Today's Market 
by Dr. Invest

If there had been any question about the direction of the market, a drop of over 500 points leaves no doubt that the direction of the market is downward. As I understand it, a drop of 10% is a correction, a drop of 20% is a recession, and a drop of 40% is a depression.

I hope you took my advice not to invest into the market at this time. As I mentioned in a previous blog, some major investment firms have moved large amounts of money out of stocks into banks. This is a sign that these investment firms don't trust stocks when the market is contracting. Also, the months of August and September have historically had poor stock returns.

There is a renewed sense of market doom and the analysts who have always proclaimed that the DOW would return to 2,000 points are making hay out of the bad news. You may have noticed that people didn't buy gold today, they sold it! I might also ask myself, "Who sold the gold?". This would be and interesting area of investigation. If gold is a "good buy", why sell? Are some investors feeling that gold is oversold? Like any investment, I would be cautious to buy the investment if it is going down.

So I want to speculate that now isn't the time to buy stocks, nor is it the time to buy gold, and that some of the major investment firms are holding cash positions because they believe that the down turn in the market will be short-lived and want to be liquid enough to purchase new positions. That means that the perception is that we are undergoing a market correction rather than a double-dip recession. As an investor, you need to be prepared for either.

If you are comfortable holding a losing position for six months or more, stay invested. Do remember that this market correction is not over and will continue to go down more. If you are a swing-trader, like myself, you will want to keep the stocks that continue to go up... like TIP, that went up .88% today as the market fell 500 points. Even though TIP has continued to rise over the past month, I still have a STOP SELL on TIP if the stock reverses.

Be cauious in this market and don't trust neither the glowing reports nor the damning reports on the economy. I heard an analyst damning the U.S. market and ending his report with: "I would invest in international stocks.". Of course, his company managed an international portfolio. Yesterday, one of the analyst who clearly represented the views of the White House, explained that the crisis was over and that the remainder of the year would see a strong market recovery. You would think that he had some kind of agenda to persuade hard-working people to invest in the market. Aren't you glad that you didn't make that investment yesterday?

(Note: The above article is not for investment advice but soley for entertainment purposes)