Oh for the love of pain. Pains taking investors - literally, those who can take the pain of a bear market that seems to drop another 5% everyday - will ultimately triumph, by patiently amassing greater and greater equity positions at better and better prices. The sun will shine once again when the whimpy hedge funds are done selling their margin calls. This is truly a once in a life time opportunity for valuations for all stocks. I plan to buy myself into happiness by buying even more shares more cheaply before the bounce back if the market does not do a big V. I see members showing courage and moving into the stock funds and it makes me proud. If you are still in your saving and investing years, a bear market if it hurts enough is a gift from the financial gods - and the longer it lasts, the better off you will be. Instead of running from the bear, you should embrace him and stay in front of the train. Yesterday everything was being jettisoned, regardless of fundamental or intrinsic value and as the panic approached maximum intensity and prices were accelerating into a verticle descent, some fool was buying securities at firesale prices - was that you Bullitt? I just love a good market panic almost as much as I do smelling the good superlative bull manure.
It's time to readily admit that the probability of a correction within a larger bull market has now been destroyed by major breaks on the various MCO's. It was a tough road to go against but it's hard to beat the stupidity of 6,000 hedge funds trying to get out of the door all at the same time. But I'm still standing and have yet to sell a single stock - where as everything I bought over the last 12 months pummeled me unmercifully and I'm now prepared to DCA into those same issues much cheaper - Allah these prices are golden.
The NYSE common stock breadth has recorded five 90% down days over the past nine days. That has not happened before in 27 years of data collection. The SPX and DJIA are now probing their 2002-03 bases. The number of stocks making lows is at a record (2901 on the NYSE yesterday), the percentage of stocks above their own 200-day average is at levels last seen in 1987 - these are all signs of capitulation. Volume on the NYSE yesterday was 11.16 billion shares. Was this a classic selling climax - it qualifies in my opinion. A climax usually begins the base-building process. History tells us that there will be a rebound and then another test - not this time. We will either grind up or rocket up from this level because it is all emotion. Did somebody say the VIX hit an intraday level of 75. The TRIN was high also. The percentage of NYSE stocks trading above their own 200-day moving average is about as close to zero as you can get - probably 3%. One advantage I may have is the experience of going through several bear markets and I'm going to treat this one like 1987. I'll be buying on every opportunity that is presented via DCA. I'm no hero so I'll take my time adding to my existing positions and adding a few more dull wall flowers as I move along. With a portfolio of 302 hungry mouths it pays to be selective. There is important support at the 2002-03 lows which for the SPX is at 965-870, and for the DJIA is at 9075-8250, although we did drop as low as 7882 on an intraday basis for the Dow. If that level doesn't hold we're headed to 7533-7197 - bring it I'll handle it. I reviewed my profit gain so far this year out of curiosity thinking about which sacrificial lamb will be required to pay my taxes. After adjusting my losses for FAN and FRE as well as LEH I'm still up $140K. And the year ain't over yet. I should be depressed but my feet are dancing under my desk because with my asset base still intact I know what may come next....mucho dollars. I'll take a one thousand point day and be humble about the gains or I'll settle for the sideways grind and DCA my cash along with my dividends.
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