(Originally posted on 1/22/08, right as the Fed made the emergency .75 point rate cut.)
Looks like all the Councilmembers were on the phone (1/22/08) with their stockbrokers due to the market crisis and they missed a quorum.
ZD predicted last Monday that the market would be low 12000-11999 today (1/22/08).
strategyupdate.com (click "daily blog link")
The fundamentals are all in place in our markets; there may be a temporary downturn, but everything is coming back stronger within just months. Bet on it.
First of all, although you may be correct that the market may rebound as you predict within just months.
HOWEVER...my prediction is based on a couple things that I hope you factored in:
a) Subprime is MUCH WORSE than accounted for at this point. You know about, "jingle mail". When subprimers end up owing more on their home than it is now worth (when their low-intro rate jumps to market rate). So banks are going to be stuck with all these homes that they cannot sell, that are also decreasing in value.
b) Bond insurance market: You heard that they are in trouble, and that the banks are writing off bigger losses than anyone imagined.
The credit derivative market starts coming due in February. And although "derivatives" are a little to confusing to explain here -- I'm sure you know about it.
When all the investors who never coulda though we'd be in the 11,000s -- well their gonna have to cover -- and it's gonna be a blood bath.
Then the banks will tank even more than expected.
* The only thing that has changed in my prediction is that today, there is chatter that the government may step in to bail out the bond insurers. So although they are not going to be able to prevent the inevitable -- it should delay the inevitable by a few months. (Possibly). But the bail out may not be here before the derivatives come due.
Which leads me to the next point:
Yeah, I made a prediction to sell today -- BEFORE THE FED CUT!!! I turned my back for two seconds to post the alert, then he cut...and the last thing I thought to do was post an update here, right away...because it was time to by some heavy metal, y'all!!!
So of course when you read something, and the Fed makes an announcement like that, everything changes. HOWEVER...the market WAS still down 400 at some point, and we're below 12,000!!! (Yikes!)
However...I STILL SAY, SOME FOLKS GOT LUCKY AND GOT THEIR GOLDEN OPPORTUNITY FOR A SECOND CHANCE TO SELL. Bro, you make it sound like the stock market closed for the last time ever, today.
Overall, with the Fed's emergency cut -- AND NOW...talk of a bond insurer bailout (the bond thing was the MAIN thing in the back of my mind that keeps me ultra-bearish),
you may want to take your chances.
Clint Eastwood has a question, "Feel lucky, PUNK?" (No disrespect meant.)
I'm saying I don't think the government will be able to keep it propped up in the long run...and we're gonna end up seeing those down 400 days that STICK!
AND...here's something that could be scary in the short run:
The Fed cut early, and people are expecting another .5% next meeting in two weeks. But we also know the Feds are a bunch of textbook, ivory tower douchebags. WHAT IF THIS WAS MERELY THE CUT THEY WERE GOING TO DO AT THE NEXT MEETING --- NOW, because if ZD predicted doomsday...I'm sure they saw it coming to. So we may not see a cut at the next meeting. Because, on the realest...although ZD like rate cuts from a Wall Street mindset...
inflation is off the shizzle, my nizzle. So I'm sure you understand further rate cuts would drive the dollar down, the oil sheiks will get pissed that they are holding cheap ass U.S. dollars and gas will rise and inflation will rise (at the pump and in most products).
SUMMARY: Yeah, the Fed made an emergency cut after my blog post -- and many people may think the coast is now clear. ZD says, "HELL NAW!"
(And my opinion will change based on these actions. OF COURSE THEY WOULD...a pilot has to change the course based on a change in weather condition.) BUT I'M NOT HEDGING, YET.
Not savvy enough to advise on foreign money, but I'll look into it. I would be scared of investing in overseas dollars now, cause you never know where (what country) and when we will see a rate cut, or not.
GOLD...HELLZ TO THE YEAH! Although I am Zuma Dogg, I too, am a mere mortal beneath the hat and glasses, so I may be right -- or wrong...but regarding GOLD as it relates to everything I've blogged about up until now -- I would simply start with buying gold manana, and not worry when it goes down a little*, because you are buying it as an investment for '08 and beyond.
(A "little" for gold could be down $50 dollars, or more, in the short run, with all of this volatility -- but with the dollar getting weaker with every Fed cut -- and inflation rising, if you think it is as I do, then gold is the #1 pick. As a gold stock, although the safest bet is the ETF called, "GLD", ZD has noticed that the stock "GOLD", (Rangold) always seems to be among the most UP mining stocks when gold is up -- and down the least when gold is down. Check the charts for '08 vs other gold mining stocks.)
But for the lower-risk takers -- safest bet (goes up the least, and down the least, but will trend up nice and slowly as gold rises...GLD. (ZD owns neither.)
They keep saying silver has the most potential to skyrocket, however, it always seems as gold takes all the UP glory. So, tomorrow would be a great day to buy silver -- early in the day -- if you believe silver will catch up, as it should. Why? The gold stocks were up by the end of the day, but silver was flat -- to down a percentage point, or two.
My silver guru confirmed for ZD's www.StrategyUpdate.com (see daily blog link) that silver DOES lag behind gold, so if gold was up today..silver should be up shortly thereafter. So tomorrow morning may be the time. BUT BE CAREFUL, I don't have a crystal ball, y'all.
But if I had cash, I would be buying gold and silver (but maybe less silver ONLY because it seems that logic doesn't matter as much as publicity, and GOLD comes to peoples' mind first -- AND it is more directly tied to the dollar, it seems. Silver is good, though, because it's used for electrical things.
Regarding other stocks...I would be sitting on the sidelines, because it's WAY too volatile -- and I think there will be further bottoming before the big comeback rally that may not be here for the next two years. HOWEVER...OF COURSE there are tons of great stocks to be buying, and I wish I COULD buy some tomorrow. (You can also short, and they have tons of ETFs that short specific sectors, commodities, and indexes. So if you think oil/gold/Dow Jones/retail/real estate/financials/etc is going up, or down there is an ETF that makes it easy to do for dummies like ZD.)
But I think gold is the best single bet for tomorrow if you are a long term investor.
(Click blue link and hit daily blog link if you haven't seen it yet. No update yet today.)
"Z DOGG PUT IT OUT THERE, AND ON THE LINE!!! You hung it out there, like a big blanket under the sun. Every one saw your statement. Everyone saw you were correct! Wow."
"That was balsy Zuma, I am not kidding you. But Don Quixote, myself, and everyone out there knows you prepared, you researched your inkling's, and came to the correct educated guess. That is what well prepared Chartered Financial Analyst do! What you did was just jaw dropping ZD! And I am happy to give you your much due congratulations. Amen. "For I already know the plans I have for you. I will help you, not hurt you. I will give you a future and a hope. You will call on me and I will answer. You will talk to me and I will listen. Jeremiah 29:11,12."
"Zuma you and your bat-computer are marvelous, and your regular readers on this blog are pure genius !!!!!"
"Zuma Dogg, thanks for the tips and info, especially knowing how busy you must be, I really appreciate it man. Yea I see today where the rest of the world is dumping and scared and I am too. Manana all my mutual funds and stock is being sold and I'm staying in cash and metals until things get a little more stable. I am too old anymore to be listening to stock brokers and real estate agents tell me about historic trends or if the glass is half empty or half full. Fuck that shit! I don't have the time or the patience anymore to wait around another ten or twenty years for pie in the sky bullshit."
"Thanks again for the great advice and your eloquent views on the economy."
"Hi, Zuma, It is very important for me to find out where the market is going. My husband and I invested his retirement in the market. So your information will be appreciated."
"Z Dogg this mornings post scared the shit out of me. You have been right on, concerning the gold and silver and that advice made me a little dinero, thanks!
But if you are saying that tues will be the day of reckoning , another historical black tuesday, and that all us "ordinary" investors will be sold down the river I am interested in having you expound on that a little, if you would be so kind. Should we move everything into gold, silver and cash? I'm very nervous about the economy so it wouldn't take much to get me to bail out even if it's a little permature, better late than never, so they say. - Thanks Zuma"
Strategy Update website (See 1/23/08 article on bond insurance and credit derivatives looming shoe to drop. Giant, giant shoes, from way high above!)
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