12.05.08

12.05.08

            The Dow has now been up 8 of the last 10 sessions and this is causing some investor to think that stability is returning after months of turbulence. We remain very cautious however, the volatility is excessive and the markets are very unpredictable. Unpredictability is the enemy. It makes it a difficult environment in which to invest, and even more difficult in which to trade. We still see “knee-jerk” reaction trading in the market on almost a daily basis. Look at Friday as an example. The ‘Employment’ numbers were ugly and I mean ugly. The Dow fell 258 points on the news as it should have. Later in the session however, it started to move the other way and ended the day up by 259 points. This is a swing of over 6%, 3% down and make that back, and end to the upside by 3% for the day. Why? Some folks said that the news was so ugly that the Fed would have to do something to correct it, therefore turning ‘bad’ news into ‘good’ news. In a way they are right, but not 6% right on ‘hope’ alone.

             For the week the Dow fell 2.2%, the S&P 500 gave up 2.3% and the Nasdaq closed down 1.7%. The really good news was that Oil closed at $40.81 per barrel, near a four year low. Oil has fallen a whooping 72% since its peak at $147.27 back in July. Gasoline in East Tennessee is now at $1,39 a gallon for regular unleaded. This alone leaves me with a lot more money in my pocket for other things. A friend of mine works at Berkline, the makers of Recliner Chairs. They were told on Friday that they would be working 12 hour days all this coming week. Things are bad in a lot of sectors, but there is some good news in others. I remember my father telling me that “bad” news is what sells newspapers. You have to look deeper to find the “good” news. 

            We are of course going to remain in the safety of CASH. It lets us sleep well at night.

 Till next time

 The MTA Staff