CHESSNOID

The overall stock market direction is still trending downwards.  Today was a nice rally, possibly even a bear market rally, but I don’t expect anything that will last for weeks at this point.  We were definitely oversold and due for a bounce.  It is always funny how the experts come out and make announcements that this it the bottom of the market.

I don’t know why they really think that this is the bottom.  We are in the worse recession since the Great Depression and you could even argue this is the beginning of the Bush-Obama Depression.  The experts who see this as the market bottom would have to make a case of lower unemployment, lower inventory of foreclosures, no more job layoffs, and a banking system that has recovered.  I don’t think anyone can make a reasonable argument that all those things are in place now or will be in the near future.

CNN:

Nouriel Roubini, a professor at New York University’s Business school tells CNBC there’s no hope the current recession, which is already 15 months old, will end this year. He says it will “more than likely last into 2010.”

Roubini says most of our financial institutions are “entirely insolvent” and the government should temporarily take over the banks, clean them up and get them working again. Although he says there will be a light at the end of the tunnel; Roubini believes things will probably get worse before they get better.

If that’s not dismal enough for you — there’s Warren Buffett. Also speaking to CNBC, the billionaire investor described the current crisis as an “economic Pearl Harbor” and says the economy has “fallen off a cliff.” He says it “can’t turn around on a dime” and that a turnaround won’t happen fast.

Buffett predicts unemployment will get worse before it gets better; and he says inflation has the “potential” to be worse than it was in the 1970s. Buffett suggests that five years from now the economy will be running fine.

Dr Doom actually predicted the housing collapse and recession over 2 years ago, so he has more credibility than most experts picking out the bottom again this month let alone this year. The best advice is to not listen to experts. They say don’t time the markets and I am actually a firm believer in dollar cost averaging, but if you jumped out of the market before October 2007 you would have avoided a massive 50-60% decline in your portfolio.

If you had started buying based optimism spouted from the richest man in the world Buffett last year before he turned into a bear, then you would have experienced losses like he did. Of course only percentage wise, because that man lost billions of dollars  in the last few months. The richest man in the world is now bearish on stocks right now.