Tuesday, September 16, 2008

I fear the worst for the stock market

Yesterday I saw a spike in visitor traffic. Most people ventured here on concerns of:
What if AIG goes bankrupt?
What happens to my mutual fund?
What happens if Washington Mutual goes bankrupt?

People are worried for good reason. I'd like to think that right now is a perfect time to buy stocks with the current market turmoil, but I fear the worst for our market.
I know there are a lot of long term investors out there that are stubborn when it comes to holding positions and that they think everything will be fine once all of this LEH, AIG, FRE, and FNM mess is over with, but unless the stock is at ZERO, we haven't seen a bottom.
I was looking at the Russian Market, and just in the last 4 months, the Russian stock market has dropped 50%. Yesterday the RTSI had to halt trading as the stock market dropped 17%.
"Russia's two biggest banks, led the decline in Moscow, falling 23 percent and 31 percent respectively. Financial stocks worldwide slid after American International Group Inc., the biggest U.S. insurer, had its credit ratings downgraded." (Bloomberg)

The VIX and More has been putting some nice pieces together and his blog is worth checking out.

Remember, its OPEX week and crazy trading is going to be seen. The market could rally 1000pts in the next few days or we could see another big drop in the market.
All I know for sure is, that I would fear holding anything over the weekend considering the stance that WaMu and AIG are currently in.


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