Jim Rogers is getting worried about the Dollar.....

Calculating Risk has an interesting graph comparing stock market crashes

I look at the graph to the left and actually feel better about the market situation we are in. That is, until I think of all the other situations "around" the market crash.

You see, I was around for all those other crashes....and I remember a lot of angst about the market fall...but there were still plenty of positive things happening in the economy.

Yes....some bad stuff for sure....during 2001, there was the tech bubble, and Sept 11th.....all very bad...but many industries were fine, and the jobs of many were untouched.

Now....everything seems to be imploding, and EVERYONE is paying the piper as the government "spends our way out" of this mess as it "inflates" the battered credit markets......putting us even further into debt.

What a mess.....but as far as the market "fingerprint" looks....it isn't any worst. (NOT)

Warning....yesterday's metioric stock rise might be a "bear trap" set to catch bulls!

Please note that the Dow Jones Industrial average rose11.1% yesterday, and I am sure it is enough to make a lot of people thrilled.

I am certain that many have proclaimed...."The Bottom Has Arrived".

Well, take a look at the spreadsheet above. You will notice that our 11.1% gain falls in between rows 4 and 5....which means it is only the fourth largest single day percent gain. (though it was the largest total point gain)

But if you look at the above table more closely, you will see that nine of the ten big gain days came DURING the Great Depression!

Yes, the market crash happened in 1929, but the market didn't really bottom out until about 1933.....and all of those big gain days happened in between. (OK, the #1 day might have happened as the market was climbing out of it all...but it was right in there)

What is my point you ask.....stock buyer beware!

Yesterday's market gain might just be a bear trap set and ready to trap people.....I suspect this is one of the reasons so many lost money in the depression....."trying to pick the bottom".....which must have looked to have come several times over between 1929 and 1933.

Look at the fundamentals of the economy.....look at actual things like unemployment, profits, foreclosures, people and companies going bankrupt. This is not the time to "double down" at the roulette table....at least I don't think so.

Check out the rocky ride the stock market had in the great depression in the graphic below.
Lots of great opportunities if you are day trader....but even then, the spikes seem so quick and abrupt.....I suspect it is even difficult for them.

Be safe with your retirement money.....if you have money you would normally take to Las Vegas....go for it...but be prepared to lose it.

There might be a "bear trap" out there ready to *SNAP*!

Yikes....I'd hate to see what the market would do if there was no bailout!

Well, the economy seems to be contracting at an ever increasing rate. I hear that unemployment is up....layoffs were at a high last month. I see that oil seems to have fallen to a very low level of about $88 per barrel.

We all know about the credit crunch, and the $700 billion government bailout....yes, the news is bad, but holy cow, what is the stock market doing now.....the floor about fell out today and the market was down about 800 points at one point.....finishing down about 370 points and below 10,000.

Stock markets around the world were falling....so I suppose it made sense to ours to fall as well.

As I type this, about 11:30pm on the east coast...the Asian markets are down about 3.4% to 4.8%. What a mess!

We shall see what tomorrow brings. In the mean time....SELL, SELL, SELL.

Market Isn't Very Stable.....time to get to safety perhaps?

Ok, so the equity market is bouncing like a yo-yo....everyone waiting for this magic bullet called the federal bailout plan.

I am not sure if this is a good or bad thing....I mean in the long run. I just don't know...but it seems to me that owning a bunch of defaulted homes can't be a good thing.

I'm also thinking that all that money creation must be causing inflation....but I don't know.

I don't like the general idea of the government bailing out companies and home owners who many of which were involved with loans that were just no viable.....where was their common sense?

On the other hand, I don't like the idea of an economy falling out of control because of panic....and over-reaction. But our country is in a world of hurt, and under a mountain of debt. In general, the USA is "too big to fail"! (where have I heard that before)

My plan.....at the moment, my portfolio is roughly apportioned like this:
77% - BONDS (about 6 funds)
11% - Foreign Currency (Cash in Euro, Yuan, Aust $, Canada $, Swiss Franc)
1% - Gold
5% - Equities (two funds at my work 401K)
5% - CD Fund
1% - US$ Cash

I am thinking of dollar cost averaging out of the bond funds into cash....I'm just afraid that some of these "safe" funds have exposure to some more of the "safe" companies that seem to be falling all around us ever day. (yet to fall that is)

I think I might get out about 10% a week.....and at some point, start dollar cost averaging into TIPS or iBONDS......to the point where I have perhaps 40% of my total money in inflation protected government securities.

I might actually "play" with perhaps some of my money and put it in and out of a couple of bear funds.....but that is kind of like gambling.....and that isn't my style.

WaMu Fails.....bailout not quite here....

Washington Mutual has apparently failed.....and tonight it was gobbled up by the FDIC. Well, sort of.....I guess the "good parts" were bought by JPMorgan.

With all the talk of the bailout.....it appears that the financial collapse continues to march along unchecked. (plenty of bad news was released today about rising unemployment, falling factory orders, and other stuff too)

Speaking of the bailout.....that hasn't quite passed yet. I know it isn't easy to spend $700 billion.....but I'd love to just get that chance myself.

Perhaps we will all wake up on Monday to a day of financial certainlty......with everyone smelling the roses.....but I somehow don't think that will be how the next week starts off.

Pray that calm heads prevail in the end.

President Bush Says what others have been saying....does that make it sink in more havinfg the President say it?

PRESIDENT BUSH OUTLINES THE PROBLEM WITHOUT EMOTION:
The speech by President Bush was actually a lot less emotional than I thought it would be. I wondered exactly how he would approach it...I mean, he certainly made it clear that we are in a heap of trouble....operating in an area we never have.

But for my money, he was almost monotonic....non-emotional about the whole thing. I expected one of two things....I expected a worried, tone....or a "Let's pull together and win one for the gipper" sort of approach.

I heard the words....and they are the same words I have heard over the past few days from all kinds of other economists and others close to the situation. The USA, in fact the global economy is sitting at a point where things could go very very badly....and no one is really sure if what we are about to do will really fix things.

But even so, they also know that doing NOTHING will clearly end up in a meltdown.....so as my father used to say, "do something even if it is wrong.....just try!"

So this is our government trying.....and I suppose it might be such an important point in history, that approaching it calmly and with focus and thought might be far better than with worry or bull-headed action. Maybe the President approached it perfectly....only our future will be able to properly judge that.

I hope he did for all our sakes.

JACK WELSH WANTS ACTION:
On another program, I saw Jack Welsh, former superstar head of GE getting all charged up and demanding government action. He wasn't sure that $700 billion was the right amount, but he was sure that inaction was no solution....not just no solution, but EXACTLY the wrong solution.

He sure seemed excited about the problem....if anyone wasn't sure we were in need of action, all you need to do it watch Jack Welsh talk about the problem for about 30 seconds, and you will be convinced that this isn't a small run of the mill issue.


WHAT SHOULD WE DO?
What do people like you and I do in the mean time? That is the $64,000 question I suppose.

I'd say you watch the economic situation unfold and try to jump into the right place at the right time. I think this kind of spending means printing money. I think this means inflation...devalued dollars.

I have some money in foreign currency and CDs at Everbank. I also have some Gold....all told, about 12% of my investments are there....with about 80% in about 5 high quality bond funds....and a smattering of money at my work 401K in money markets, bonds and some stocks.

I have Chinese Yuan, Euro, Swiss Francs and as I noted, some gold.

Is the the right thing to do.....I have not a clue, but it fits the several visions of what I think will happen now....this isn't a business as usual time.

Bill Gross' Latest Discussion of the Economy Situation

Bill Gross of Pimco Inc. is one of the world's largest mutual fund managers, focusing mostly on bonds. Called "the nation's most prominent bond investor" by the New York Times^[1], he manages Pacific Investment Management's Total Return fund (the world's largest bond fund and fifth largest mutual fund) and several smaller ones

Bill Gross is a very enlightened speaker with a lot of insight into the investment market, and world economies.

But he isn't always the easiest person to listen too and understand....often seemingly speaking in "code".

But even with this, I find listening to him to be quite interesting and educational.

Well actually....YES......I instructed my financial advisor to move my investments to high grade bond funds.

I had initially instructed that it go to cash, but changed my mind when he countered with the BOND fund option. (highest grade corporate bonds)

He did NOT agree with my assesment and my making this move, and put such a comment in our transation notes....but I am not happy seeing my investments slowly eroding. (with no sign of recovery in sight)

The Move to Cash....wise, too late, or too little too late?

Well, I emailed my financial planner and asked him to move everything to cash. Yup....the Fanny Mae / Freddie Mac situation is glowing hot and things are not looking up in the general investment environment.

The market is lip sliding away.....stocks and bonds seem to be eroding as I watch.

So I'm at the point where I'm trying to decide what to do...but I just feel I have to stop the bleeding!

Is this a bad time to fall out, I suppose there is always a potential problem of selling low, buying high.....but I don't think this is the bottom.

The housing crunch hits the northeast....

Houses in Westford, Mass:
It is spring, and house sales are supposed to rise at this point.

I'm not sure how they have been going, but as I see from the average house prices in Westford Mass, they prices look to be falling.

I see that the average # of houses on the market in that town seems to have hovered aroung 51-52 for the last few months.....so I'm not sure if that means things are even selling.



Houses in Litchfield, NH:
Here is the graph for Litchfield, NH...the town I live in. I am surprised to see that it looks as though house prices are rising....but then, oit might be the fact that prices in the town were low to start with, and have actually been down about 12% from evaluation for the past year.

It's all a very complex picture....but it looks like selling and buying a house has become a much higher stakes games in recent months.

Good luck to all.....

Today's Sad News......nothing too new I suppose.....

The news headlines below are really nothing new.....but when I read them today, I realized how messed up things really are.

I think I have commented in earlier BLOG posts that things seemed to be sinking yet stocks seemed to be floating along.....unaffected.

Well, today the market is a bit choppy, but nothing compared to the sort of headlines we are seeing as I type. (below)

______________________________________

Top Stories

As of 27 minutes ago

Consumer Confidence Drops to Lowest Point in 5 Years- AP

Soaring gas prices and weaker job prospects made Americans gloomier about the economy in April, sending a widely watched measure of consumer sentiment to a five-year low, a private research group said Tuesday.

• U.S. Home Foreclosure Rate Soars 112 Percent- AP
• Home Prices Plunge at Record Rate of 12.7 Percent- AP
• Stocks Lower With Investors Wary of Consumer Data, Fed- AP
• Merck Hit Hard By Cholesterol Drug Rejection- Reuters
• Millionaires More Bullish on Stocks, Real Estate- Reuters
• Up For Grabs: $42 Bln of Newspaper Ad Revenue- Tech Ticker
• Bernanke's Burden: Way Beyond This Week's Fed Meeting-

I learned something that might be useful - "In times of crisis, correlation increases."

I read an interesting thing on the Seeking Alpha BLOG that I will not try to repeat here, (and that BLOG refered to this article)

The article stated something quite interesting:

There is no escape. People investing in stocks have lost money since world equities peaked on Hallowe'en last year and shifting around the world cannot change that. The amount you lose is determined by your home currency.

So it sounds as though the world economies are slowing down in lock step.....probably an indication of hosw strong of an influence the US economy, and the US Dollar has on everyone.

So my theory has been that the world would eventually get tired of the USA's debtor ways, and find a way to replace our consumtion with consumers....oh, say from China or India.

I think the sign that this has begun to take hold is when the three economies of the world stop correlating so closely.....when the USA is allowed to drop while the others level off and then perhaps climb.

At that point, there will be a clear winner in terms of where to invest. But what to do in the mean time.