The Market's Continuous Drop...

I've been listening to some smart investors talk about how to invest in an environment like this.  These theories vary and this helps me shape my frame of reference.  It allows me to hear how bankers, investors, and politicians think and then I can ground some of that in reality because I can probably tell what's going on with the everyday person better than they might experience.

Right now we are in rapidly changing times in the US, some parts of the world and of course in the stock market.  The stock market has been violently gyrating and for the last few weeks it has been decidedly lower.  The smart money will tell you not to panic and while I subscribe to this theory it can be very difficult.  The economy is weak and some are reporting the increasing risk of a double dip recession.  For me, I go with my gut feeling and I have stayed consistent that too many Americans are hurting for anyone to be blindly buying stocks.  I agree that certain actions along the way have helped to stimulate the economy but not enough has been done to help alleviate the areas that the average citizen is being hampered by.  I believe the economy will continue to be fragile until: 1) Jobs return in a consistent fashion 2) Debt levels for the average American must get rightsized, and 3) Housing burdens for the average person become less of a constant drag on people and their local economies.  I'm not happy with the fact that are politicians can't stay focused on some of these core issues that are plaguing us today and make this their top priority.  So I will remind you to not get fooled by their gimmicks of last minute deal-making and understand that this slow painful decline will continue until they address the real problems at hand.

I do wish I had sounded a louder alarm because I've noticed that many big investors had recently been hedging their bets and protecting themselves if things got bad.  And as you can see they got bad in a hurry.  I think my approach will not change from the points I've been highlighting from the beginning of the year, and that is this is the YEAR OF DEFENSE. See the following articles to learn what we've been doing to stay defensive in these uncertain markets:

See "Defense from an Unpredictable Market":

 I like the move in metal stocks (i.e., gold, silver) and miners because the DEBT BURDENS in Europe and the United States are forcing governments to implement austerity measures which will deflate their economies.  Legendary investors like George Soros have typically increased their positions in Gold to hedge or protect against deflation.

http://urbanomics.blogspot.com/2011/07/ipos-little-defense-chinas-all-star.html

See "Double Dip??"

The economy may be suffering from a really bad hangover that was worse than we originally thought.  Financial stocks, housing stocks, and high levels of consumer debt make you wonder if we've learned anything at all from the 2008 crisis.  I just don't have the feeling that we are out of the woods yet and I've been cautious for quite awhile.

http://urbanomics.blogspot.com/2011/07/new-tech-titans-double-dips-dont-label.html

See "What's Up With The Economy"

http://urbanomics.blogspot.com/2011/06/whats-up-with-economy-deficit.html

See " Anything to Short?"

Early in the month, I listened a little closer to someone mentioning it may be time to short Consumer Stocks and Retailers and the best way may be through the ETF, RTH. This may have been Doug Kass and it sounds good but boy I have to admit I am a little nervous about shorting stocks in this environment. I think this call has its merits as we continue to find out that the economy is weaker that most people would like us to believe. The economic numbers have been mixed and while I wanna be in front of this trade...I'm not signing up for it just yet until I see key indicators like GDP and unemployment turn.


http://urbanomics.blogspot.com/2011/05/notes-from-matrix-april-download-pt-i.html#more