3.14.08

   3.14.08

       For the week the market finished little changed from where it started on Monday morning. Sounds boring, doesn’t it?  Not so. The week included a 153 point plunge for the Dow on Monday, a huge 416 point rally on Tuesday, a 210 point swing from high to low on Wednesday (but with the Dow closing down just 46 points), a 340 point swing from high to low on Thursday (but with the Dow closing down just 35 points), and then came Friday's ugliness.  The pre-open indicators were positive, the market got great news on inflation in that CPI report, and the Dow was up 50 points in the first few minutes. Then, the news hit that the Fed had to step in for an emergency rescue of Bear Stearns, and the market immediately dropped into a dark hole with the Dow down 312 points in less than an hour. There were attempts at a rally, but it was still touch and go right to the end as to whether it would close even lower. The Dow finally closed down 'only' 194 points. It's no wonder that investors, whether long or short, are becoming shell-shocked. This week's blindside blows to the market, the news of the collapse of Carlyle Capital early in the week, and Friday's near collapse of Bear Stearns, hit just as there were some potential positives showing up to provide hope. 

The Fed's decision to provide $200 billion in loans to troubled financial institutions, for which they can even use their toxic mortgage-backed securities as collateral, is no small thing. In fact, if Bear Stearns could have waited until that plan begins on March 27, Friday's shock to the market would never have taken place. Bear Stearns could have just availed itself of a loan from those funds. That it couldn't wait another 10 business days is an indication of its dire straits. 

This is why we have been in Cash since Jan. 8^th.  Kenny Rogers said it best in the song The Gambler, “You gotta know when to hold them, know when to fold them, know when to walk away, and know when to run.”

We are still 100% in CASH. Some time in the future we will get back to normal markets, but now in not the time. This coming week is only 4 days, being closed on Friday for the start of the Easter week-end.

Till next time

The MTA Staff