Stop the bailout insanity!

Stop the insanity!
The Dow fell 778 points today.
That’s not good — but it’s also not surprising.
My gut tells me this has a whole lot more to do with politics than the financials.
I’ve said it before — and I’m saying it again — the market has seen sectors get beaten up before — remember the tech meltdown?
Companies went out of business — and the market got through it just fine.
But what the market does respond to is uncertainty — and the politicians and media combined have created so much speculation of doom and gloom that the market is reacting to that.
In fact, if you look at a time chart of the market today, you will see the market made its biggest plunge today just before 2 p.m. when it appeared the bailout bill wasn’t going to pass.
In my opinion it’s because of all the news and politicking hailing this bill as the white knight that will go charging on his white horse straight down Wall Street with the first half of $700 billion in his pocket to rescue many of the struggling financials.
And, you know what?
My guess is that either Thursday, or some other day over the next few weeks, the Legislature is going to pass some form of bailout.
It will just be more wagging the dog, as far as I’m concerned.
Instead of a $700 billion bailout, here’s what I suggest be done — and it won’t cost taxpayers one cent:
First, and foremost, reinstate the uptick rule — now!
It worked for 70 years through bull markets and bear markets.
It was the SEC that made the idiotic decision that it was no longer necessary last year.
Of course it wasn’t necessary on July 7, 2007 when the SEC did away with it — we were in the midst of a bull market then — and liquidity was not a problem!
But liquidity is most definitely a problem now — and thanks to the elimination of the uptick rule — we have been in one heck of a bear market for a good portion of the past year.
In addition to the uptick rule, the FDIC also needs to increase the amount of money it insures for each individual in each bank. Individuals and small businesses need a place to keep their money safe in this market — and they shouldn’t have to scramble to spread it out in different banks.

While on the topic of overhauling the market — let’s also do something to address the practice of marking-to-market. After all, it was the lack of a market for the toxic CDO’s that went a long way to contributing to the subprime meltdown. Clamping down on that would go a long way to fixing a financial system with a myriad of problems.

We currently have a bunch of people running around yelling “the sky is falling, the sky is falling” — and the more they say it — the more they’re convincing people with money in the market and in the banks to start pulling it out.
As I’ve been preaching for a long time now — if you don’t have the stomach for this market — there’s no shame in staying in cash on the sidelines and not caving to the temptation to try to time the bottom.
Just make sure you are closely watching your 401k and know precisely what companies your funds are invested in. I do not believe anyone — no matter what age — should just let it sit there and hope for the best.  There’s no excuse for ignorance regarding your 401k.
For me, I’m still doing my due diligence on the same companies I’ve been mentioning for a while now — Bank of America, Wells Fargo and U.S. Bancorp. I’ve also added one additional spec play to my due diligence list — the Chicago Mercantile Exchange.
But heed my advice closely — don’t base any of your investment decisions on anything you read here — do your own due diligence — or at least enough research to hire the right professional to handle it for you.

3 Responses

  1. Right on, Cat!!!! I love your style! I’m going to write-in your name for president, seriously! Cat, can I ask a big favor? I have been reading you since Cathleen’s Corner and then EAM and over here. I even sometimes read that video blog you do on that town in Mass. But what I REALLY need your help with is getting access to your Spotted In Boston site. I totally LOVE that site, and now my password won’t let me in. It was working great for the past few months, and then this week it won’t work anymore. I thought maybe you weren’t running it anymore, but Pete mentioned on another board about something you had on Tom Brady yesterday. I emailed him and told him the last thing I got to read was about Steven Tyler talking about a book he’s in the process of writing in NH, and Pete told me about all the other stuff since then. I don’t want to miss out anymore and no one is responding when I write to EAM asking for another password. I’ll PAY ANYTHING to get back in there. PLEASE PLEASE PLEASE help me get back in!!! Love ya, Mari

  2. Mari, I run the Spotted In Boston site with a friend — and we’re trying to keep it as an exclusive to our EAM members only at this time, as an incentive to stick with us through the restructuring of EAM. Send another email to EAM asking for a new password — but you must send the request from the email account on file with EAM. We have an arrangement with a popular celebrity-spotting TV show to sell our info and videos to them, with the arrangement that the only place they are dispensed beforehand is to our EAM membership. Also, be aware we recently changed the site address for our Spotted In Boston site to

  3. Cat, thank you thank you thank you!!! It worked and I can get in Spotted again!!! Its my addiction at work. How do u get that access to all those celebrities? OMG I LOVED the video of George Clooney! I almost fainted when he said that to u! I was wondering what u were thinking? I love your style so much! And why don’t you guys answer anyones questions over there? I know u guys are all friends but Diane seems like such a bitch. And Tim and Steve seem stuck on themselves. How long have all u guys been friends? What do u think of Gisele? That’s the 1st time I’ve seen her being friendly. Can I ask what that thing was she laughed about and u said u’d leave on the cutting floor? I’m so jealus of u! Can I ask a huge favor? My birthday is October 15. Can u guys say happy birthday to me on Spotted that day? I’ve had such a crummy year and that would so make my next year! I now love Spotted 10 times more than TMZ. Luv u Cat, u are definitly my favorite on Spotted!!

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