Another Buy In

Friday, October 24, 2008 | 11:56 AM

We put some more money to work this morning into the mess -- another 5% -- while I was somewhere over North Carolina, on the way to Tampa. we are now down to 55% cash, from a peak of 80%.

As I noted on October 10, we "scale in over time, in 10% increments, and recognize that the bottoming process can take several months to several quarters to complete. Hence, slowly buying in is the key."

I would expect that another whoosh down will lead us to put another 5-10% to work. I was disappointed to see we didn't get the 1000 point down capitulation. That's probably to pat, and widely expected/hoped for.

Oh well, there's always Monday . . .

Friday, October 24, 2008 | 11:56 AM | Permalink | Comments (52) | TrackBack (0)
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We have an entire industry of traders, money managers, institutional investors, etc. who are trained to buy anytime the market drops big. They are all looking for a “capitulation” event, with a spike of fear, because historically it has been profitable to do so. Now what we see is that any time the market opens down big, everybody gets excited and jumps in to buy.

As long as this occurs, we’ll never truly see the selling climax that they’re looking for. The bottom won’t be in until all these traders jump in, and then get smoked when the market falls by another 20% or more. It happened during the depression. It will happen again. The bottom won’t be in until NONE of these clowns wants to jump in and buy equities. That will be the final capitulation.

Posted by: GH | Oct 24, 2008 12:05:47 PM

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