Capitulation Is Here (Again)... Good Times to Follow

For anyone who has monies in a 401k, a Roth IRA, or some other retirement account and is under 35 years old, now may be a good to enter the market and use up some of that financial gunpowder.

From Barry Ritholtz:

The criminal enterprise, formerly known as Russia, has decided to halt trading. With its stock market down 57%, Putin & Co. are being even more risk averse than Paulson, Bernanke, et.al. & Co.

You know times are bad when Russia halts trading. But people with a long-term horizon of at least ten to fifteen years may want to add to existing positions. The economy and the stock market go through boom-bust cycles, and you can't enjoy the boom unless you get in on the bust. I've personally seen my retirement funds decline in value by over 10,000 dollars in the last two to three months. I've continued adding to positions, especially in the Asian markets. Barring some cosmic wrath directed at me, I don't need the retirement money now, tomorrow, or even ten years from now.

From Warren Buffett:

We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful.

If this isn't fear in the air I smell, maybe it's eau de depression. Come November, we will have a change, with either candidate bringing fresh ideas to the White House (McCain with less tolerance for pork and corruption, and Obama with, well, Obama). Good times will be here again, because a) we can (or should try harder to) learn from Japan's mistakes bailing out their banks; and b) financial services are still not that vital to an economy, once liquidity is restored.

We had a great economy back when Citigroup (C), BofA (BAC), and WaMu (WM) were just small or midsize banks. I still remember Citigroup being "just" 19 dollars during the heyday. Banks were never meant to be growth stocks. When they go back to paying a stable dividend, maintaining good credit profiles, and selling some insurance, the world will be a better place. And if I never have to hear about credit default swaps, I will be a happy man.

Disclosure: None

Comments

[tipalia:]

correct ,banks used to be stocks for widows and retirees with a small revenue. But greed,those fat executives that never have enough money,took care of that wealth.I repeat what I said many times before, stock options are the source of this mess we are in now,GET RID OF STOCK OPTIONS NOW ,TODAY or be ready for the same mess in another few years from now.

2008 Sep 18 10:18 AM

[tipalia:]

we now what happens to the shareholders and taxpayers but what happen to those fat cats?

2008 Sep 18 10:20 AM

[tipalia:]

know with a K ,sorry

2008 Sep 18 10:20 AM

[Dweezil:]

I think it may be a little early to call capitulation, but I think your right about averaging down. This may not be a capitulation bottom marking the beginning of a new bull, but it sure feels close. The only thing I'm looking for is the VIX over 40, and a few days of it with spikes up to or over 45 and I'm buying as fast as I can.

2008 Sep 18 10:34 AM

[TBill:]

Down only 10,000? Count yourself lucky!
Unfortunately, the health of the financial system is critical to everyone. The powers that be are doing what needs to be done, but this mess is as new to them as it is to us. "Well, we'll try this medicine, and if it doesn't work, we'll either take more of it or try something else."
Fear and panic are in the air. That is what long term bottoms are made of. Time to start shoveling funds into the market, and get your finger on the trigger, ready to fire both barrels.

2008 Sep 18 10:36 AM

[Urbane Gori...:]

Mr. Guerrera: I'll see your 40 and raise you 5! jegan ;-)

2008 Sep 18 12:10 PM