Elvis Has Left The Building...

By Roger Nusbaum | October 10, 2008 | 11:40 AM | 1 Comment

...and he took logic and reason with him.

The market action is completely devoid of any and all logic. Prices have been taken down in a manner not justified by the fundamentals for more than 95% of the stocks out there. Fear and panic are ruling the roost.

While I believe the above paragraph is correct (even if worded a bit sensationally) markets act with no logic or reason occasionally, nothing new about that. Crazy selling does not have to end today even though the open does show some classic signs of a capitulation.

I don't know where a bottom is but it is easy to recognize a freak out, this is it. Do you own individual stocks? How many are going to go out of business? Do you use index funds? How many indexes will go to zero?

Hopefully you can recognize this as a freak out and are not following suit. This is not an attempt to be Pollyanna or tell you to jump in and buy but more just to say step back, take a breath realize this sort of thing has happened before and that panicking has always been the wrong trade.

I'm not buying either. It probably is a good time to buy but I admit that I am not comfortable doing so. 

For several years I've been writing about taking defensive action early on, like when the yield curve inverts or when the SPX (NSDQ: SPX) breaches its 200 DMA. Hopefully you had some plan of action but if not hopefully you can keep your head about you enough to try to learn from this bear so that you will be better prepared for the next one.

Bottom? A lot of talk this morning on CNBC, MSN, FOX, etc., that this morning could have been the bottom. Hopefully.. But we can't really believe them anymore. Submitted by CameronQuin on Fri, 2008/10/10 - 12:33pm » reply |