Europe Went Red and America Looks Red!

When I entered the orders at the beginning of January my broker gave a warning that the order may contain a mistake because it was very different from the current market conditions. Yet here we are on Monday one of them triggering…

What happened and why the drop?

So I did some research on what George Soros said, and found two things (1,2):

Soros: Ja. Die Lage ist viel ernster als irgendeine Finanzkrise seit Ende des Zweiten Weltkriegs. Ich werde in einem Artikel versuchen, die Lage zu analysieren, es ist alles sehr komplex. Auch das ist eine konzentrierte Erklärung, aber besser als nichts. Die Sachlage ist sehr kompliziert. Es gibt grundlegende Missverständnisse, die die Politik in den vergangenen Jahren geleitet haben und die sich aus dem ableiten, was ich Marktfundamentalismus nenne. Das ist der Glaube, dass Finanzmärkte dazu tendieren, als Ausgleich zu agieren. Ich glaube, das ist eine falsche Idee. Wir haben jetzt wirklich eine ernsthafte Finanzkrise.

and

DNA Money could not independently confirm this, nor could it touch base with Soros’ operations in India.

But some senior marketmen, who did not wish to be named, said there were two cases of basket-selling last week which clearly was to break the market’s back.

“On Friday, this dealer shorted 21 lakh Nifty contracts triggering a late crash. The same entity had earlier shorted 54 lakh Niftys in the middle of last week,” one source said.

Is George Soros behind this? Well your guess is as good as mine because I can’t make heads or tails of it.

Though somebody thinks that it was because of comment from a French banker.

Understandably, the story was slow to get around. But sitting in paragraph nine, there were comments that amount to a profit warning for banks in France as well as those around the world.
“I’m reasonably confident that French banks will weather this turmoil without major trouble even though they are clearly, like all banks, in the world still in the process of marking down assets,” said Christian Noyer, governor of the Bank of France and a member of the European Central Bank’s governing council,

What I think that is happening is that we are hitting the meat of many traders.

I am starting to think that many fund managers can manage a bit of up and down. But there is a point when a fund manager has to pull the trigger. And I wonder if we have hit that point? I was actually waiting for this happen. I was hoping for this to happen. This is where fund managers panic because now they will loose money.

This is GOOD! Yes it is because there is a grand unwinding, at least I hope there is.

So I am back in the market, and waiting for more “babies to be thrown out with the bath water.” Though it does not mean that I am jumping completely back in. I am taking my time picking stocks and picking timings.

There is a call that today the Fed should cut by 75 basis points. And add on top of that “lets spend everything” Hillary Clinton said Bush with his 150 billion is not spending enough?

Hey “lets spend everything” Hillary, why not just print oodles of money and give it everybody! I mean its only paper right! Stupid stupid stupid…

Or how about we drop the interest rates to 0… After all it has helped Japan! I mean Japan is the rip and roaring economy! Ha! I remember in December analysts were saying, “oh let’s invest in Japan because its relative value is low.” Well folks Japan is busting every support point again.

Guess what the “Decoupled Theory” is a MYTH! Yes traders are saying, maybe the would is not decoupled after all. Gee I could have told you that! Oh wait I did!

Now the world economies will be coupled, and when the bubble bursts it will be a global bubble burst. I believe the synchronization of the economies is a real problem because each of the economies will have to be start up in sync. This synchronization up and down takes time, thus delaying and prolonging the downturn and upturn of the economies.

So now what?

I am assuming you have cash. If you have cash start nibbling. Don’t worry about the commission costs because they are not your problem right now. Your problem is that the market might swing up and down and thus will have to stage your entries. I feel nibbling is key to success.

BTW guess who is buying? Warren Buffett.

We do not know what stocks Warren Buffett is buying, but we know that he must be laughing as he sees the opportunities Mr. Market presents him these days.

If you don’t have cash, and you are 100% in the market what then? I am not going to give any advice because whatever advice I give will be wrong. Sorry…