Sunday, September 21, 2008

Kathy Laments the Markets

I received the following e-mail from Kathy of the Lone Star State. My response follows:

> Hello Mitchell,

> I am consumed with news between the naked short selling and credit crisis as you are aware. I am effected by the economy in the construction industry, the real estate industry and my ARM.

> Now I am consumed with stocks since I play in the government's form of white-collar-gambling with small amounts of money I have in the stocks. Suddenly short-selling (more painful naked-shorting) is more and more put to the top of my attention. Here I go again, another portion of the dying economy that I hit!

> So, what I just listened to."the problems of Main Street are now affecting Wall Street". Oh, now it's an issue. Okay.

> I turn to your blog with my head spinning. I see (as if I didn't actually know) that news is not a good place to get my news. So, I am asking where (in your opinion) is the "safest" place to get as close to truthful information as possible? I seem to trust no one coming across the electrical waves.

> Additionally, I am lost. BO scares me for a variety of reasons then I am left with McCain, who supported deregulation but is now pushing regulation and blaming for lack of regulation without so much as an "oops, my thinking was incorrect then but now I see". What am I supposed to do now. I only have 5 weeks and 2 days to get my head right. That is not a lot of time with this. Much fuzz and cloud going on here.

My response:

Stocks may be good now. I wouldn't pull out or sell short at this point. We are heading toward the early stages of another inflation and that is usually good for stocks for at least a year.

One thing I can suggest is Howard S. Katz's newsletter and blog. The newsletter
costs $300 a year and I offered to help him market it because it is very good. I have gotten more than a few ideas from him.

He's at:

I don't have much more than that to recommend. You might try the Wall Street Journal as a basic newspaper. I don't read it myself at this point but I'm thinking of starting. I have been subscribing to the NY Sun, but they are likely to close their doors at the end of this month. Howard and other friends read the Times and the Economist to see what the establishment is thinking, but I don't have the time to make a career of doing that, and they are not good news sources. Fox is a joke. I wish I had something more to suggest, but honestly I don't.

One approach is to assume the opposite of what your newspaper is saying. They say that there's a financial crisis, so assume that there is a bull market coming. If they start saying that the economy's going great, assume that there's high inflation and misallocation of resources, etc.

As far as the general election, I support McCain as the "lesser of two evils" but the time is nearing where I may decide to vote for the Libertarian Party as the "least of three evils".

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