Home » Investing

Calling A Bottom In Financials Is Stupid

28 July 2008 One Comment

Back in March when the market hit a low, many across the internet and the news networks called a bottom in financials. If they didn’t call a bottom, they made some bold prediction such as “We’re through the worst of it” or “We’re in the 8th inning of this financial crisis.” Well, a few months proved how retarded these comments were. Last week, we heard much of the same. I’m not gonna say we haven’t hit the bottom, but I’m not gonna tell you we have either. Why? Because it really doesn’t matter.

I’m not smart enough to tell you whether we have hit the bottom or not in the current financial crisis. If I had to guess, I would guess that we have lower to go and more pain to endure before a financial recovery is to come. But, that isn’t the point.  The point is that you shouldn’t try to guess the bottom.

Why risk being the first one in on a financial recovery?  It’s way too tough to time perfectly and you risk getting seriously pummeled.  Even the so-called experts have admitted they do not know how to value many of the banks that make up the financial sector.  If they don’t know how to value them, I’m sure you don’t either.  I sure as heck don’t.

The financial crisis is ugly.  The stocks have been slaughtered.  There is a good chance that it will continue.  My advice is to either bet against the banks or stay away.  You can buy the Ultra Short Financial ETF (SKF).  If you think financials are headed lower.  Lastly, the next time someone tells you that financials have bottomed, tell them to shut up.

One Comment »

  • torbjorn rive said:

    “…tell them to shut up”. **then kick them in the nuts.

    I would expect some sideways volatility, then yes, more drops through the rest of the year. That is based on very basic charting, and pessimistic (but reliable) voices around the bear market scene.