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Friday, October 10, 2008

Have we hit bottom?


Seeing a stock market bottom is more hindsight than foresight. We will not know for sure that we reached rock bottom until the market has tested it and left it far behind.

Traditionally, October can be a wild month during a bad market because October 31 is the end of the fiscal year for many mutual funds; fund managers dump losing stocks as tax-losses then look to buy anything that can act as portfolio window dressing.

This crisis is international, so foreign investors also are cashing out of the American markets. Many Americans just received their quarterly 401K statements; they puked and entered sell orders. People are selling simply because everyone else is selling.

Eventually this bear market bubble will burst and then sanity will return until the next bubble forms. For better or worse, at the end of the worst week in stock market history, with 45 minutes left in Friday's trading session, I put in my October BUY orders.

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