Tuesday, November 25, 2008

7 Reasons we are in a Brave New Market

In his market, you have to take your profits often - daily or weekly. Because they won't be there next time around.
Unfortunately, if you are buying stocks for the long term its a horrible idea.
DON'T hold stocks long term!
There are too many problems with this market. Its a brave new market. It won't look anything like it has the past 100 years.

WHY, you ask?
1. We now can trade around the clock - thanks to the internet.
2. People can now communicate easily and instantaneously surreptitiously. That can lead to all kinds of insider trading, price fixing, dumping, etc.
3. The masses now constitute a large portion of the market - and they can day trade.
4. The masses also now have 401k's, and are putting huge sums of money into the markets. They give most of it to managers - but then they tell the managers to do stupid stuff, like selling at the wrong times!
5. All world markets are now interconnected. A tree falling in Detroit can cause millions of Chinese to die the next day...
6. Amplification of emotions are rampant through the new instantaneous and highly visceral mass media. This can also lead to pump and dump schemes- or just blowing stuff out of proportion. Right now we can obviously see lots of fear being amplified to the Lemmings.
7 . Lastly, and most importantly, we are facing the end of an era. Large corporations, with their inefficient bureaucracies, sinecures, golden parachutes, crooked CEO's and office space middle management are a dying breed. They can no longer compete in a global marketplace, where there exist in growing numbers small, efficient, closely managed companies. Companies that are managed well, that people like to work for, that people actually do work for. I estimate that for the most part, a large company gets about 60% productivity out of its workforce, whereas a better managed company gets 90%.

That's just off the top of my head - I'm sure there are more reasons.

But these markets have to figure out how to deal with this brave new world in a way such that the violent turbulence we are seeing subsides. There needs to be some sanity here. We have precious little now. I don't know what will happen to change things, I just know it must happen.

I suppose, were I to want to own a stock more than a week in this market - I'd be buying the ones from this list:

Those are the companies that will able to adjust to the new market in the long run.
Say buh bye, GE, GM, ..etc..!

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