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Friday's Turnaround: Raid on the Shorts

I agree with Bill. CNBC is joke. They always try to put a positive spin on everything. Sure AMBAC and MBIA are the most heavily shorted stocks and maybe they were trying to spur a reaction from hedge funds that were short these stocks by reporting rumours of a bailout. The fact of the matter is that we are going into a recession (which seemed far fetched 3 months ago) and maybe into a stagflationary environment (which may seem a long way off now). The subprime situation is not over and the housing crisis has not bottomed. I watch CNBC and they are always trying to play the positive angle on everything, suggesting people should buy bombed out stocks now for the long-term. The stocks may or may not eventually go back up but can the ordinary investor stomach a 50% or more decline in his portfolio in the meantime? Even Paulson and Bernanke seem to have their head in the sand telling Congress the US will skirt a recession. I know they are probably trying to avert a panic but they should acknowledge the severity of the current situation rather than shrug it off. I'm concerned by the fact that are this hope and optimism about 2H 2008 recovery has meant that the stock market has held up relatively well. Once we see reality set in with a less than bright 2H 2008, the Dow may fall another 2000pts. I dont want to be a pessimist or seem to be un-American but we have a big problem not seen for the last 20 years and my confidence in the current team (Bernanke et al) is severely lacking.

PS. I agree with the last post..trying to time the market is futile. We are in a bear market and stocks will most likely go down from here. Just make sure you don't get shaken out by the bear rallies.