Update on the Stock Market  

UPDATE ON THE STOCK MARKET.  Wednesday, Febraury 20th, 2008:  Well, we posted another one of those intraday reversals yesterday.  But this time from it was from up to down.  Actually, this phenomenon has been happening a lot recently whereby early day gains succumb to late day selling.  I have to say this is disheartening.  It just looks like this pattern of afternoon selling is the long dreaded, much written about “distribution” taking place.  In Wall Street jargon distribution means selling by large institutional investors camouflaged as much as possible.  Institutional investors carry such large positions, and so many of them, that when they decide to net sell, they just can’t liquidate all in one day or one week.  They have to take advantage of any and all excitement and buyers when they do show up.  The worry?  When this latest bout of distribution is over, stocks end this slightly upward, sideways trading action and plummet.  Or to describe it differently and more accurately, when the buyers out there today who still believe this decline is going to end soon and smoothly buy their fill, sellers again overwhelm the market and stocks start off on another leg down.  Schwartz View:  Hey, if the fastest Fed rate cuts about ever, a Congressional (amazingly) quickly-passed by 1% of GDP stimulus plan, numerous Depression-style government bail out plans and a very oversold stock market can’t do more than hold the market together for the last three weeks, make sure you take some extra precautions with your portfolios.  For those of you who never sell or disturb your investment positions, maybe go ahead and buy yourself some put options on the indices.  This way you (almost) don’t have to worry about when to buy them back like those of us who buy today’s new-fangled inverse mutual funds or inverse ETFs.  Put options go up when the market goes down and then expire down the road.