posted on Jan, 16 2008 @ 11:48 PM
It's simple, the market is correcting itself. It has been overvalued for some time now. The Fed pumping money into the economy is not helping
either; it's just an artificial crutch. Investors now are begging and pleading for more rate cuts, yet this will do nothing to help the situation.
By cutting rates further, we artificially inflate the stock prices/market, what have you. The thing that needs to happen, and won't happen, is that
the Fed needs to let these companies(Citi, Merrill Lynch, JP Morgan, ect.) take their losses in one "lump sum" and then move on with it. The
consumer isn't going to be helped by these rate cuts, they won't be helped by the action the government is taking to help these companies; only the
companies are benefiting from these cuts, as well as investors. I believe Merrill is going to announce earnings tomorrow, not a good
thing----considering I read an article on Yahoo on how they've managed to destroy nearly half the companies value.
Now, on to the stocks themselves. If you have stocks now, don't sell, it's as simple as that. What do you have to gain if you sell your stocks
low? Nothing. You can't write them off as a loss, and more likely than not they will return to the price they where at or close to it. If you have
a dividend stock why sell at all; you'd still be making money off of it and if you reinvest it, you'll be able to get more stock cheaper. All of my
stocks are losing, for the first time ever I'm getting a negative return on my investments. I don't like it, but I realize its all part of the
game, and I hope others do as well. When you sell, you create panic, and panic is never good.
Right now, I wish I had money to invest; there are so many good "sales" right now its unbelievable. Because of the loan crisis and credit crunch,
good companies are very reasonable now. Here's one for someone who wants to invest, Johnson Control (JCI). This company was at $120 something a
share before their split, now it trades for $32 or so a share. I've lost money on it because I bought right after the split when it was at $38-40
per share. Am I going to sell it, no. This company has paid a dividend for, if I remember right, 100+ years. That is an impressive feat. I bought
a company called US Global Investors (GROW) for $28.45; it now sells for $17. Am I happy? No, but am I going to sell it, no. I've lost 40% of my
investment, but, their mutual funds are very highly rated so I expect this company to come back, just like JCI.
I realize because I'm young that I am more willing to take risks. A lot of other people won't or can't, and thats fine. But, still, why not take
a gamble on Citi Bank? They're not going to fail, they're cleaning up their mess, and they pay a good dividend. The stock sells for $26 and was
trading at $55. They're going to come back, if you buy now, you have the chance to reap a huge windfall on this stock. Same with Bank of America;
while it trades for more, $38, it wouldn't be a bad investment. They haven't been effected by the credit crunch at all, yet they're paying for the
mistakes of other banks and lenders.
Now is the time to buy. There are so many sales and bargians out there that a savvy investor will make some serious cash. This does not mean however
to just rush out and buy these stocks; you've got to do your due dilligence and find the right stock(s) for you. I wish I had the money to pursue
these stocks; now is the time to buy.