The Blue Chip Cycle

It's hard to get motivated when the press publishes "It's the end of the world" each morning as we sip our coffee and ponder the fate of diminishing investment accounts. No wonder people are cashing out $300 billion in money market funds and stuffing it under their mattresses.

Of course, withdrawing large amounts of cash only makes the problem worse. Compound that with our well organized Congress, who instead of passing an obviously necessary economic rescue bill decided to get into a urinary contest with each other about who's fault it is. As a result, we have to watch the DJI fall out of the sky like a plane with no wings looking like an freshly cooked hot dog.

Feeling helpless yet? We should. Because there is nothing for the us to do but sit back and watch it happen.

Now, having said that, let me say this.

1. We will come out of this. That is a certainty. An absolute certainty. TRAGICALLY, how soon we come out is up to Congress and their infantile behavior.
2. All the finger pointing and name calling needs to be set aside. I am all for investigations and prosecuting the guilty for manipulation, but let's fix the problem first and THEN perform the witch hunt.
3. News tends to follow the most extreme stories. After all, that's what sells. But in the number of companies that have crashing stock prices, there are as many companies that are doing fine. It's a Blue Chip environment right now. Budweiser (BUD), Coca Cola (KO), and McDonald's (MCD) are weathering this storm like it was nothing but a windy day. And you don't think the Guru of Gurus', Warren Buffet, stuck billions into GE (GE) and Goldman Sachs (GS) because he felt sorry for them, do you? He has seen this cycle many times in his life and is viewing it for what it is. A cycle.

I know it's tough. It is for most people. But panicking is the absolute worst thing to do.

Put on your boots, get out the fire hoses, and take advantage of some cheap stocks that will eventually rise again from these ashes. In five years you can be one of the ones that can say "I told you so".

Disclosure: Author holds positions in the above-mentioned securities.

Comments

[ATLBob:]

Well said and I couldn't agree more.

2008 Oct 02 02:29 PM

[SA Guest:]

I posted this elsewhere but thought I would put here as well

A one hour interivew of Warren Buffett by Charlie Rose - October 1, 2008. (The bail out will make money if you buy at market)

www.charlierose.com/gu...

If the above link does not work try this one

video.google.com/googl...

2008 Oct 02 05:41 PM

[differt:]

you won't have to wait 5 years for GE..
see you at 30 by year end.

2008 Oct 02 06:38 PM

[Socialism c...:]

"It's hard to get motivated when the press publishes "It's the end of the world" each morning as we sip our coffee and ponder the fate of diminishing investment accounts."

Heh. It's hardly the press...it's Bush and the whole bloody set of "leaders", including Pelosi, Franks, Boehner, etc. The whole mess of them crying "mayday" and "we must have this or we will perish!"

Notice the pork in the Senate bill passed last night? We start with 700B...Joe Average objects loudly to that much spending on the back of the taxpayer..."leaders" respond that it's for our own good, and then proceed to add 150B in pork???

2008 Oct 02 07:08 PM