Wednesday afternoon, a good friend
of mine sold off all his stock in the market. When I told him we were at or
near bottom, he replied "I don't want to hear it." This makes me believe that
right now we shifted from market reaction from the Fanny Mae and Freddie Mac
crisis to a stock market correction scare. These are two different reactions to
two different problems.
The first drop was
stabilizing when the second sell-off started. We had lost about a third of the
market value in a correction, and panic has set in. One thing is needed to stop
this - major players announcing they are buying, which is probably already
happening, but not yet spoken about in order to nab stock at great prices.
Essentially, board members of big companies, and the board on behalf of the
companies themselves are reducing their cash and grabbing their own stock
cheap, thus poising themselves for a big profit later.
Think about it - there are bargains out there, and
the people who are in the know in their own companies are always looking for a
great deal. The fact is that stocks prices will recover in about two years,
maybe three. Still, that means 10+%, and most probably a 15%+ return on
investment in each of the next two or three years. So, people who sold their
stock in panic have made a mistake - stock prices will recover - they always do
after every correction. Right now it is a buyers market. |
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