Selling Frenzy Out of Control

The market is not acting rationally. The selling frenzy and fear in the marketplace is simply out of control. The market lost another 7% today, that is incredible. The losses over the past few days have gotten to insane levels, particularly in light of all the government's actions to stem the bleeding. The market went down after passing of a $700 billion bailout plan, and went down again after Global support for a 50 basis point decline in short term rates. That rate cut was remarkable in that it may have been the first time we have had Global participation and integration from many countries over interest rate planning. Nonetheless, extreme selling pressure still forced the market down!

In our view this market is clearly oversold. Yes, it is clear to us the economy is in very poor shape and the financial sector is extemely weak. But the market has moved far below what economic conditions would dictate. Further, the movement down in the market over the past few weeks, has been far worse than any new information released on the economy over that same period. The selling frenzy has out of control. We think the market is very oversold, but we are not yet ready to jump in with our available cash. The market will not recover until the selling frenzy is exhausted, and that timing is nearly impossible to predict. Investors need to be ready to invest when cash starts coming back into the market. Gloom and Doom is extremely high right now and that usually means we are nearing the bottom. Let's hope the bottom of the bear is near!