We all understand that Supply & Demand is one of the most fundamental concepts of economics. When we are in a bull market, the amount of supply of stocks is limited while the demand is extremely strong. In the current bear market, it seems that there is an unlimited supply of stock for sale and no demand. We are seeing deleveraging in the economy which creates forced selling in the stock market. The market will continue to go down as along as we still have willing and unwilling sellers around. It seems to me that the willing sellers sold a couple of months ago.
We are now forced to watch the liquidation of unwilling sellers. These investors or institutions must raise cash to avoid bankruptcy. Institutions include pension plans, hedge funds, mutual funds and corporations. The deleveraging or unwilling sellers seem to appear everyday.
If you are in a cash position, now is the time to be buying stocks. I would advise buying stocks on a monthly investment plan. For example, lets say you want to commit $100,000 in the market.
Buy 1/12 or about $8,333 every month starting today. This will limit your exposure to one day events. If you are leveraged, it is time to cut your risk and make sure that you have enough cash to last you for two years.
Random thoughts.....look at the British pound vs. the dollar today....1.49....the Euro is about to break 1.25....oil is testing $55...Goldman Sachs is trying to hold $69.5...Best Buy is not selling any electronics....If you have cash, isn't this a time to nibble?
We are now forced to watch the liquidation of unwilling sellers. These investors or institutions must raise cash to avoid bankruptcy. Institutions include pension plans, hedge funds, mutual funds and corporations. The deleveraging or unwilling sellers seem to appear everyday.
If you are in a cash position, now is the time to be buying stocks. I would advise buying stocks on a monthly investment plan. For example, lets say you want to commit $100,000 in the market.
Buy 1/12 or about $8,333 every month starting today. This will limit your exposure to one day events. If you are leveraged, it is time to cut your risk and make sure that you have enough cash to last you for two years.
Random thoughts.....look at the British pound vs. the dollar today....1.49....the Euro is about to break 1.25....oil is testing $55...Goldman Sachs is trying to hold $69.5...Best Buy is not selling any electronics....If you have cash, isn't this a time to nibble?
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1 comment:
Alan, I agree with you. It's time to BUY--or at least "nibble".
I love the "homeless looking man" you chose to feature in the photo. I feel like I'm a follower of a new reporter from The Baltimore Sun (in the hit TV series THE WIRE). LOL
You're the best...great blog today. The supply/demand issue really needs to be clarified time & time again...always a great reminder--even for me.
Hugs,
Michael ;)
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