Market Soars on Bad News

Yes, I took a month off. So what, nobody but my wife reads this religiously.

The Dow was up 391 points today based on Lehman efforts to raise additional capital by selling $4 billion in preferred stock. Ford reported a 14% drop in sales. UBS and Deutsche Bank report billions more of write downs and guess what...

That is good news! Who knew? We live in upside down world.

I have been reading a lot lately of those analysts that are calling a bottom to the market. Others say we are exactly half way through the recession period and that is the perfect time to buy stocks.

I'm not sold on it. Rallies like to today are fluff. It's nice to see stocks up, it's a nice warm feeling. But keep in mind that all the news that you saw hit the wires today was still negative. I'm not sure that the banks are done with their write offs.

We have seen Bear Stearns fail since I have spoken to you last. What has been learned? Well, the Fed, having earned a piece of what is REALLY being hidden by big investment banks and commercial banks now will be able to better assess what, if any, changes need to be made. As for the Fed taking on these "risky assets"...uh, the Fed could turn a nice profit, if the assets perform.

My feeling is that you are going to find some stocks that are on sale right now. I really like foriegn stocks, excluding most of China. I have suggested EWZ in the past, the EFT from Brazil. The EFT has reseasonably well in the current market, even with the dollar's struggles. As the dollar regains some strength, which it has in the past few weeks, you will see this EFT surge forward.

I still don't trust financials. Maybe I will miss the boat...but I think once you see at least two full quarters of the major banks posting no write downs, then the tide will have turned. Sure, you might miss some of the upswing, but the downside is still considerable in my opinion.