This looks like the end of down for this year.... see the WAVES? Those are the psychological crowd emotions.... predictable... now we should see a turn around in the crowd psychology... despite the fact you the tax payer is on the hook for a possible $7 trillion!
After the predictable psychology plays out the THREE waves up then the next push will start down... FIVE waves down.... One WAVE down... Then the next wave up (2)... then the next one down(3)... one more up(4)... then a long wave push down(5)... maybe it stops at 4000.
So when we get close to the line I would move my money back into cash. EVERYONE FEELS LIKE THE WORST IS HERE.... this is evidenced by the outrageous actions by the government over the weekend, including the president elect saying the worst is yet to come...
All this talk and effort is evidence that from the top down people are negative... commercials on TV... your buddies at work...
So now that there is sufficient negativity in the CROWD you will see the turn up...
All the while we were headed south, losing 46% of the Dow people were holding onto HOPE that it would eventually turn around....
But hope was lost by the powers that be and they had to act... promising to give up half of the the US GDP to 'save' the economy...
Picture this:
You are a business man... your business has done very well for several years... maybe a decade... but you begin noticing that your customers are changing. Many people want your product but can't afford to pay cash for it... so they begin using a credit card to buy your product... and suddenly you have a super influx of customers because more and more of your customers have a credit card...
"Wow!" you think. You start ramp-ing up the supply... even using credit yourself to buy supplies to create your product so you can keep up with demand.
Then you notice that your customer base is depleting... that the customers that are left don't really have a credit card... So you decide to give them the product under the arrangement that they would pay you monthly till it was paid off. That was going well until you started noticing the last group you gave the product too stopped paying the monthly payment... then worse you notice you have run out of interested customers...
But you have, like half of your money tied up in 'floating' the last group of customers and they all begin to stop paying... you start taking loans out to keep your business open... hoping that the customers start paying... then you end up maxed out...
About to go under in an attempt to 'save' your business a third party with some sort of 'authority' goes to your first customers... the ones who paid with cash... and raids their bank account to pay for part of the last 'non-paying' group's bill... you feel pretty good... for awhile...
But the people who had the means and the responsibility to buy your product out right with cash... will never ever come back to your business...
and you are stuck with a group of customers that want your product but don't have the means nor the discipline and responsibility to buy...
Unless of course the 'authority' keeps raiding the bank account of the ones who do...
It seems a very wise one once said, "Lay up for your selves treasure in heaven, where moth or rust won't corrupt, and theves can't break in and steal." Hmmm? Sounds like sound investment strategy to me? Whada you think?
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December, 2007
