Monday, October 27, 2008

Asian markets tumble; investors won't bite on sales pitch that stock prices are too low pass up

Asian markets in Japan and China lost 6.4 percent and 12 percent of their values today respectively, as consumers rejected the sales pitch by so-called financial experts that stock prices were too low to pass up.

Advisers over there and Wall Street fatcats over here have been trying to peddle the myth that an imminent bull market is here and a bottom has been reached on the Dow Jones Industrial Average. They say consumers should buy up stocks now and get some great bargains.

Don't believe them. The Asian markets' performance today shows a bottom has not been reached. The bargains out there will get even more attractive for the investor with discretion. And more truthful financial analysts are predicting a 20-percent drop in the Dow before the year is out.

Some analysts also are shouting that you should get in the market now so you won't miss out on the immediate, big gains when stocks turn around. But you have plenty of time to wait. The market really won't start upward for good until February or March and even then it will be very slowly.

A poor holiday buying season, an Obama victory Nov. 4 and very poor fourth quarter earnings for corporations will keep the Dow and the financial markets down for a while.

Japanese and Chinese investors have been hit much harder by the financial turmoil than us. Japan has been in a 15-year recession, which has wiped out a lot of personal retirement and other savings. The Nikkei average has now hit a 26-year low.

The Hang Seng in Hong Kong lost 12 percent of its value today despite a Chinese economy still growing with 9.5 gross national product in its latest quarter. In Shanghai, where trading volume in that market is much less, stocks were off almost 4 percent.

So don't fall for the sales pitch. Keep your money on the sidelines, or get it into cash or a fixed income mutual fund before the next shoe drops on Wall Street. Please don't get greedy. That's what got this nation in this mess in the first place.

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