a “Black Swan Event” ?

While investors are busy trying to find there way, and Europe is forced to take its medicine by getting served a round of bank failures, Washington plays the blame game without realizing Identity politics and affirmative action have destroyed our credit markets.

What we had is a “Black Swan Event”, the worst week in 75 years a 9.5 standard deviation move .In English this means you have a greater chance of getting hit by an asteroid or winning the lottery twice in one week than you have the stock market get as clobbered as it did last week .Like 9/11 these so called “Black Swan Events” are as devastating as they are improbable

Investors are left wondering if this is the worse case scenario, the beginning of the end or the end of the beginning. My feeling toward this market calamity is simple, its important to remember that even though there have been a significant technical break down unlike past calamities such as 1929 ,1987 and 2000 the market was up huge in the preceding period while in the last 8 years the market has barely kept us even after adjusting for inflation . So I guess what i am getting at is that unlike other market observers I am of the view that as they say you can’t fall off the floor, which leads me to favor the ‘this is the buying opportunity of a life time” scenario. I will also go out on a limb and say this is October and in the past the seeds of many significant turnarounds have been planted during this month.

I don’t think despite the sirens of doom that we are heading into the next great depression. The government for all its failings during this crisis does not seem to be nearly as inept as the government actions were during the early 1930’s such as raising taxes, price fixing ,stopping foreign trade ,and raising interest rates . The financial rescue plan if anything seems to be a reorganization of the need for global liquidity .The closest thing to the stupidity of the early 1930’s seems to be this silly attempt to stem “Global Warming” though the regulation and taxation of carbon which is scientifically totally bogus.

The Elliot wave however is telling me that we are due a short term rally which will then followed by a significant bottom. It may come at us hard and fast so I would play it safe and look toward any relief rally to sell and move into more dividend paying stocks.