Ok, the Japanese government has its excuse for an
economic meltdown. It was not their fault, it was the earthquake. They just never had a chance. The US of course has their excuse as well. Bad luck, and of course others. The Republicans will blame Clinton for easing restrictions on home lending, and the Democrats will blame Bush for allowing the problem to grow. Others will blame Greenspan. The Europeans will blame those 'shameless Southerners', the Greeks, Spanish and Italians for loving life. And of course taxpayers will sign, all too happy that they have the power to repress all bad news.
Nevermind that this current $0.5 trillion in stimulus is coming on top of a public debt which exceeds 200% of GDP. Nevermind that the Japanese savings cannot sustain this level of indebtedness. Someone will pay for this largesse. My guess it will be Japanese property holders; a lot with a 'shot' of currency debasement.
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The S&P500 has broken support in the last 2 days....sadly I was not watching
the market. Irrespective, I was well cashed up, since a number of stocks I like had announced issues, so it was of no consequence. Remaining in my holdings are some gold stocks. Rest assured however there will be some good trading rallies on the way down. Gold explorers, which I very much like, will come under threat because they are intangible, even at a time of high gold prices.
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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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