10.10.08
For the week, the S&P 500 crashed -18.20%, Dow -18.15%, the Nasdaq -15.30%, and the Russell 2000 -15.65%. London, Germany, France, and Japan were all down over 20%. And, the damage we saw is of historical proportions: The biggest one week loss ever in the US stock market. Many pundants are liking it to the crash of 1987. Many are saying it has bottomed or close to a bottom. Folks, this is a lot different than anything you have seen before. It’s a Global happening, Friday a number of countries shut down trading on their bourses after sustaining losses of 20 or more percent. This is a different animal altogether. This could have some of the implications of the 1929 crash. Now don’t panic, I’m not saying a world wide depression, but it is the most serious market condition many of you will ever experience in your lifetime. I believe the risks are way too high to accept that we are at or near the bottom. It very well could be, but it is not a good bet for your life savings. There are too many unanswered questions overhanging the market right now to place any bets on the markets direction going forward. We will know soon enough if we have hit bottom and it’s over. The smart money will stay on the sidelines and avoid the risks.
While all of us would very much like to return to business as usual, unfortunately there's little reason to believe that will happen anytime soon. The best we can do is manage our risk, stay opportunistic, keep our emotions in control, and keep our eyes open for signs that the worst is really behind us. As long as you do that, you'll be fine no matter what comes our way next. We of course are remaining 100% in cash and will keep you abreast of our read on the markets.
Till next time
The MTA Staff
