(The purpose of this entry is so that I can look stupid for crying "Wolf!" and, thus, so that you can be laughing at me six months from now when the NASDAQ is up at 6000 and the DOW has hit 20K or whatever. Really, for the sake of all the folks who are about to get burned, I really would like to be wrong about this.
... then again, for the sake of the various bets I'm placing, and for the sake of the re-election chances of a certain venomous turd (or collection thereof), perhaps not...
and, for those of you who have been following this story, no, there really isn't anything new that's triggered this; just the gut feelings piling up + some vague signs in the latest S&P 500 charts that a non-guru like myself can interpret as "exhaustion"
Summary: If you are currently heavily into the stock market, now might be a good time to be getting out.
Or if you don't want to get all the way out, at least get half
out. Diversify. There's nothing dishonorable about having a big chunk of your assets sitting in money market.
You probably won't manage to catch the top, but in the long run, you'll be very happy to have been out of there when the 16-ton weight came crashing down.
Yes, I'm surprised that we didn't start sliding a few months ago, but that still doesn't really change anything. This "recovery" is
largely explainable in terms of one-time effects (GDP spike attributable to Iraq war buildup, last gasp of the refi boom, taxcut checks coming back) and thus not sustainable. The powers that be are clearly trying to juice things along until the election, but unless there are some really odd tricks up their sleeves, I don't see how they're going to make it given that they are out of ammo (interest rates can't go lower; they can't start another war;...)
The year is now 1973; "LBJ" has fucked us over deficitwise and OPEC has just cut production. Obviously, some things are different this time, e.g., the US is now a net debtor nation rather than a net creditor, we are way more dependent on foreign oil, and the US dollar now has viable competitors in the contest to be everbody's favorite World Reserve Currency (read EURO). And we are more dependent than ever on the good graces of Japan and China who are both buying T-bills like mad to keep the dollar propped up.
"Buy and hold" may have been a nice strategy for the roaring bull market of the past 20 years but as far as equities are concerned, we're in a secular bear market and the rules are different now; "Buy and hold" might well mean waiting 10 years to get your money back.
Or, if you're really intent on doing "Buy and hold" then you need to find something that's currently in a long-term bull market: like gold or silver. That's pretty much it for bull markets these days.
Anyway, you've now been warned.