Wall Street: Capitulation Watch, the Lie and the Mouse

Have we hit the bottom?  That’s the million dollar question.  I wish that I had the answer for you.  I watch CNBC (too much) and all of the clowns that were calling for bottoms in March and July have gone radio silent.  That’s been replaced with capitulation look out.

Capitulation is when there is a tidal wave of frantic selling typically over a day or two.  Basically everyone throws in the towel and says “no mas.”  The DOW is down 23% this month.  The S&P 500 is down 40% year to date. Commodity stocks are down 50-70% this year.  Does the market really have to go down another 10%, in a day, for people to say “Uncle?”

The theory is that after everyone finishes up chucking – the market can begin its recovery.  Maybe it will play out that way.  However, with some many people looking for it – I am sure that Mr. Market will have something else in mind.

****

The Wall Street powers to be must realize that they have a public relations nightmare on their hands and I am not talking about the $100 million dollar golden parachutes. Many investors that started investing in the market 10 years ago – are beginning to questioning whether this has been a good idea?  They are not calling this the lost decade for nothing.  People retiring in the next year or two or recent retirees must be irate.  A large percentage of their net worth has disappeared with little time to recover.

Wall Street’s mantra of “buy and hold for the long run” is being exposed as a LIE. I have known that “buy and hold” doesn’t work since I was almost wiped out during the internet implosion.  The Crash of 08 is reminding me of everything that I may have forgotten.

****

Many investors are finding themselves either in one of two camps.  In the market wishing they were out or out of the market trying to figure out when to get back in.  If you are the former, at this point, it is too late to sell.  In time, some of your stocks will recover and some won’t.  As time passes, you will figure out which ones are truly the dogs and you will have to shoot them.

If you are in the out looking to get back in camp – first of all Relax.  Wait for the market to move up 10-15% before seriously re-committing your capital.  Let the bottom callers be the first mouse.  Maybe they will be lucky and get the buy of the life time.  Or maybe they won’t be so lucky and have their neck snapped in the trap.  Be the second mouse.  You may not have the great bottom catching stories to tell, but at least you will be at the party to eat the cheese.

banner ad