Are You Scared Yet?

If you are not concerned about the current direction of the market you do not have nerves of steel you have your head in the sand. Normal movement like this is generally a market event, but I am becoming more of the opinion this week's movement might be a reaction to the economy. The economy is not in recovery, it might even be in a second dip recession. The concern there is as I opined in a posting a week or so ago the Federal Reserve is out of bullets. Obama has spent money at the federal level that their is no more money to spend on any stimulus. Lastly, the states are in restrictive mode as they tighten their belts to make revenue meet expenses.

Frankly I see nothing that makes me believe the economy is going to recover either.  If, and this is a big if, the jobs report on Friday is really bad as it could be you could see a wholesale abandonment of the stock market by investors and a sell off of gigantic proportions. I am talking 1000 plus points or so. The business environment in this country is as bad as I have seen it in my over three decades of investing and watching the market. Much of this originating from Washington DC, that is become outright hostile to business. Be it heightened regulations, burdensome health care requirements, or just the President telling us day after day how evil any business is period,  No one is investing in expanding their business in this environment and no one is hiring either. For some reason some people in this country believe business regulation and taxation is a bottomless pit.

This evening I had a conversation with a small business owner who told me he not only is not hiring he is laying off to continue to reduce costs ahead of more regulations that could restrict his business. His comments about getting smaller to avoid being a target of Washington politicians make me cringe. That my friends is what we are facing and I see no relief before November 2012, if then. God help you if you do not have a job currently, maybe I should say God help you if you do have a job now too.

Let's also make a point here about the dismal work of the media in the last week, they were so busy talking up "default" that they did not take time to do some investigate work to see this coming. Not sure if this was the media being in Obama's pocket or just lazy. but surely this will should teach any of you left who do not believe me when I say much of the media is useless this should do it.

What is an investor to do in this situation. When I look at my screen of stock and option positions and see only three green on the screen I too get nervous. My three green are GS, DO, both bought correctly and my all time favorite safety stock SO.  Nothing is my portfolio is radically down yet, but many are on the edge. Fortunately my hedge fund is built to withstand situations just like this and survive. However I would advise no buying here and certainly not until after this Friday's job report. As I mentioned in a post within this week the agency REITS look good here and I still believe they do if you are looking to hide somewhere.  NLY, HTS, and AGNC are all solid buys even in this environment. I own HTS, and am considering AGNC. What is not to like with a security that hold value in this market and pays a dividend of 15% plus.  Oil and tobacco could get interesting here if the market finds it footing.  But the old buyer beware is certainly the point here.