Friday, October 10, 2008

Capitulation Abounds

Is it the end of the financial world?

Think about what happens when the end of the world doesn't come? People go, oh, gee, well, I'm still here. Maybe I outta buy some of the stuff that I was selling at such stupidly low prices just two weeks ago. The problem of course is telling when the end of the world is supposed to come and when it doesn't arrive. You really need to know when the spaceships are supposed to arrive and take everyone away from the mountaintop because otherwise you don't really know when it is all over.

You know I love sarcasm! Well done Jim Jubak!

I definitely believe that at least some things have been sold indiscriminately this week. At some point, I have to believe that people are going to look at all the paper fiat money in their hands and wonder, "Now what?" It reminds me a bit of when I turned bearish in 2004. I sold stocks. Within a day I realized that cash didn't look all that attractive either. Interest rates were just 1%. I ended up (at least partially) in gold and silver for a few years. Things are somewhat different now though. There's a 3% real yield on TIPS. Stocks are over 40% down from their peak. The market's having a half-price sale on oil.

If nothing else, just look how many Panic Musical Tributes I've had to create lately. It's reached daily routine mode. I can't speak for the market's selling, but I'm certainly nearing an exhaustion point.

The saying goes that if one must panic, panic early. I can't say much, but I can say that those panicking now are most certainly not panicking early. I do think things will get worse, but that doesn't mean they aren't already priced into the markets. Who knows?


Anonymous said...

The Great Depression II started Thursday afternoon when the S&P broke 960 and failed rally back and close above it IMHOP. I expect a rally and then a break of 800 by the election. My target is now 450 within the next 18 months. The amount of damage done that has been done along with all the dead bodies that will come floating to the surface in the next couple of weeks combined with major policy mistakes will simply be to much to overcome. Hope I'm wrong but I'm not optimistic.


Stagflationary Mark said...


I expect a rally...

For what it is worth, the Dow is up nearly 300 points from the time (10:13 PST) I posted this capitulation selling of everything heckle.

The spring has been somewhat recompressed and should be able to provide more bouncy capitulation in the future. I make no predictions on where the market is headed next. It was 10,150 when I got out in 2004. At that time I expected it to be 10,150 now. Clearly I was too optimistic. Go figure!

The amount of damage done that has been done along with all the dead bodies that will come floating to the surface in the next couple of weeks...

I feel for the vast majority of people who were even more optmistic than I was.

People would have thought I was a nutcase to be missing some optimism in 2004. That's the year I bought precious metals (sold in 2006 though) and a handgun (still own that!). Hindsight shows I was too optimistic?

My girlfriend refers to the pantry as the Apocalypse Pantry due to its packed nature. Once again, I was too optimistic?

How is that possible? Good grief.