Blog > US Stocks and Markets > Won’t somebody please light a match
Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

Won’t somebody please light a match

Today's Financial News - Posted April 6, 2009

The markets stink. Unfortunately, rolling down the windows and letting them air out won’t help us get out of this situation. Only time will do the job. Until then, there are plenty of moves to make.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore — (TFN): Sometimes an old dog’s flatulence is the perfect metaphor for a world gone mad. With a list of spring chores growing onto a second page and a young wife quickly learning to wag her finger, this was not the weekend to pack my bags and head to the beach.

Oddly enough, knowing that my in-laws were soon headed on a trans-continental trip with my guest bedroom as their final destination made the decision that much easier. If I did not take the time to relax this weekend, it could be a long time until I could muster up another excuse. And besides, it was a business trip. I had a book signing to attend.

Everything – the weather, the company, the food – was close to perfect all weekend. I rarely had more than a passing thought of my obligations at home, some 128 miles away. But about halfway through the three-hour drive home, my dog was transformed from a lazy, squirrel-watching canine into a supernatural beast of revenge.

Knowing that my conscience was not enough to deter me from two days of hedonism, some sort of higher being used my dog to spread the message. The method of attack? A god-awful stench – lingering and persistent, with a hint of rawhide.

As my wife and I simultaneously lowered our windows for the eighth time, I had a thought. Maybe it was the mind-altering scent in the air or the tears running down my face sparking a remembrance of the pain of the recent market collapse, but I realized my dog’s flatulence was no different than the stock market.

He fills the environment with a horrifying, gag-inducing scent and the windows go down. The rush of winds transfers the old air with new and the windows hesitantly go up. The trend continues, not until we give in and keep the windows up, but until the dog’s stomach settles or we jump the heck out of the car.

This market stinks

The markets over the last seven months have been eerily similar. We get a rash of horrific economic data and the indices plunge. Then our political leaders devise a plan to temporarily exchange the good air with the bad and the markets rebound.

But as we have learned, the next stock market plunge is never more than a “squeaker” away.

No matter what artificial means we use to clear the economy, we are not getting out of this mess until the internal turmoil settles. It will happen. We all know it always does. But it will take time.

For investors, there is a sense of encouragement. Thanks to last week’s accounting changes from FASB and rumors of a reinstatement of the up-tick rule, a lot of the shorts that were betting against the market have locked in their profits and moved aside. Much of the recent market surge can be attributed to short sellers buying stocks to close their positions.

But also, we have been fortunate enough to remain devoid of “game-changing” news. There have been no major bank failures. Detroit has yet to file for bankruptcy. And the Obama administration has only fired one CEO. Things could be much worse. North Korea could be a clue.

Still, I see no evidence of a large influx of investor dollars anytime in the near future. With shorting activity dwindling and traditional investors refusing to budge from their pile of cash, we are going to be stuck in a range-bound mess for the next several months.

The only way to get out of it is to get through the next earnings season unscathed and let the markets naturally heal themselves. It will happen, but there will be lots of “window-opening” events along the way.

So what does this all mean for you? It means put on a nose plug and stick with it. Just as it has always been, the key to financial success is buying low and selling high and, most importantly, maintaining a properly diversified portfolio. There have not been many better opportunities to buy stocks at a discount. But you have to be smart about it.

For savvier investors, or the hands-on type, I highly recommend the options market. When used properly, especially in a predictable, range-bound market like this one, options are a fantastic way to make money.

We have proved it many times over the last several weeks at TFN Strategic Trader. Just last week, we locked in gains of 60% in a trade that took just 23 hours.

For that kind of money, I would put up with just about any stench.


Next Article: Emotional Investing: Save the tears for a funeral

Related Articles

Posted by Andrew Snyder · Filed Under US Stocks and Markets 

Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

 Add to Technorati Favorites | Follow Us on Twitter!

Be the first to leave a reply.

Your comments are welcome