Edited

from another board:

In my opinion the US government does not have the resources needed to save
the economy.

Europe has just dropped rates and is making an effort too. I have no
perspective on Europe.

Nobody knows which corporations or banks are holding toxic assets. Thus,
even healthy companies and banks cannot be trusted. Additionally, as
unemployment drives a credit implosion, more assets (CDO/CDS) turn toxic.
(Many cities in the US were involved in this too.)

I had been exploiting the anticipated effect on the stock market. However,
the stock market has become unstable. Stock prices are not connected to
reality. I have lost my sense of what to expect from the stock market.
Thus, I am afraid that any efforts to exploit the markets are now just plain
ole gambling.

What a difference a year makes. Exciting stocks are at prices I might only
dream of a year ago. Yet, I don't buy any of them. Goldman Sachs at $75.
Apple Computer below $100. They look like bargains, but any stock holds
significant risks.

If the government is going to bankrupt itself trying to save the economy,
then gold would seem the logical investment. However, gold, like most
commodities, has been falling in price. A Depression is deflationary.

What to do?

I'm crazy not stupid. I should be able to gain an insight here.

I feel like I am missing something obvious.

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QN,

Don't they say about the markets, the trend is your friend....

If the market is discontinuous, expect discontinuities.

If the market is unreal, expect the imaginary (mirror inversion).

Gold held a 20+ year trading range roughly between $250 and $500/oz.
It broke that range to the upside when Gulf War II started.
I expect gold to return to the trading range when the war ends, but not
until then.

I am hoping to buy a small house, as the housing market makes a bottom.

jerasmus

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If you don't know what to buy, buy an index fund.

I'm putting 1/3 of my paycheck into the stock market, and splitting it
equally between a Europe/Australia/Asia index fund and an S&P 500
index fund.

The stock market is valued at a normal level relative to the last 100
years. It just seems weird because we got used to it being
ridiculously overvalued.


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Apple Computer is an accident waiting to happen. The ipod is all but defunct as
the price of memory chips have fallen over 90 percent. The memory chip will put
the ipod out of existence. Windows 7 will also put a drag on Apple not to
mention only a complete and total idiot would pay to download a song or songs.
Even the stupid people with some money will realize this at some point in time.
Competitive pressures will get the best of the iphone. My 6 month target for
Apple is 40 dollars US a share but being short anything past the end of March of
2009 is taking a chance.


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The trend for gold is sharply lower. A very safe bet would be to play silver
long and gold short both in the same amounts. HSBC and Citibank have two huge
short positions on the silver market. By playing a spread you can wait literally
forever to make a lot of money when those two banks do in fact cover their
positions. Longer term gold and silver will probably be the best investment as
the US enters a phase of hyperinflation after a deflationary phase. You just
have to see or know when it starts to occur. I wouldn't expect this to happen
for at least two years. So the earliest to buy precious metals would be 18
months from now.


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