Wall of Worry

I have always believed that for the stock market to go up, it has to climb a wall of worry. If you scan the Wall Street Journal daily you will find that the percentage of 'negative' headlines to 'positive' headlines is 99 to 1. If you turn on CNBC, negative stories about the economy are 100 to 1. If you go out to dinner with a friend or business associate, the #1 topic for conversation is about the economy and how bad business is. It seems that the political discussions have stopped and the reality of hard times is here. Remember when we would get stock tips at the beauty parlor or find out that everyone was doubling there money in buying real estate. Clearly we are climbing more than a wall of worry these days. It is very close to total panic. Over the history of financial markets, the time to buy is when 'it is very lonely to buy'. Today, you might be the only buyer around.
Random thoughts....What happened to President-elect Obama?...He should pick Paul Volcker, former Chairman of the Federal Reserve, as Treasury Secretary. This announcement should be made by next week....General Electric's dividend yield is approaching 8%.....Watch the currency market carefully as the British Pound will continue to weaken over the next year....

Supply & Demand of Stocks

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?