Thursday, October 9, 2008

Time is the enemy

The cavalry is coming to the rescue, but not tomorrow, and that's the problem today. Treasury is said to be considering buying equity stakes in major banks, following lead of the UK, but it may take a few weeks to iron out the details. Same goes for the rest of the bailout plan; it's not ready to be implemented. Even if you had some attractive bargains staring you in the face, would you be eager to buy today, knowing that something bad might happen in the next week or two?

That's the paradox of a bailout that has been announced but is not immediately implemented. Buyers keep sitting on the sidelines waiting, and it's a shortage of buyers (see earlier post below) that is the real problem.

6 comments:

CDLIC said...
This comment has been removed by the author.
CDLIC said...

Scott,

Base on the updated VIX to 10yr. Ratio chart, and your statement that "we are in uncharted territory," does your statement of yesterday still stand that "we've seen the bottom" or are all bets off?

d said...

i think the bottom is different for every sector, although they are all interconnected in one way or another. Tech was doing alright most of the day until the last hour. maybe its a glass bottom?

Scott Grannis said...

This is a global panic, so it's anybody's guess at this point what happens. There are rumors that Treasury will be making a major announcement tomorrow. Let's hope they do and that it helps.

Tory Conservative said...

Scott,

Even if you are a pessimist regarding upcoming corporate profits, the S & P 500 is a bargain.

I have to think that people will kick themselves years from now if they sell their stock holdings now.

Scott Grannis said...

Yes, to sell now is to believe that we are entering a depression. I can't imagine that is a likely event. In the meantime it's like trying to catch a falling knife.