Tuesday, September 30, 2008

Market Trend: Cash Is King!!!

USD 700B bail out? Full of craps. Subprime problem exceeds at least USD 20 Trillion conservatively. USD 700B proposed by Treasury, Feds and SEC is only for bail-out of companies related to them. Why the selective rescue plan? Why Fannie and Freddie and not Lehman? Explain to me about it.
So what if US lawmakers push this proposal through? Maybe it will stabilize Dow for another 2 weeks. But when this USD 700B fail, we are talking about the Mother of All Depression. I have already see it coming months ago. Further financial collapse is expected. Read here..
With such worrying scenario, Cash remains the King. Why would investors risk their money in situation like this. Other than cash, Gold would be a better instrument to invest in to hedge against the sorry state of US economy coupled with all the 'scandals' behind the bailed out.
Sorry to be sceptical here. Sorry if I am being too direct here. Just my nature to make my statement the way I see it without holding back. The lawmakers can say what they want but the truth is they knew US is fucked for sure. High chance that US economy is heading towards Depression. How one country survive would very much be dependent on the efficiency and the flexibility of the administration. How are they going to cope with such negative scenario?
Bailing out is not the answer here. Not a time to be aggressive. Keep interest rate low. Push for more mergers and acquisitions.
Time to consolidate and feel the pain.
Update 10:45am
The House's rejection of the bailout package throws the future of the proposed bailout into confusion. Dow plunged 777 points. Read more here and here.
So what would happen from now? Reasons for bail-out not convincing enough? Perhaps, this bail-out package needs more transparency. After all, the manner of which they came out with this bail-out thingy is enough to stir up suspicion of a scandal behind this move. Malicious when they imposed a No Short Sale rule in the middle of the game when all the cards are opened up to them. Sure win situation for the bankers.
Whatever it is, Just Hang On to Your Cash. You may find it useful few years into the future. You may even feel the real satisfaction of holding cash as there will be abundant opportunities to grow your cash.

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