Dow Drops Below 11,000: Is Now the Time to Buy?
The headline says a lot. Dow dropped below 11,000; will it go lower, are we near the bottom, will hover here for some time, or are we on the way up?
All questions for which I don’t have answers.
However, I can tell you this: If you thought the Dow was cheap at 12,000, do you think it’s cheaper at 11,000? Were the fundamentals not as well known then compared to now? Or do you think that pessimism and fear have firmly inserted themselves into this market?
I think fear and loathing has overtaken this market. That is not to say that they won’t keep or tighten their grip over the coming days, weeks, maybe years.
It is my firm belief, though, that prices will be higher in five years than they are now. Our economy is very resilient and we, fortunately, have some really smart people managing our economy at a macro level. I happen to think that Ben Bernanke and his peers are some of the smartest people on the planet. They’ve been confronted with the “perfect storm,” too.
They may have reacted a little slower than I might have liked, but if you believe in free markets, you gotta give the mechanism a chance.
I think it’s clear by now that we’ll get another round of stimulus checks. And now might not be a bad time for a little corporate welfare, a “works” project for good corporate citizens (i.e., not Black Water or Haliburton!).
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