TGIF-No-SGIF

“Thank god it’s Friday” is famous and happy phrase but not now, for bull investor it is “Save god it’s Friday” from bears.  All bear investors hibernating in first 4 days of week and collecting all information (I don’t know where are they storing information, but bull know source and why) and dumping stock like right, center and left on Friday. This Friday’s sell offs are very well coordinated, bears coordinated from all over world, it was happening very early in the morning. Most of the sell off are out of panic and with panic these bears loosing logic and thinking power, just take all news as literals and getting more panic.

So for a smart bull it is good time to jump on, I don’t think so, this is tempting to jump in. Very low P/E ratio, major indexes lost almost 20% on average this month alone, all panic sellers are done with their selling (still they are out??), in other words bears are gone for permanent hibernating. All reliable technical indicators, fundamentals and theory, are showing to return to the market. For example, Google is selling at 21 P/E which is unbelievable and highly attractive now.  

We are having following positive factors.

  • positive GDP growth so far (which is why we are not officially recession yet),
  • very low oil price (comparison wise now oil $2.78 per gallon is almost free),
  • second stimulus package (hopefully)
  • narrow timeline to election (find some concrete answer about who will be next president)
  • positive existing home sales(just starting to turn as green)
  • ASEN influx of $80 Billion into market
  • Dollar value increasing against all other currencies. (Especially Indian rupees now Rs 50 per dollar first time in history, hence most of my Indian friends tempted to go back India, but Indian government don’t want to us to come because they can’t handle more population…just kidding).

The sole issue now is, some banks are run out of money to lend again to consumers. The money rotation stagnates and people unable to borrow money.  But I think it will time to reenergize credit market again, the $700 Billion bail out package would take some time to come into main stage. But real remedy should be government buying unsold house from buyers and hold it for sometime or help them to refinance toxic mortgages.  

But here I want to follow blatantly the 2000-2002 market pattern, which is S & P index fell to 700-750 points with economy was deep recession. We are not there yet at the current situation. Now S & P holding at 870 points, still 170 points to go, which is right time to jump in with aggressively towards stocks not mutual funds or ETFs?

Comments

Anonymous said…
It is a sad state of affairs. BSE has lost 940B$ in market cap. Even the Ambanis have lost 80% of their wealth. Hope the good times return soon. Untill then cash is the best bet i think.
12:57 AM
Subba Muthurangan said…
Yes...Ambanis to Gates and Kandaswamy to Joe all lost their wealth. This is very bad time.
6:29 PM
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