Friday could be our generation's 1929.

Finally it seems that the market, traders and investors, have realized our economy is in deep deep trouble. I have opined on this endlessly for months now and others have warned as well. Wall Street went merrily along either not wanting to know or not caring.  The last couple of weeks of trading have been ugly due to this situation. Europe is in a mess, socialism and it's unsustainable entitlements, which have been there all along, now seem to be clear to investors who are exiting in mass today from the continent to US Government bonds. The only reason that is happening is that not only is that the last refuge, but some see the new sentiment in Congress towards budget control as hope there might be hope of no default here. European markets just closed and the day was butt ugly.

 

Friday starts with a 8:30 AM jobs report, which I noted earlier is sometimes silly in it's lack of being real or maybe more worrisome being politically altered to suit current administration needs. In any case everyone  knows unemployment is high and going higher, so all that is needed to have a big blow off in stock and bonds is for the job reports to confirm what everyone knows.  Friday could be like pouring jet fuel on a fire.  There is the possibility of a couple thousand point drop or more in one day as everyone heads for the exits at one time. Simply put it could be our generation's Black Friday in 1929.  I am a believer in generational theory and the theory is history repeats about every 4 generations, or about 80 years, because that is long enough to forget lessons learned. We are about 80 years hence.

 

If you ask me what to do I do not know. You have to decide what assets you have at risk and how much you can stand going down. Best guess is to hold onto your blue chip stocks and bonds as selling now is useless. If you have cash you could get a once in a lifetime opportunity to make some serious profits, but expect those to be years out as this is a economic event not a market event.  Good quality companies with good yields will survive as we will always need those services and products. My hedge fund holds higher dividend stocks and very safe muni bonds, plus serious amounts of options hedged against underlying securities. I am down about 8.1 % currently,  and fortunately some positions seem to be holding up since yields tend to keep floors under stocks.  I do have my limits and if they get reached will cash out and take losses and head to the beach leaving the rest of you to deal with the carnage and Obama's continuing mismanagement.      

 

I pray I am wrong.