Mid Week Pit Stop #20

The Bottom That We Are All Looking For

Alright, this post is for everyone. New learners, old time professionals, children of all ages whatever...

I really think that we have a bottom. But some signs have to be met.

1. Bankruptcy!!! Well I learn this from Jim Rogers. I was watching a video of his and he was telling people about airlines. He was bullish on airlines when oil was $140. Honestly speaking, my eye brows were raised. But he mentioned that bankruptcies mark the end of a bottom and many airlines were bankrupt already. I probably mention this before but I need to emphasize this again because it is very applicable now. Fannie and Freddie are sort of considered gone. Lehman will probably be next from the way things are going (but it will be like Bear Sterns case). Maybe more financials will go as well, like MF global or something.

2. Panic Selling. Even though I think we will see a bottom soon, but this bottom will be accompanied by a period of panic selling. Real crazy selling, maybe 1000 points off DOW in a week? Something of that magnitude. Like what I have mentioned before, I wish to see HSI at 17000, STI at 2400, Dow at 9750, Shanghai at 2000 or even below 2000.

3. Catalyst is the key that marks the end of a bottom. I have mentioned about the emergency rate cut before by the Fed that marks a mini-bottom. We have a 2% interest rate now and I will not be surprised if they bring it to 1% to save the market. =)

4. Few scenarios that I picture. Might not be true but just to give you some guide on what might happen.

a. not much news -> no rate cut -> market sell off -> emergency rate cut (not sure about this, but it did happen in 2002)

b. crazy bankruptcy news like lehman and more -> panic sell off -> emergency rate cut/ normal rate cut on 15 sept to 1%

c. nothing happens -> things resume as normal (no panic selling and we are at a bottom already) -> I'm very WRONG.


It isn't as important to buy as cheap as possible as it is to buy at the right time.

Jesse Livermore