Earlier this year the couple of investing newsletters I subscribe to made a point that the Dow Jones was oversold, and that a rally would be expected to correct this - but then after this rally, stocks would suffer a big fall, past March 6th low point, and wouldn't be in a position to rally again until towards the Autumn.

Last night I briefly spoke to me old stockbroker - her strategy is "Sell in May, buy in September".

Looking around, the economic reports from the IMF, etc, make the point that this is the biggest financial crisis since the Great Depression, and yet no one seems to be using the actual data trend from the Great Depression as a template for economic recovery.

Hence economic predictions are constantly over optimistic, and constantly revised downwards.

There's currently a slight economic bounce going on, but I think it's fueled by false hopes. Enquiries for home sales may be up, but these are people who think there may be a bargain, and even still, not in volume enough to stop the real estate collapse already under way.

Also, the news that Citigroup and other banks making a profit is absolutely false - all these banks claiming a billion or so in profit have received tens of billions in state aid. They are not profitable, they are on life support, and simply recycling state aid. Assets are now being marked up from "toxic" to "healthy" after the change in mark to market.

The overall point being, I can see the current optimism tiring very quickly, so I'm not invested at the moment. I'm looking towards later in the year, when perhaps the economic outlook has become more realistic.

2c.

Agreed. The other day a group of us went over all the economic indicators, and considering that they are being under-reported, it looks far worse than the picture is being painted. However, Obama and the news says we've "turned the corner."

Everyone has heard about Goldman losing a month to report their earnings, and personally, I'd like to think Goldman would be one of the stronger banks in this mess. However, they moved to become a depository institution, accepted aid, and like I said, didn't count December. If they have to do that to look viable, it makes me wonder how Citi can even be holding on.

On top of that, everyone who lost their jobs recently had/have debt, and I base that off the average American having debt. Assuming they are even able to find a part time job, it probably won't be able to cover their payments, and defaults will rise.

Then you add the fact that the Fed printed a shitload (yes, an accurate measurement) of dollars while the economy is shrinking. Generally, you try to match or come close to the rate of growth of the economy when it comes to a money supply. The Fed did this to "solve" the liquidity crisis, but when the markets become more liquid, will they burn the trillion or so they've printed? What if the economy gets worse and their is another "liquidity crisis?" Will they print more money or become more conservative? I have to say, I believe the Fed will continue to increase the money supply, and I'd have serious doubts about their willingness to do the opposite.

So, yeah, I wouldn't even count on a sell May buy September strategy, but there are cycles even in a recession. The media makes sure to promote group think.

Hmm, interesting views. As my name implies, I'm just a newbie when it comes to investing, but in a lot of my research there's talk about money to be made in the stocks during a downturn. As the mathematics and logistics of it all is way beyond my comprehension (I will NEVER understand the concept of "split stocks"), one thing that captured my understanding was the term "Dogs of the Dow". As you both seem to be well versed in the stocks and finance, I'm sure I don't have to define this term, but it's the way I've chosen to go so far and I've made a good ROI despite my friends losing massive amounts on higher risk stocks (except for the one that invested in google when it was valued below $300/per, oh how I wish I'd done that).

Anyway, my point is that though I agree it is wrong to be overly optimistic about today's market, I also feel that it is wrong to veer towards the other extreme of being overly pessimistic. Yes, banks are facing hard times regarding real estate and bad debts, but a lot of financial institutions still have staples in other areas that bring them plenty of revenue and inflate their capital. Not to mention there are PLENTY of businesses finding innovative ways to capitalize on this recession.

I could be way off course and completely wrong, but end of the day the game still seems the same; you have to do your homework and invest based on your risk preference, time, and confidence in your research.

Knowing the current situation of the stock market is crucial especially if you have stocks invested in it. It is better to be up to dated to the situations so that you could know the actions to be taken if some changes in the stock market occur as to secure your stocks to lose. Today, the stock market is unstable so we need to be vigilant to the current market conditions.

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Regards,
Gold Coins