Knocked Out

What. A. Total. Mess.

Tonight's post will have two parts, a market observation half and the other half more of a rant. If you don't to read one or the other (or neither) you have been warned.

Shots to the Head

Roberto Duran KO8 Davey Moore (MSG, 1983)

I spend a ton of time on charts, various indicators, and screens to find short term trading ideas for my trading account. Vicious sell offs like this one are easy to dodge, just don't play. When the markets are getting dusted by combinations to the head leaving stocks dizzy and off balance, everything gets sold. Everything.

In my long term holding account I do have plenty of gold and silver (yeah!) but look at Hormel Foods (HRL), Hershey's (HSY), Coca Cola (KO), and McDonald's (MCD). I hold all of these from years ago. They are slow growers but are solid companies and pay nice dividends. All are getting whacked down. A drop of 10-15% for these types of companies can take a long time to recover from.

I am not selling anything here and won't unless I need the money (I won't). I am just trying to show you that even conservative portfolios are not spared in market massacres. If you invest in any way you have to accept this.

Everyone wants to know if this is THE bottom. With the FED on tap tomorrow there could be a setup for one amazing rally in short order. If the FED is not helpful, a crash is a likely occurrence in this environment. I have zero interest in playing that trade either way. I am on hold trading wise until we stabilize at SOME level and then move sideways for a bit. Right now if you are of the longer term investment mind set, many companies have been destroyed beyond reason here. Barring a global depression (who knows) some leader names are attractive. Write them down and keep an eye on things, there may be a chance to grab some good things at good prices.

Crippled by Body Shots

Julio Cesar Chavez KO12 Meldrick Taylor (Las Vegas, 1990)

I gave up on writing about the ills of the economic world around this time last year. The US federal Reserve started Quantitative Easing 2.0 (QE2) in an effort to, well, who knows what. Instead of market players and people in power asking the right questions and stopping such a gross application of liquidity most just jumped on board and looked to make a killing off it. Hope they did.

So what now? Record food stamp usage; no jobs; a slowing economy (wait until the market drop hits confidence, you ain't seen nothing yet!); and another historic stock market collapse. Want QE 3? Many are asking, no begging for just that. For what? Another rally fueled by nothing but air, then another collapse?

In boxing shots to the head can be overcome, if you can hold or get to the end of the round. Body shots sap the very heart of a fighter. When he goes down, he does not want to get up. We are at a point where belief in our government, faith in the FED, and trust in markets are putting people down and they don't want to get up.

Watch mutual fund redemptions. Regular folks never really dove back into the markets and those that did probably just got in a few months ago, just to get flushed again. While sitting in cash at 0% return sucks thanks to the FED, it beats getting murderholed to the tune of 20% or more.

Will the general community finally apply the pressure to get some reform? I want to think so. Will the people of the United States send every single incumbent packing next election? I want to think so. Will we finally start to have an adult discussion bout the economic future of this country? I do want that.

Instead, look for QE 3 in whatever form and the real issues to fall along the wayside once again.

Have a good night.