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Will financials lead market recovery?
Old 10-07-2008, 03:33 AM   #1
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Will financials lead market recovery?

We are in the beginning of a recession of indeterminable length. But clearly, housing, automobile sales, large appliance, electable medical care, and many other discretionary choices of the average American, require borrowing.

The FED and the government will likely do whatever is necessary to steady the financial ship and it therefor seems inevitable that the financial stocks will lead the market recovery.

Is anyone considering this a bottom and bulking up on financial sector mutual funds or ETFs?

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Old 10-07-2008, 05:59 AM   #2
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What the Fed is doing IMHO is "shoring up" and, although significantly big in dollars, is artificial and short term. If the problems are, in fact, longer term they will return when the money spigot is closed (and eventually it will have to be). I believe this is just "prolonging the agony" of a very credit (got to have it now) centered economy. Until that is corrected (and IMO it may take 5-10 years) it will continue to be difficult economically. Sometimes holding still is the best tactic but I have no expertise in accurate procrastination (but it is what I intend to be doing in the foreseeable future).

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Old 10-07-2008, 06:21 AM   #3
Confused about dryer sheets
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OAG, I'm glad for that opinion. I think it is spot on. The US (and world's, probably) economy is totally propped up by credit. Is that new? I don't have the answer but I would suspect that the current economy is the most illusory in history. If the wrong card is pulled from this house of cards, it could be a real mess.

I am currently in 100% cash, MM (worried about it's safety even) and was fortunate to liquidate all equities in early Nov 2007. Had a very strong sense of foreboding. Not sure why. Most of the capital gains from liquidation were in tax sheltered. The taxable had enough cap losses to make the tax bill bearable.

But, I do feel the need to re-enter the US market. Just feel that financials are bound to lead the recovery and it may well take 4-5 years as you suspect.

Looking strongly at XLF. Anyone else?
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Old 10-07-2008, 06:27 AM   #4
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we are probably in for slower growth like in 1987 - 1991. financials are probably dead money like they were back then.

look for companies with a lot of cash that don't have to rely on the CP market. i'd check out tech, especially MS and Google
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