Daily Investment Interpretations
September 30, 2008
The stock market did, in fact, turn around today, consistent with what happens
when there's such a spike in the VIX. Oil jumped $4.27 a barrel to $100.64. The
Nasdaq Composite rose 98.60 (4.97%) to 2,082.83, the Dow climbed 485.21 (4.68%)
to 10,850.61, and the S&P 500 shot up 58.25 (5.27%) to 1,166.36. The VIX fell
to 39.39 (still a respectable number). So, of course, what's next?
Here's what several advisors have to say about that.
Michael Ashbaugh says, "Too early to celebrate". Mark Hulbert offers: What Dow Theory had to do with Monday — and today and We haven't hit the bottom yet. Among the other advisories are: Brimelow's September to remember, Market Meltdown: What Happens From Here, Home-price plunge shows no sign of ending, and Despite Monday's bloodletting, a bottom may not be in for stocks. I think what's significant going forward is that the financial world seems to be on an accelerating downhill course, with a lot of credit unwinding still to come. The stock market may turn up, with the Senate voting on a bailout tomorrow night, and the House expected to address this topic later in the week, but this won't mean that anything but a tourniquet has been applied to the problems. Of course, I only know what I read, and the stock market is notoriously treacherous. If a coming event is even remotely obvious, the markets will already reflect this influence. Mark Hulbert has this to say about today's stock market action: Dead-cat bounce or fresh new bull? My current plan, right or wrong, is to sell or hedge what I have left in mutual funds, and remain in cash. (I purchased a small position in inverse funds, as I recommended on September 21, but sold them at a small profit when the markets jumped again on September 25 and 26.)
I might short the markets if we get a bounce out of the current Congressional actions, but at the moment, that remains in the future. I'm also buying a little gold as a hedge against a falling dollar.