Galt Stock

Independent Investment Research for IRA’s and 401K’s

Dec 3, 2008 

I wrote a few days ago about the amount of money pulled out of Mutual Funds and Hedge Funds.  The reason this is important is these redemptions reduce the amount of money available to fuel a rebound in the stock market.  Funds have to sell equities to raise cash for the payout.  This creates immediate selling pressure in the market and leaves fewer poker chips to power the next rally!  I saw today that equity mutual Fund withdrawals were estimated at $19.5 billion for the weekending November 19.  That is a lot of dough gone from the sidelines!  Today came news that some hedge funds have stopped any further redemptions.  They say any more redemptions would materially affect their positions.  WOW, I can imagine the other side of that conversation.  This will surely cause some lawsuits! 

There is a little sucker rally going on last week, do not be a victim.  If you have followed our advice, you have sold on the rallies and bought on the dips.  I know it is hard to do; we all want to get on the bandwagon.  Now is when you get out of trading positions you have sat on too long underwater.  A little rally can cover up past mistakes!  It is nice to be in cash if the market retests the lows.  That is when you can scoop up great values on your favorite stocks, or just make some great trades.  If the market continues to rally, we can get back in for the strongest part of it.  At worst you will miss out a few up days, at best you will avoid another roller coaster dive that takes your breath away.  Good trading. 

WARNING:    The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it’s your money.  If you lose it, it’s your responsibility, not ours or your grandmothers!  The editor may or u amay not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future

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