We started off this morning saying that the two bailouts in Europe, the second nationalization of a UK mortgage lender and what was essentially a failure of WB was pressuring sentiment early this morning, but that we were still witnessing a classic “sell-the-news” reaction to the announcement that the House would be voting on a bailout bill later in the day. However, we don’t think anyone was expecting that the House would reject the bill, nor would they have predicted that the major indices would end up losing a whopping 8.31%, on average, when it was all said and done.
That said, even had the bill been passed, we certainly don’t think it would have been solved all of the market’s problems. While we might have seen a bounce, chances were that any rally would have been sold hard. Today was incredibly painful for many market players, but it is highly unlikely that anything but time will provide a solution to our ills.
The simple fact is that we are in the grips of a bear market that is much uglier than many were willing to admit, and all we can do is wait it out. Above all, individual investors must resist the temptation to listen to anyone who tells us it’s time to buy until there is actual proof in the pricing action that this market’s primary trend has changed.
This is no doubt a very difficult time, but rest assured that this market is finally making the sort of progress that will lead us to a real bottom. It will take a while, and as long as we stay focused on keeping our capital safe, we will do very well when conditions do improve.