What Do You Do?

June 27, 2002
Gary Kaltbaum

What do you do when a company that does $33 billion in revenues commits a $3.8Â billion fraud? What do you do when a woman who is worth a few hundred million possibly trades on inside information to save a measly $100,000? What do you do when the family who runs a cable empire has the company pay for everything including their toilet paper, take out zillions in loans and tell no one? What do you do when energy trading companies make up false trades in order to book revenues? What do you do when a software company and a pharmaceutical company dream up other companies to buy product from the mother company with a loan from the mother company so the mother company can book the revenues? What do you do when you realize that fiber as in fiberoptics...is not good for your diet? What do you do when a major accounting firm (who, by the way, couldn't balance my checkbook) shreds documents to cover up illegal activities? What do you do when the US dollar is sinking like Bernard Ebber's, Gary Condit's, Mike Tyson's and Kenneth Lay's future? Â What do you do when you can't wake up in the morning with one day where the market isn't up 100 or down 100? What do you do when you have four reversals in three weeks, only to be at lower lows? What do you do about this tape that is an absolute mess? What do you do about all this?

It's simple. You take a deep breath, relax and read. That's what I am doing. On top of my subscribers making a ton of buckos on the short side, I am reading.

In the last three days, I gobbled up O'Neil for the twenty fifth time, Weinstein for the eleventh time and Livermore for the ninth time. Why? Why would I do this even though I have been calling the moves correctly? It's because getting back to basics during times like this is everything.

In this type of environment, I would guess the average investor feels like a flopping fish out of water. Not me.

I go back to basics to remind me of what things are going to look like when the ultimate turn comes. It has been so long, I had to remind myself. You see, I take the optimistic view that every crappy day that goes by just gets us closer to the next bull market. It may not happen until 2012 but I will be ready. I urge you to get some of these books out and study, study, study. When the market does turn, most investors will have their heads in the sand. When the market does turn, most investors will not want into the market. When the market turns, most investors will doubt the move because they will be listening to the same buzzardheads that are still bullish right now. Are you like most? Don't be. Fortunes have been made in bull markets...and if I can promise you one thing, it is that another big bull market will come along again. I have no idea when or at what price...but I will know it when I see it.

As for today. It is constructive that the market has had so may upside reversals in the last couple of weeks while taking a bunch of body blows from different areas. That is about all the good I can say. I believe there can be upside testing off of these oversold conditions but any upside is off of weakness, not strength.

I cannot find anything that looks like a breakout. I cannot find any leadership. I cannot find any compelling reason to inject any longs into the equation. In fact, I can only find a contracting NEW HIGH LIST, an Â expanding NEW LOW LIST, a plethora (big word of the day) of breakdowns in both stocks and sectors and still...still...believe it or not, too much talk of a bottom on any rally.

I cannot overemphasize enough that the word "cash" and "sell" are not four-letter words.

What Do You Do?

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources