Hold Your Breath! Don't Sell Your Stock!

I'm no expert, but I am holding onto my small stock portfolio. Until I sell it, I have (in my mind) only lost money on paper. Once I sell, that loss is realized. Who wants to sell low!? I'd rather wait it out. My financial advisor reminded me not long ago that the longest 'bear' market in U.S. history was '30 months.' Well, this bear market may be one of, if not the, worst bear markets in U.S. history, but it certainly hasn't come close to being as long as 30 months!

Hold your breath. Don't sell.

'The Worst Is Over': U.S. Economy

Barton Biggs, 75 years old, believes the worst is over for the economy and for the stock market. While the market is likely to move sideways for the rest of 2008, he says there will be no recession -- and with the remaining poisons purged from the system, stocks should move upward next year.

He left Morgan Stanley in 2003 to start a hedge fund, Traxis Partners LLP, where he is a managing partner. Traxis has $1.7 billion under management. It's down 4% so far this year after posting a 25% gain last year. Mr. Biggs, his hair still reddish, is an intense fellow who follows the world from the modernistic Traxis office towering over New York's Rockefeller Center.

A creative-writing major at Yale, Mr. Biggs peppered his investor notes at Morgan Stanley with literary references from Shakespeare and other authors. Mr. Biggs's latest book, "Wealth, War and Wisdom," studies the rise and fall of international markets from 1935 through 1945, and focuses on the role of public psychology in driving market performance.

Wall Street Rallies Up Fourth Straight Day

Earnings Relief Rallies Stocks
By Peter A. McKay

Stocks leapt as investors hailed both Citigroup's horrid but not as bad as expected earnings report and surprisingly strong results at bellwethers in industries away from Wall Street.

The Dow Jones Industrial Average rose for a fourth straight day, finishing up 228.87 points, or 1.8%, at a three-month high 12849.36, down 3.1% on the year. The blue-chip indicator was boosted by a 4.5% jump in its component Citigroup after the banking giant announced early Friday that it swung to a $5.11 billion first-quarter loss as it booked more than $13 billion in write-downs amid surging credit costs.

Recession! Fear Run Amuck!

CNN Money reports:

A growing number of top economists believe that the U.S. economy has now toppled into recession.

Alarm bells were set off Tuesday by a grim report on service businesses, which make up the majority of the U.S. economy.

The Institute of Supply Management said that activity in the service sector declined for the first time in nearly five years. This report also indicated that employers are cutting staff.

The survey covers the retail, transportation and health care industries as well as hard hit areas such as finance, real estate and construction.

Some economists argued that the normally low-profile ISM services reading, coupled with the government's report Friday showing the first monthly net loss in jobs in more than four years, is proof that recession is now a reality.

Take-over Bid by Microsoft: Yah-Whoo!

REDMOND, Wash. - Microsoft has pounced on slumping Internet icon Yahoo with an unsolicited takeover offer of $44.6 billion, seeking to join forces against Google in what would be the biggest Internet deal since the Time Warner-AOL merger in 2001.

The surprise offer of $31 per share, made late Thursday and announced Friday, seizes on Yahoo’s weakness while Microsoft tries to muscle up in a high-stakes battle with Google likely to define the technology landscape for years to come.

A Sign of Health in the U.S. Stock Market

TIM PARADIS notes:

With Friday's decline, the market might well be following the pattern of past corrections, when huge gains were often followed by some retrenchment. Many market watchers consider such backing and filling a sign of health. However, with much economic uncertainty ahead, investors may need months before they can decide whether to take the market solidly higher.

"Whiplash Wednesday" On the US Stock Market

A day after the Federal Reserve slashed interest rates, averting a nasty nosedive in the market, Wall Street watched as the Dow Jones industrial average oscillated like a yo-yo, diving nearly 250 points in the opening minutes, spending the day in a series of rallies and swoons, and then closing up — way up — with a gain of nearly 300 points, snapping a five-day losing streak.

Market volatility reached its highest level in nearly five years. In a three-hour span in the afternoon, the blue-chip index ricocheted from a 326-point hole to a 275-point gain.

“The market has this out-of-control feeling, and until the market sees some semblance of stability, it’s going to continue to be very volatile,” said Richard Sparks, senior equities analyst at Schaffer’s Investment Research.

You can probably guess who profited from the last few days' erratic behavior in the stock market. As I posted previously, fear begets panic in ordinary people but experienced stock traders understand that right now is the best time to buy and hold stock for the long term. If I had any cash, I would have put it into the stock market this morning right after that big downward plunge!