CHESSNOID

The stock market has closed down 6 out of the last 7 days.  In fact, since Obama was sworn into office, the stock market has gone down almost 20%.  That is a lot in 2 months.  The market trend is still pointing down and has not bottomed or flattened out yet. Australian Business AGE:

One of the major measures of the health of US stocks, the Dow Jones Industrial Average, has fallen 20% since Barack Obama was inaugurated on January 20 – the fastest drop under a new president in almost a century.

Experts say investors may be worried Mr Obama’s stimulus measures won’t revive the economy anytime soon.

The 20.4% drop in the Dow is the steepest for a new administration in at least 90 years, according to data compiled by Bloomberg. The Dow tumbled 25% in 2009, its worst annual start, as unemployment climbed and bank losses increased.

Overnight, the Dow slid 4.1% to 6594.44, its 12th decline in 15 days, as the worst start to a year for US stocks deepened. The Standard & Poor’s 500 Index lost a further 4.3% to 682.55, extending its retreat to 19.7% since January 20.

“It’s the Obama bear market,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “We don’t know what the rules are in so many different areas the government is touching.”

Most people who have saved some money have it in stocks via 401ks or IRAs. That is why when the market goes down, it actually represents peoples’ savings shrinking. From the stock market high of October 2007 to today, most portfolios have been cut in half. If you listened to the experts for the last 18 months talking about staying in the market because it will bounce back, then you would have suffered some major setbacks in your portfolio.
At these low prices, everything looks like a great value buy. Even Warren Buffett was fooled last year when he made a big bet the market would turn back up shortly, only to be handed the biggest loss of his lifetime that literally cost him and his shareholders billions of dollars. Forbes:

But even that touch of vintage Buffett prose from his annual letter to Berkshire Hathaway (nyse: BRK – news – people ) shareholders, released Saturday, didn’t sugarcoat any bitter pills. Losses of $4.6 billion on stock derivatives contracts caused the company’s net worth–Buffett’s longstanding measure of success–to fall to $109.3 billion at year’s end from $120.2 billion at the end of September 2008 and $120.7 billion at the end of 2007.

I sold everything early before the market top and considered buying bank stocks a few months ago. Fortunately, I avoided the purchase all together and stayed in cash which is basically earning nothing.  I have been researching gold lately because it seems  long term it may be where investors flock to when the economy continues it decline and have decided to buy some to hedge against inflation.

There are some great bargain stocks I would love to buy right now, but prices have fallen continuously for the last 12 months and I don’t see any changes in the economy that indicates Obama’s “hope and change” will make a positive difference yet.