Unemployment Up, Market Down
Independent Investment Advice

by John Dalt

01/07/09

The market giveth the market taketh away! I was excited yesterday as we were approaching the highs set on Election Day. Today we backed up more than I thought we would. The problem is, there is a lot of sentiment for a big fall. Most articles I have read expect a rally but leave room for a devastating drop. Did I mention another 40% down from where we are now! That is enough to make your legs bow. The other concern is that the talking heads on TV seem unanimous in declaring the bear dead. That really makes me nervous. It is hard to trade stocks when you wonder if every dip is the first sign of the market going off the cliff. This is the mind set I am fighting right now. You feel like a kid playing in the street. Mom yelled, “Get out of the street, you’ll get hit by a car.” You cannot help it, the ball is in the street, everyone is doing it. So here is the dilemma, do you fight the market, but jump to the curb every time a car comes down the street. Or do you play matador, and swing your cape at the neighbor coming home from work. Tomorrow needs to show some strength, or we could start another drip, drip, drip down.

The unemployment report is coming out Friday. It is predicted to be BAD. ADP, the payroll company’s National Employment Report said private sector jobs fell by a greater-than-expected 693,000 in December. The market was expecting 500,000, so this report telegraphed almost 40% higher! That was enough to kick a leg out from under the stool. The market had been ignoring bad news and going up; the bad news may have overtaken the optimism today. Tomorrow will tell us if sentiment has changed, or if the market just needed a breather. A rally will ignore bad news; a bear market will ignore good news. If we have just discounted Fridays job report, we may take off again tomorrow. We shall see. I made a new recommendation on the Long Term Portfolio today. As luck would have it, it went down all day after I recommended it. You can see it here. 

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 is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may 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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