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From: Robert A. Christy
Editor/Publisher, ‘The Intelligent Trader’
http://www.intelligent-trader.com
http://www.christyinvestments.com
Date: September 17, 2008
Yesterday’s continued sell off has everyone
worried. Politicians are running to find any microphone that works so
that they can opine about how George Bush allowed the financial markets
to return to the ways of the ‘old west’. Nancy Pelosi is shouting “don’t
blame us”. Even she even had a clue.
America’s financial system has been rocked to the core and has investors
asking themselves a lot of questions today.
The two that I am hearing the most today are: (1) is the stock market
truly a safe place to put your money and (2) what kind of future can I
now expect?
Look, I’ve been in this game since 1982 and this is not the first time
we have had a bone crushing setback. Do they hurt? Only a fool would
disagree with that question. Is this the end of the world? Hardly. I
would call it another turning point.
Our indicators have us on DEFENSE and in the principal preservation
mode. Now is not the time to call it quits. It is a time to take a real
hard look at your investing methods and see what you can do next.
For those people who are panicking out, they will look back on this week
and it will be the greatest mistake that they have ever made.
For those who believe in the indicators and are willing to follow them
when their stomachs suggest otherwise – they will come out of this
stronger and far more profitable.
The Fed’s action suggests in very loud terms that bailouts of major
companies using your tax dollars is likely to set future precedent.
Lehman Brothers made some very ill-advised choices in their investment
portfolios and they are paying the price by having to declare
bankruptcy. The same holds for Merrill Lynch, who agreed to be bought by
Bank of America.
AIG has talked the government into giving them a loan. The current CEO
has better get former CEO Greenberg on the phone and get this mess fixed
pronto.
In a free market society, only the strong survive. Truer words have
never been spoken.
The government needs to step forward and ensure that the credit markets
are rebuilt from the square one.
The politics of this is making me sick.
George Bush is taking a lot of heat and standing up to it pretty well.
It can’t be pretty sitting at the desk in the Oval Office, but this
stuff is not his fault. He continues to stand up for what he believes
and is talking about the breadth, depth and strength of the American
economy. He may not be right, but he truly believes in the system that
we have in place. Time will be the judge. He feels that the market will
take care of itself and that the strong will get stronger and the weak
will fall by the wayside. He believes that more government is not the
answer.
McCain says he is a Teddy Roosevelt Republican and he sees a ‘robust’
role for government in ensuring our markets are fair and orderly. He’s
bashing Bush for allowing a ‘wild West’ situation to occur on Wall
Street. He feels that true unfettered capitalism leads to corruption.
One positive here is that McCain is not changing his stripes like others
are doing. He’s drawn his line in the sand and is taking his stand.
Obama is stumping and blaming all of Wall Street’s woes on George Bush.
His solution is more government intervention to make it ‘fairer’ for the
common folk. He fails to understand (or he does and will not admit) that
it is because of government that we are having these problems. Fannie
and Freddie are programs started by and backed by Democrats. They failed
because our government lost sight of the fact that it is not in the
mortgage guarantee business.
Nancy Pelosi is blaming Bush for everything. She does not have a clue as
to what is happening – she just knows it isn’t her fault.
Al Gore will blame it on global warming sooner or later, but he’s out on
his new house boat.
Hillary, not be outdone, is claiming that she was warning everyone about
the dangers lurking on Wall Street 2 years ago. (She has the ability to
say just about anything with a straight face)
The bottom line is this – by not bailing out Lehman, the government
actually did the right thing. The mistakes Lehman made were fatal and
the US taxpayers should not have to fix what went wrong.
Lehman is not the only one who will fail. More will fail moving forward
because the lifeline they thought would be there isn’t going to be. This
is good.
This market has been sluggish for some time. It is estimated that $3.5
trillion is currently in cash and ready to flow back into the stock
market. When it does, the market will fly.
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What to Do Now
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1. Don't panic. What we do is not gambling. Not every day is a winner
and not every day is a loser. In fact, investors in our forex managed
accounts had very big days yesterday.
2. What is your time horizon? Short term traders are the ones who have
taken the brunt of this downturn. Think back 1987, 1989, Barings (1994),
Long Term Capital (1998), Russian Ruble collapse, Tech sector meltdown
(2000), and of course 9/11 (2001). We have lost money during each of
these crises. And each time we have made a bundle as the market
improved. I don’t see any reason why this would be different.
3. Examine your holdings. The strong will survive and the weak will
suffer. When we return to Offense, we only want to own the strongest
names in the strongest sectors.
4. Open your eyes. The reason that I created my 5 step process was so
that I could catch change in the market before the average investor. Not
all sectors are in the tank like the financials. It’s all about risk and
reward. Do your homework. If you use a broker and he has not been in
touch with you – fire the broker. It’s your money and if he is just baby
sitting it, he’s not doing his job.
5. If you have a process – stick to your knitting. I have my 5 step
investment process. What is your process? If your broker doesn’t have
one – fire them. If you don’t have one, copy mine. Mine has stood the
test of time and works. HOPE AND PRAY IS NOT AN INVESTMENT STRATEGY!
Times are interesting. Hang on and get ready to put some cash to work.
That’s about it for now. Let me here from you if
you have any questions.
Robert Christy
The Intelligent Trader
P.S. Are you interested in trading along side me? There are 2 ways to do
so. The first way is through my stock trading service, The Intelligent
Trader. For just $249 you get a front row seat and the chance to get up
close and personal with the market. Just click to learn more. The other
way is through my dynamic forex trading service. If you have an interest
in trading and/or learning about forex, just drop me a note. I am in the
process of finalizing a new mentoring service geared to just trading the
forex markets. In your email, please let me know when would the best
time to get in touch with you.
P.S.S. Please fee free to forward this to your peers, friends and
associates you think would benefit from its contents. They will thank
you for it - and so will I!
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Robert Christy is a professional stock trader, money manager, author and
speaker. Mr. Christy is the President CEO of Christy Investment Group,
Ltd., a registered investment advisory firm. He is also the Managing
Partner and Portfolio Manager of Crabapple Capital Group, LLC and the
editor/publisher of The Intelligent Trader, a subscription based
long/short trading service. At the time of publication, Mr. Christy may
from time to time write about stocks in which he, Christy Investment
Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a
position. In such cases, appropriate disclosure is made. Under no
circumstances does the information in this column represent a specific
recommendation to buy or sell stocks. Mr. Christy appreciates your
feedback and invites you to send it to
rac@intelligent-trader.com.
Robert Christy
The Intelligent Trader
c/o The Christy Investment Group
P.O. Box 625
Alpharetta, GA 30009-0625
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