Wednesday, March 19, 2008

Still Waiting for the Bottom

I continue to expect the worst of this storm to be during the first half of 2008. I believe that we are now hearing the worst of the bad news.

The Fed actions this week have given the stock market a dose of enthusiasm. This should soon fade. The average guy is just now beginning to dump his stock positions (401k, mutual funds). We will not see the market bottom until the average guy has given up on stocks.

The homebuilder stocks should soon be confronted by the continued lack of home sales, and will probably drop significantly in a few months. Home prices will continue to decline for a while.

Commercial real estate prices have peaked and rents will start declining as vacancies rise from businesses needing less space with their reduced employment, and as new office space comes into the market.

Nothing looks safe or good to me, so I continue to wait - with about half of my investment assets in cash and Treasury bonds. I will probably sell the Treasury bonds in a few weeks at a premium of about 15% over what I paid for them about a year ago.


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