Staying in the Stream

Well, it's finally becoming fairly apparent to me
what my stock worldview is for now,
...and pretty much until about Fall of 2009.

And that is...

1.) Apparently, the American economy, the value of the dollar, the housing situation, etc...
is actually capable of slowing down global growth & companies' access to capital worldwide.

2.) The ARMs mortgages are only starting to adjust now in the U.S.,
and will do so all through 2008,
and when one realizes that data shows that Americans as a whole
have a negative savings rate &
can no longer refinance and get more money out of their home
which is declining in value, ...
& when you see that wages have not increased over recent years,
but that gas & food & insurance & tuition, etc...have, well,...

3.) And when you see that hedge funds are being forced to sell their best,
most profitable stocks
to come up with cash
because investors want their money back,...

4.) And when you see that credit lending standards
are now being tightened worldwide,...
and that this is going to prevent most people from having a chance
at being qualified to be first-time homeowners,
... & how any company, big or small,
is going to have to already be sitting on lots of cash,
because it's gonna be tougher to qualify to borrow money
for their businesses,...

5.) And once it becomes common knowledge that the world is dependent
on the Americans & their consumptions habits
to make the whole globalization/free trade thing work,...
(which is why China & other countries loan the U.S. so much money).

And, let's just say they're already not happy about how they just found out they got burned by buying these "junk" American mortgage bonds that were deceptively rated as Triple-A & safe,...not to mention they're already not too happy that they've lost a ton of money by virtue of owning American dollars...as the dollar gets weaker & weaker.

6.) So basically it's gonna take some time for things to sort themselves out
and the markets figuring out what the actual value of these "bad" bonds are (whether ten cents on the dollar, or what),
...and also to find out who is really exposed & how much.

7. ) It's gonna depend on what kind of government intervention
is involved worldwide, including the U.S. and the Fed,
...and whether they can affect much.

8.) It's gonna depend on political events, as well; even the weather.

9. ) For now, buying puts (selling stocks short) on days when the stock market goes up is one of the few ways to play the market.

10.) A little riskier is betting on stocks
which have a monopoly on their industry,
or have accelerated revenue growth
and are virtually exploding from a little
to a massive company.

11.) That's about it.

Once things sort themselves out a couple years from now,
& Americans' standard of living improves,
perhaps there will be a legitimate worldwide bull market.

12.) Until then,...

13.) I guess we should focus on how
we live in an expanding Universe.

And that we live in a world in which lack does not exist.

And, that once we realize
we do not have to compete for limited resources,
we will all thrive.

Until then, we as individuals are entitled to thrive
by thinking this way, regardless of what everybody else does.

Or the market does.

And if you're gonna stay in stocks in the near term,
then your money will be the least at risk in defensive stocks,
otherwise known as "staples."

These stocks include food & beverage stocks and drug companies.

These stocks will deliver good earnings even in a bad economy,
...because consumers need the products these companies sell,
because they are necessities,
regardless of whether the consumers' spending budgets
are tight.

Examples include: Schering-Plough, Pepsi, Colgate-Palmolive,
Procter & Gamble, Kellogg,...

These stocks are considered safer when an economy
seems likely to be heading into a recession.
And mutual funds send their clients' money to those places for safety.

It still doesn't mean you'll make money when you're invested in a market
which is filled with fear, uncertainty & expectations of further bad news.
But, you'll lose less money.

But, anyway.

It's always advised
to be aware of where the exits are
when you enter a bar.