We are living in the middle of a breakdown of the markets due to corrupt lending practices with greedy executives and uninformed people getting involved in business they never should have. This is never good for stocks and I don’t care what anyone says. Shooting down that bill was the right idea. Let wall street battle it out. They screwed up and the tax payers should not be bailed out. At the same time capping CEO pay at $500,000 for running a bank is psychotic and shows NOTHING of a FREE market system.
However, I must admit the system is/was broken. When I left NYC in 2000 I knew there was more than what the .com bubble had. But I had no clue that it would ever get like this in real estate. I used to date a real estate broker in Maui and I used to tell her that this was going to end up destroying the economy one day. I kept saying it and when Ken Heebner got out of housing stocks and the biggest real estate investor sold all of his holdings in 2006, I KNEW it was over. The calamities to come however. No one could have known. Until this year that is. That is when it became apparent (well it was before that for those “in the know”) that loans were given to people who had NO BUSINESS EVER receiving the financing they did. This was all done on a “bet” that “housing would continue to rise.” How asinine is that??? Unbelievable greed at its finest. This is what is sick about my favorite, and the only form of rule that can make poor people wealthy, form of government. Capitalism.
The fact is we are headed down a road of socialism and I don’t know what that will do with all my stocks. But all I am praying for is that the companies that were stupid and greedy enough to do these things will just have to take the beatings. I know it sucks but giving a $500,000 loan to someone without checking on their income…you get what you deserve.
I want the market to solve this and the government to stay the F out. I don’t want them to touch this market and I want the strong to survive this wreck and the weak to leave. If we elect the Socialist Obama (which is looking more likelier) it is doubtful that we will be moving “forward” any time soon.
For now I continue to preach cash unless you were smart and went short with me when I went short. No one says when I go short 300 shares that you do too. You guys realize that commissions are $1 per 100 shares nowadays. You can go long 3 shares of AAPL short and enjoy the gains with me. The fact is that the money was laying on the floor this morning and in a lot of my shorts up over 25% in under a month I did take around 1/2 the money off the table in profits. I am now around 90% cash and will continue to monitor the market. However, I don’t expect the market to rally higher.
In fact, I believe the market is just starting a long selloff and believe that the market has a long PROLONGED period of underperformance.
