It is amazing how people can be so unthinking. For the last decade people have been drawing attention to the US market being problematic, and now that its happened journalists are saying they haven't had time to prepare. I have been warning about this type of incident since 2001. In 2005 I started researching the global economy to get a better idea of the implications. Glad to say things are going pretty well as scripted. There are a lot of people running around saying they forecast it. But really there are pretty well a million people who knew what was coming. These are people who read the right internet content. Not the crappy news about Paris Hilton, but websites like www.prudentbear.com. This bailout is needed because without it the banking system will deflate, which is what happened in 1929 with the Great Depression. There is no time to stall really as that will only sap confidence. The whole system needs to be supported because there are heaps of derivatives contracts outstanding which are counter-party exposures for all the derivatives being traded. -----------------------------------------------
Andrew Sheldon
www.sheldonthinks.com
Investment Strategy
If you are investing for the long term, you still need an investment strategy. Dont be fooled by the rhetoric of fund managers. The reason they advise you to 'buy & hold' is because they dont want to compete with you in sell-offs. Markets and industrial sectors are cyclical, so they demand trading to get the best returns. Fund managers actually cant hope to match the performance of small investors (if you are half good) because they have to manage huge amounts of funds and charge you a fee besides.
MY ADVICE is (i) look at a range of market indices and decide upon what level of correction would give you the justification you need to get in & out of the market. It might be a 5-10% retracement or a break of trend. (ii) Diversify if you dont have an intimate knowledge of the company or management. More than 30% in one company is aggressive.
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