The Meltdown is Upon Us…Now What?

You MUST survive. That does not mean you hide.

The crash is upon us. We are in the middle of it. You survive by having a plan and keeping your head. You can buy, as I have been doing, but it’s not necessary or urgent.

If you doubt we are IN a prolonged crash, take a look at some of the charts and data points in this great TraderMike post.

I don’t think there are is any ‘ONE’ magic bullet to fix the markets right now.

You can’t magically fix confidence. Period. There is no shopping our way out of this mess. There will have to be great leadership, great decisions and some behavioral changes. The ‘brain’ that is the market is pretty pessimistic about that occurring any time soon.

I agree with Gregor here and it’s what makes buying this dip horrifying. This credit crisis is not an event, a war, one fund going under. This is cancer and it’s not something you just cut out, separate and isolate.

That said, there is insane negativity out there. Take a look at the newstands or go and check my twitter stream the last few says. The panic headlines are great for selling magazines, the same magazines that screamed ‘buy a home’…at the top!

All weekend, I have gotten emails that my buying the last few days is dumb. OK. I agree, and that’s the cost of my transparency. I do this to make me smarter and I don’t mind being called dumb. There is no way I could be right more than 50-60 percent of the time anyways. That makes me dumb quite a bit.

All weekend I have gotten newsletters emailed to me talking about the cost of the bailout and the inevitable inflation and crushing coming to the US dollar. Color me skeptical, but ‘THIS’ dummy has been bearish on the US dollar on this blog and bullish on gold for three years. In this instance, I agree that I am dumb so that makes these late ‘SUPERDUMB’ and now I have to question my own judgement.

Gold should be absolutley screaming. It is not. The dollar should be zero. It is not.

Fact is, the US is still the market holding up the best throughout this global meltdown.

As much as this blog is about trend following and there seems to be an epic trend towards ZERO for all assets, I can’t just pile in on this end of the world trade. Too many true yutz’s are blaring it for their own traffic and ego’s.

I would rather look at the market from a ‘What If’ scenario.

1. Maybe Steve Job’s is sick, but even Steve Ballmer can’t wreck Apple at this point. Let’s face it, the guy is a lunatic and he is not running Apple. Design runs Apple and the company is pretty well diversified and down 50 percent already. The retail distribution set in motion CANNOT be stopped, even buy a putz replacement. The stock is not cheap and there is market panic. The stock being down 50 percent makes absolute sense. At $80, it does not. I will take this $20 down for $100 up trade anytime.

2. Google will undoubtedly face downgrades and a slowdown, but maybe the stock being down 50 percent has a lot priced in already. It’s not like there is any competition for the overall brand. I do believe that the Social web is eating way at Google, but I trust they will be growing strong again soon. I will watch for downgrades and continue to scale in if it falls on the downgrades.

3. Amazon is unstoppable. What I don’t know is what it’s worth. If you think you do, you are lying. I want to own unstoppable brands when the world is ending. I wish I could give you more, but call your broker at Bear Stearns..I mean Lehman, I mean Merrill, ok Schwab? and get the 50 page research report.

You get my point.

As to what could go right…

Just maybe Obama is not best friends with Bin Laden and Biden’s new teeth have invigorated him.

Just maybe, Silicon Valley continues to work it’s magic and the people laid off on Wall Street get religion and put their efforts into innovative projects that build infrastructure beyond dumb financial products that keep people glued to blips on screens for 24 hours a day.

Just maybe the conversation that we keep talking about continues and the smartest, most dedicated, and positive people in the world get refocused and on a positive path to productivity and prosperity.

I subscribe to my friend Gregor’s look at the world and therefore see this mess with opportunity goggles.

We recovered from the Internet Bubble with the Web 2.0. We will recover from this Financial Crisis and Energy crisis as well. There is too much money at stake and too many smart, dedicated, optimistic people to let it come apart right now.

That means I could miss the market bottom in a fit of fear for buying last week and will lose some money being net long and not short tomorrow, but I won’t risk losing so much as to crush my confidence so that I can participate in the next boom.

If the world is indeed coming to an end, at least I have my family, friends a career I love and a super dog. Nothing else really does matter.


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