25 September 2011 A Party To End All Parties

We Live In Crazy Times

First off sorry Butch you were right about the Dow on Thursday it was only down 387 points not the 500+ I thought. Good detail. Wow what a whacky week even putting aside the wedding details. The market took about a 6.5% hit last week. We fell through some important support levels on Wednesday and Thursday. (Another apology goes out to Mike D. as I was explaining the importance of resistance points in the market and should have been calling them support levels. Support is at the bottom numbers and resistance is at the top. Sorry Mike.) I can honestly say I was almost ready to pull sell trigger on everything Friday morning. Then the bottom feeders came is and added a bit of support for my core holdings. I was bit taken back when Dan Sullivan (Of The Chartist Fame) rang the bell and said cash out. After the close on Friday we started hearing more details about the Congress now not passing the keep the lights on bill they said they delivered a month ago. That is making for a very ugly market opening tomorrow morning as I write this at 11:17PM. My game plan is to read this week's Barron's and decide tomorrow who is going to be sold out of position and to what extent. Remember besides the big boy Salve Lucrum account, we have some custodial accounts we are responsible for, and some friends accounts we help with. For the teen ager accounts, we don't mind taking a few chances and enjoying at 2-10 year time line. We have some retired folk that we don't have that luxury so knowing the next 2 years is going to be volatile and tumultuous and knowing I don't always get it right, cash and bonds are looking might appealing. I can tell you that if you are under the age of 40 and reading this, you are seeing some of the best values since the 2008 crash. Things might get a bit cheaper, but if you have even a 100.00 a month to be in the game, it will be great for you 2, 5, 10 years down the road. Once of our readers said their mom wanted to park some money in a Schwab account for me to baby sit. Her Mom is about 80. I told my good friend that 80 year olds should not be in this market. Stick with cash and bonds a bit of gold if they have it to spare. My suggestion for everyone would be to get out of this market it you are looking for 2 month or 6 month gains. Forget it, it will not happen. If it does it just blind luck. You need to have a 2 year to 10 year horizon when buying equities and be prepared for some of the most volatile rides of your life. Yes I am saying that even after the last 3 years we have experienced. There is one thing the government could do to bring some stability back to this and the global market. Ironically it is something they are expert at doing. NOTHING. That is right. If president Obama and Speaker Boehner just got up in front of podium together and said STOP. We are not implementing anything we agreed on for the last two years, no new regulations no new taxes to new anything, we are going back to the drawing board and will nit change a thing until 2013. If they promised to come back to the podium with a plan to get our fiscal house in order that will have cuts and news taxes but will not be implemented before 2014, Americans, and business could actually do some fiscal planning knowing what the rules are for 2012 and 2013 and those with cash and decent revenue (AND THERE ARE A LOT OF THEM) would say, "Hey I know what it will cost me to hire 5,000 workers and I can afford it, or I know what the rules are and they are not changing for two years so I will spend some money on my company or lend it to the company that needs it. That would be a huge boost to confidence and will get people hired. Would that be cool.

I am going to bed now and think about a special young man and a beautiful young woman as they rest and think about their next 10 days in France on their honeymoon.

Salve Lucrum