You have a quandary. You see, not only do I say we are headed in a recession (at best), but now, Jim Cramer, Larry Kudlow, and Erin Burnett (all three recurring characters on the daytime black comedy called, CNBC) say the same thing.
The problem you face is not what you might expect, though. One of my readers emailed tonight to say, "Now that the shills are on the bear side, the market will probably go up on Monday."
I can understand that sentiment. It sounds easy. The logic seems to work: Wall Street shills told us to buy the market because the economy would be great. The economy wasn't great. They were wrong. Now, the same shills are saying the economy is bad. They must be wrong again. Therefore, ergo, thus, and ipso-facto, it must be time to jump in to the market.
There is where you logic would break down.
The Wall Street shills were wrong about the economy. That's public record. No debate. I was 100% correct about the economy, and the Wall Street shills were either wrong or liars (probably a little of both) when they pumped you into stocks based on the glorious US economy.
The part of your logic which would be wrong is that the same shills who pumped you into the market because of the "goldilocks" economy, Ben Bernanke "nailing it", and economic "nirvana", are only saying we are about to (or, in Jim Cramer's case, "are") in a recession. There's no talk of selling stocks yet.
None. I've yet to hear one nutty, CNBCer even pretend that it's time to sell stocks. And, that, my friend, is what we need before we start jumping in.
The fact that I was right about the economy - a fact never in doubt, and never a concern of mine - is obvious. For the charade about the economy to continue much longer would be, well, ridiculous. The fact that the Larry Kudlows of the world admit the obvious is not a sign that it's time to buy stocks. The sign to buy stocks is much farther down the line.
I'll give you a litmus test on when to buy stocks: When Jim Cramer comes out and says it's time to sell Sears Holding (Nasdaq:SHLD), Goldman Sachs (NYSE:GS), or Apple (Nasdaq:AAPL), you'll get your first buying sign.
No fooling. Jim's pumped so many people into those things that he can't push the sell button JUST YET. He'll only tell folks to sell those bloated pigs when they've dropped far enough that the oversold readings are pegged straight down. SHLD is the real indicator to watch, though. Jim was pounding that junker at $195 (Closed Friday near $130) as the "one stock" you should own because it was the "next Berkshire Hathaway". Jim's reputation (I know, I know, don't laugh) is on the line with SHLD. He'll only tell people to sell it out of sheer panic.
And, that's when you'll probably get an email from me saying, "Load the boat."
Look, I don't know what Monday holds. My best guess is that we're looking at huge losses this week ahead. However, that's a guess. An educated guess, sure. But, just a guess.
My advice is for you to take profits in stocks you can right now (read: give losses to someone else!), sell calls on stocks you just can't bear to sell, buy puts on the Dow or Nasdaq, or make sure you have some QID, DXD, SDS, or TWM in your portfolio. Not much of any of these ideas can go a long way to helping you conserve capital or even make money. It's my standard advice, but, there's still time. At the bear minimum, you need to increase your cash position to 25% to 50%.
Remember, that no matter what the shills on CNBC say, there motives remain the same: Keep your butt in your chair, eyes on the screen, and finger off the sell button. (If you sell you are out of the market. If you are out of the market, you don't watch CNBC. If you don't watch CNBC, they don't sell ads to the likes of Ditech or Ameritrade. No ad sales means they can't afford to pay Jim Cramer. No Jim Cramer and they don't have ANY VIEWERS. Shoot, when Fox takes Jim, CNBC is done anyway.) So, like I said, they gotta keep you happy, upbeat, and buying all the time...
...until they get the word from their pimps on Wall Street that it's time to start pushing people out. When you hear Erin Burnett ask, "So, is this a bear market," or, "Is it time to add QID to your portfolio," you'll know it's just about time to get jump in with both feet.
Not there yet. Not there by a long shot. All this new "bear" talk from your favorite CNBC-sketeers is just that, "talk". Just fluffery to pose a new set of "questions" to you during the day so you'll hang on through the next commercial break ("Even if Bernanke's fed cuts rate, is it too little, too late? We'll tackle that "question" in the next hour. Stay tuned!")
True bears hibernate, sleep it off, and come back after winter. Larry Kudlow, Jim Cramer, Erin Burnett (and all the other regular cast members) are just pretending right now. This is just a "walk through". Call it a non-dress, dress rehearsal.
Better take your seat, though. The show starts soon. You don't want to miss the opening act.
Sincerely,
Don Harrold
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