Well . . . . . is it safe to come out from under the covers? Maybe not yet. It depends on what type of investor are you, if you are a contrarian (i.e. bottom feeder) this could be the time for you to shine. While most people are wringing their hands and watching increased worry lines appear on their faces, those who are savvy and willing to stomach some risk, now is a time to be getting cash ready to go back in. The bottom is near! Actually, at the current daily meltdown, the Dow will be at zero in only 19 more trading days! Is that something great to think about! Seriously, I would looking at things important to our standard of living. Industries like infrastructure, natural resources, energy and food. Areas to stay away from are the autos, like you needed me to tell you this! GM hit a low today that it had not seen since 1952 when it traded at $6.42. Ford hit a low not seen since 1985 at $2.77.
With all this turmoil in the markets, you wonder who is buying. Well, Bank of America has just sold a bunch of its stock in the markets to raise $10 billion in a effort to help with the Merrill Lynch takeover.
The FED cut the federal funds as well as the discount rate by a half a point to 1.50%. Central banks in Canada, Seden, UK, Switzerland and the European Union have also lowers rates, even though some were worried about inflationary pressures.
Finally, what would a day be like if we didn't talk about oil prices. Today, oil hit $86.05 a barrel. Some members of OPEC (Nigeria, Iraq, Iran & Libya) have been making statements to the press that OPEC may have to adjust the supply in order to help the current markets. Their statement effectively said they feel $90 a barrel is fair value and any sustained level below that will cause them to cut supply. Saudi Arabia has not said anything on the matter. Saudi Arabia is the biggest U.S. ally in the region.
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