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The Next "Correction"- Coming Soon to a Theater Near You!

Apr. 06, 2011 2:33 AM ET
Realist32 profile picture
Realist32's Blog
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From the Art of War by Sun Tzu: "When the enemy attacks, we retreat. When he is idle, we attack. When he retreats, we pursue.

This quote is the basis of the famous line by Warren Buffet for stocks- Be fearful when others are greedy and greedy when others are fearful- and it is so true.

As everyone knows, if you bought while people were panicking at the height of the crisis, you could of had doubled your money at the market's current position.
The market is in fact almost where we were before the crisis (where we were a year before the crisis to be more exact, but that seems appropriate as the peak before the crisis was obviously overvalued).
We are also officially in the greatest bull market since the Great Depression.
Good news about jobs come out weekly, and more than drown out the Japan and Mideast Crisises that temporarily scared investors.
In short, others are definitely greedy.

Honestly, do you really think that our economy is where we were before the crisis? yes, our unemployement rate was just lowered from 8.9% to 8.8%, but that is still WAY more than before the crisis. Additionally, the housing market is STILL falling, Oil is at over $100 and will obviously affect the economy (consumer spending is only up a bit because of oil inflation), the Japan supply crisis is only just starting (just wait till parts inventory levels of factories around the world are finally empty), QE2 will soon be over, making money a more attractive investment than it currently is now, yet the market is obviously drunk with greed and once reality sets- it will set hard.
I'd guess that will be sooner than later, and that this new earnings season is going to be the catalyst.
Although it may not be time to short the market, t would be smart to start locking in profits.
Be fearful when others are greedy. I'm afraid.

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