Schwartz View: So maybe we won’t have a real crash during this bear market, just a series of declines, then minor rallies or sideways trading, ending with a panic leg but not any crash (which just may have started with the Bear Stearns dramatic sell off last week). Now, one last intriguing item. Mr. Hamilton noted that at the October 1907 crisis lows, people bought stocks figuring that was the bottom but got “…squeezed out at the still lower level in November, reached before the bear market ended.” In other words, the crisis didn’t totally end the bear market. For us today that means be cautious after a really bad sell off which we may think ends this bear market. Net, net, I think we may have a guideline to follow. No crash ahead because hedge funds are shorting every chance they get which lets the steam out of the tea kettle periodically. But a panic stage before this bear is over. So going forward strategy would be to scale in at what we think is the bottom as there may be lingering sellers and bad news at the very end.
03-18-2008 8:55 AM