Wednesday, September 17, 2008

Capitulation is here...again (Good times to follow)

For anyone who has monies in a 401k, a Roth IRA, or some other retirement account and is under 35 years old, now may be a good to enter the market and use up some of that financial gunpowder.

From Barry Ritholtz: "The criminal enterprise, formerly known as Russia, has decided to halt trading. With its stock market down 57%, Putin & Co. are being even more risk averse than Paulson, Bernanke, & Co."

You know times are bad when Russia halts trading. But people with a long-term horizon of at least ten to fifteen years may want to add to existing positions. The economy and the stock market go through boom-bust cycles, and you can't enjoy the boom unless you get in on the bust. I've personally seen my retirement funds decline in value by over 10,000 dollars in the last two to three months. I've continued adding to positions, especially in the Asian markets. Barring some cosmic wrath directed at me, I don't need the retirement money now, tomorrow, or even ten years from now.

From Warren Buffett: "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful."

If this isn't fear in the air I smell, maybe it's eu de depression. Come November, we will have a change, with either candidate bringing fresh ideas to the White House (McCain with less tolerance for pork and corruption, and Obama with, well, Obama). Good times will be here again, because a) we can (or should try harder to) learn from Japan's mistakes bailing out their banks; and b) financial services are still not that vital to an economy, once liquidity is restored.

We had a great economy back when Citigroup, BofA, and WaMa were just small or midsize banks. I still remember Citigroup being "just" 19 dollars during the heyday. Banks were never meant to be growth stocks. When they go back to paying a stable dividend, maintaining good credit profiles, and selling some insurance, the world will be a better place. And if I never have to hear about credit default swaps, I will be a happy man.

1 comment:

Anonymous said...

Investing while the markets are down seems like a good idea to me... more shares at a cheaper price = larger retirement when the day comes. With everything thats been happening, your best bet is to run background checks on the companies to spot check anything that may be a problem for the company.