Relax, no reason to panic. In today’s WSJ everything is just rosy. There is a years worth of bad news in just one issue! CALPERS lost 21% of it fund since June (48 billion dollars). They even mentioned that 63% of their stocks were in the global market (talk about dumber than a sack of rocks). They might have to ask California employers for a 4% increase in contributions on top of the current 13%.
Then on the same page there is an article projecting state budget shortfalls for next year ranging from 2 to 10 percent depending on the state. Let’s just triple that to be more reasonable 6 to 30 percent. California was projecting 5% so we will figure 15%. What part of the state budget gets cut first? CALPERS employees: Teachers, Police, Fire, Highways and all sorts of government services. This is going to be fun for everyone!
Page 3: Chrysler will slash 5,000 white collar jobs. GE is going to cut their budget by 500 million. Christmas is just around the corner and Santa is at a hock shop pawning his sleigh. Talk about putting an "X" in Xmas!
Then on one of the back pages was a list of the top Mutual Funds. Notice the figures are as of 9/30/2008. The last 24 days didn’t do much for this years returns. (Double click on picture for a more irritating image)
Some stock analyst on one of the networks stated that there was 6 trillion dollars on the sideline waiting to get into the market. In order for that money to be absorbed by the market, they have to overpay for the stocks purchased by 6 trillion. Every stock has an owner even if money is on the sideline waiting to buy.
Denninger called for a collapse last Friday and it looked like a sure thing. The surprise was the massive buy programs that kicked in after the market dropped about 550. This had to be a coordinated group effort. Ben and Hank have been awful quiet the last 4 days, they probably had a hand in Friday’s outcome. I would bet that most of the hedge funds have redemptions of at least 50% to unwind in the next 65 days. Look for the Hedgies and Mutual Funds to sell into any rally with a vengeance to raise cash.
Examine the age of those commentators on the business news channels; there hasn’t been a bear market in 33 years. These people haven’t been alive long enough to experience one.
World markets are dropping. There is no "up" from here, only how far down are we going. Of course if you listen to "Damage Control," now is the time to buy. I foresee the Dow at 6,000 or less by November 5.
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