Salient to Investors:

Barry Ritholtz at The Big Picture says:

  • Obama has nowhere to go but up in selecting the new Treasury Secretary as Larry Summers and Tim Geithner were asleep at the switch when the crisis occurred and were there to help the banks and not service the taxpayers.
  • The government made loans when no one else would and got virtually nothing back  – we are nowhere close to breakeven.
  • Goldman Sachs should be given 3 months to decide if it is a bank or not – the key question is are taxpayers on the hook if Goldman loses money?
  • Does not own bank stocks because an investor has no idea what the banks own, and despite the Fed being extremely accommodative towards them and the government’s willingness to always back stop them.
  • Microsoft, which missed every major technology trend in the last decade, is the Maytag dishwasher of technology. Gates is down to less than 20% ownership of MSFT stock and has made money doing so.
  • “Persistently Overbought”  means stocks can stay at the top of their Bollinger bank for a long time.
  • Investors must have a rational plan for investing – high turnover is a big red flag you are doing something wrong.
  • Keep investing simple and ignore the plethora of noise. Ten years ago a list of the Top Ten Stocks to Own Over the Next Decade is down 75% versus the considerable gain in the market.
  • If you only invest when you are comfortable and have confidence then the stocks has already had a great run. Confidence and fear are two sides of the same coin – the  best time to invest is when stocks are cheap and no one has confidence. Uncertainty = opportunity. In late 19999 and late 2007 people were really confident.
  • Long term, you can’t hide in cash or invest in bonds at 1.8% so have to buy equities as the Fed has ordered. There never has been a 20-yr period when equities didn’t have positive gains.

Ritholtz says he has been fully invested for 4-6 weeks, that stocks are  reasonably valued. Likes a balanced portfolio.

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