Saturday, November 22, 2008
Relief at Last II
Yes, relief at last! Relief in the markets, that is. What a wild week? This was not an exciting roller coaster, this was a free fall on a bungee cord. Friday we hit the bottom and got a little bounce. Being an optimist, I believe this is the bounce we needed. I believe this is it..... this is the bottom. Stocks of profitable companies have no more room to be squeezed downward. We now have a new Secretary of the Treasury who is bound to be more of a positive force than Secretary Paulson.
It is really a sad day when things get so bad, that at the first hint of good news, the market soars. And right now, stocks are way too cheap, but fear is keeping them down. Take US Steel for example, it peaked at $195 a share, now it is $25 a share. Once the decisions are made for the car manufacturers, and we realize that GM and Ford will not go out of business, but will continue to make cars, US Steel and other steel companies will go up dramatically over the next year. $195 is out of the question, but how about $25 to $75. That looks like 200% to me.
This recession will continue at least until summer, but stocks will now go up as buyers position themselves for the upswing. It will be both earnings per share, and speculation that will push the market upward. I am actually getting excited about it. The pessimists will continue to sell while the optimist will continue to buy and position themselves. Then, when the market moves upward the pessimists will continue to gripe and complain while the optimists will get rich at their expense. I want to buy my retirement fund now at a steep discount.