Blood In The Streets

Today marked one of the worst collapses in financial history as the Dow lost 778 points or almost 7% as the House failed to pass a bill for 750 billion dollars to help the credit markets. The Nasdaq had it even worse losing over 9% or 199 points! Brutal, absolutely brutal!

Now I hate to beat a dead horse, but if you are a long term investor this is not the end of the world. In fact, because in most cases the baby is getting thrown out with the bathwater there might even be some stocks worth owning that are looking very cheap. Unfortunately, this credit crisis has spread into mainstream and there is really no way to tell how long this will last. That is why it was so crucial to pass the bill that failed today. Every day that passes without a resolution will be a blood bath... sure not as bad as today hopefully, but who knows, there isn't any certainty what so ever which is very bad for stocks in general.

Now there are companies that I would still be picking up at this point. Let's all remember that there will be a tomorrow and a next week, next month and next year. The election is quickly approaching and both candidates are preaching investing in solar and wind power. So with that in mind I still like ESLR which was beaten up very badly by the fallout with Lehman Brothers and now stands at just over $6! I really can't believe it got that cheap, but the whole thing with Lehman Brothers caused a panic and the stock sold off. Another one I like at these levels is ORA Ormat technologies which today hit a fresh 52 week low at 36.39. These two companies are going to benefit from the next president, especially if it is Barrack Obama who has a real plan to change or energy structure.

I have said it before and I will say it again, Google GOOG is just an unbelievable buy at these levels. Today it fell $46 to $385, that's right $385! This gives it just a 25 P/E ratio! For a company that grows like Google this is very reasonable.

Now could everything crash again tomorrow and the next day? Sure, but how about 2-4 years down the line? The market will correct itself from time to time, this all be it is a real problem and we need congress to pass something ASAP, until then we will most likely drift lower.

As always, buy in increments and over time your investments will do fine. Good luck to all and most importantly don't panic...

It's A Bear Market, What To Do Now?

Today the Dow Jones Industrial Average and the Nasdaq officially hit bear market territory. A bear market simply means that an average is 20% below its all time high. That's right both the Dow and the Nasdaq have hit these lows on the same day as oil climbs to new heights! So what should you do with your money that you have invested in the stock market. Well, it is really quite simple... You should do little or nothing. No one ever made a profit selling at the bottom and anyone that has an outlook of more than a couple years should be adding to their positions not selling them at the worse point possible! You should be selling when the times are good and buying when the times are bad, it is just that simple.

Sure the economy is in the tank and oil is crippling business and consumers alike, but it won't last forever. A lot of the rise in oil has to do with a weak dollar which was caused by the federal reserve lowering interest rate to help stimulate the economy. Don't get me wrong, the Federal Reserve did the right thing, they were just a little late to the party. A lot of speculators have been pumping up oil prices too, which only makes things that much worse. The public will only take it so long, before they demand action. The oil bubble will then weaken and will in turn make the markets skyrocket back upwards. Take a look at a 20 year chart of the Dow Jones Industrial Average below...

As you can see we have had corrections like this before, but the general long time trend has always been up. So let's say this time is different and oil continues to ride high. Well you should have protection, which means you should have alternative energy stocks in your portfolio. You know that with these outrageous energy cost, solar, wind and geothermal plays become all the more economically viable. Focus on the future of the world and not the past, just look at how investors did with Google, and they are just getting started! With a Democrat (most likely) coming into office you can bet that there will be some major government subsidies for all these alternative energy plays as well!

So whatever you do, don't get caught up in the selling panic and liquidate your portfolio. Even if the market continues to go down a bit more, or we even see a sell off that triggers the capitulation that everyone loves to see. We are very near the bottom and we are also very near the economic reign of terror by George W. Bush. I think history will look back at this as one of the greatest buying opportunities... Just do your research, don't buy all at once and you should do fine. Your kids will thank you...