Tuesday, October 7, 2008

Best of the Net - Tuesday October 7, 2008

I've been a little short on words lately (rare). And considering I'm not the victory dance type, there's not much that has changed over the last two weeks to merit mention. Governments around the world are doing their best to ensure this crisis lasts as long as possible. The Canadian government hasn't succumbed to this madness as of yet, but I'm not holding my breath on that.

Overvalued stocks are being sold by panicky investors and as a function of forced liquidation by hedge funds. There appears to be no bottom for the markets, as profit forecasts are being lowered at the same speed that prices are falling. What was overvalued last week is no less so today as growth expectations get slashed. There will be a bounce sometime soon, but without the credit markets and the overall economy bouncing with it (not likely to happen) it won't be sustainable. And considering there is a far lower amount of shares short to be squeezed out (due to the short selling ban), a rally may not be as manic as it would otherwise. Exceptions to this may be the commodity sector that have been hammered mercilously despite trading at very attractive valuations.

But I'm not at the point yet where I'm willing to risk my precious capital on an asset that everyone agrees is difficult to put a price tag on. Furthermore, a bottom is not a bottom if there are still people all over television telling me to buy. I am starting to get phone calls from people who I normally wouldn't asking me what I think they should do. That is one contrary indicator. But I want to start hearing folks tell me that, "buying stocks is a one way ticket to the poor house." That, "NOBODY makes money in the stock market!"

Then I'll buy.

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