CHESSNOID

Today was actually a great day for the stock markets.  Definitely more buyers than sellers.  We had one of these days earlier in the month, so it is hard to say if there will be substantial follow through.  Here are the numbers:

You know I missed this rally today since I am all cash, but I haven’t changed my position yet for the short term. We are in a bear market and rallies are expected. I even felt that we would have furious rally because we were extremely oversold.

According to the Wall Street Journal:

Rallies in overseas shares and favorable news at Boeing and General Motors boosted market participants’ mood early in the session. That enthusiasm briefly wavered after the release of downbeat economic data, but came roaring back as the closing bell approached, with buyers rushing in either to rebalance beaten-down portfolios or to place speculative bets at bargain-level prices.

“People are starting to take a long-term view, and the long-term looks pretty good,” said Anthony Conroy, head trader at BNY ConvergEx, a New York brokerage.

Alluding to the Dow’s steep decline from it’s year-ago record, he said: “If you went to Macy’s and you saw that all the merchandise was 45% off, people would be buying like crazy. That’s what’s going on in the stock market right now.”

Heading into the end of October, the Dow has plunged 17%, on track to register as the worst month in its history. But that plunge has whetted bargain hunters’ appetites and forced some money managers whose funds are required to hold a certain percentage of money in stocks to come back into the market as the time approaches to mail month-end statements.

I think it is best to wait much longer even though there are a ton of bargains. If you must buy, then I would buy systematically in a dollar cost averaging method. Going all in in one shot can give you the biggest return if this is literally the last day of the bear market and the very bottom.

The reason I don’t feel secure in going back into the market after being in it long for 7 years is that nothing has changed for economy yet. Yes, we will get a new president in a week and Bush will be out come January. These facts change nothing in the big economy picture.

I would have to guess that the bottom of the housing market will occur before the stock market bottom. The housing market bottom will definitely be one of the things that MUST stabilize before our economy pulls out of the recession.