. Remember Warren Buffett’s axiom that the time to buy is when there is blood running the street and everyone else is panicking. He’s been waiting ten years for this moment, and that’s why he’s now buying up GE, Goldman, Constellation Energy, etc. Remember that shareholders have been beating on him for years about holding 40 to 50 billion in low-return cash. Just wait, he said.

Even if there is a really deep recession, the risk level now being priced into stocks and bonds is absurd. See this piece by my pal Kevin Hassett on just how absurd it is getting.

So yes, I have been buying stock every day this week, a little at a time. I’m still getting pounded of course and am almost out of new money to throw in. But the stock market has never turned in a negative ten year return even during the Great Depression. I figure I’m going to get a great return. I did in 2002 when I threw in big both times the market dipped to 7,500 or so.

And hey, if it doesn’t work out, my losses will allow me to escape Obama’s intended higher tax rates he wants to throw at me. So it’s win-win either way!

FRIDAY UPDATE: Looks like I’ll be going with the tax loss strategy!

Discussions - 7 Comments

Gentlemen, this is the time to buy.

There are HEALTHY companies whose stock values are nonetheless falling by virtue of a generalized panic.

But then again, often times "it takes money, to make money."

GM and Ford are penny stocks right now. However, they might not constitute a good buy. They have not funded their union negotiated pension plans and may owe more right there than the companies are worth. Speaking of wisdom, looking before you leap is always good advice.

As for GM and Ford, think of it this way, "penny stocks" on companies very likely to recieve Fed assistance, might be a steal. And since they're "penny stocks," -------------- how much are you out if those companies wholly explode or detonate.

GM and Ford are prestige corporations, and the Feds aren't real eager to pick up the obligations for their pension plans, but nor are they eager to see those companies detonate.

Which Senators are pushing assistance for them? Which party do those Senators represent. How important are the Electoral College votes in those states?

The Democrats are going to come riding to the resuce of GM and Ford. And those "penny stocks," down the line, not real quick like, but down the line, are going to be looking real good, REAL GOOD.

We're not talking day-trading or swing-trading, but holding stocks for an ultimate rebound. And for GM and Ford, ---------- those are very attractive.

I thought it was Templeton who said that one should buy at the point of maximum panic.

Actually I think Templeton and Buffett both got that axiom from Benjamin Graham, who was the mentor of both men.

So we are panicking, now? Is it official? I thought we could not be having anything like a "crisis of confidence" since we had paid so much not to.

If Congress had not passed the rescue/bailout package, would this have been worse? I would really like to read an article where some economist or Treasury official explains how "worse" would have looked.

Probably long-term, stocks you buy now will be very profitable. That is if we survive government assistance which does not seem to be doing quite the job it thinks it can.

How's this: “If you survive this with your capital intact and mental state somewhat sane there are unbelievable opportunities,” says Sean Peche, manager of BlueAlpha Investment Advisory Limited in London. which quote reminded me of this.

I begin to wonder if the true difference between this event and the Crash of 1929 is Prozac.

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