Crash Market Stocks - Financial Tips On Making Money In The Stock Market

Ending the week with the fourth consecutive day in the green is something we have not seen in the market since December 2008. We all remember the times of December. It was not a good time to be positioned short. Not to say that March will be the exact same, but this buying is definitely more than just a couple day fluke. It is behaving much like your standard bear market rally and may have a bit more left in it. The dangerous part is trying to guess when it ends. I keep reinforcing my choice to stay lucrative at the moment, besides my small trading I've been doing here and there. This is because I do feel there will be point where the shorts are at a price that is just too low and I want to have the capital ready and available to make my move. I think we are very close, but I do feel that there still may be some rallying the next week or two, so I am remaining fairly cautious.

I did almost pick up some SRS for two consecutive days now. However, on Thursday and Friday my $59 buy order was unable to hit. SRS enjoyed being up almost 10% on Friday, but as buying persisted, it found itself back at the $60-$62 range where it ended up closing at. SRS is definitely holding up the best during this bear market rally as it is clear that commercial real estate is just scraping the surfaces of the problems coming their way. If we indeed see SRS dip back into the $50's next week, I'll will buy my first round.

Monday is the big anticipated FASB meeting to discuss mark to market accounting principals and the possibility of altering it or completely doing away with it. I don't see how they would just do away with it all together without severe reporting problems, so I assume if they do make a move it will be an alteration that maybe allows multiple options for banks, kind of how businesses have the opportunity to choose either FIFO or LIFO for reporting their Cost of Goods sold. So all eyes will be waiting on Monday to see what is the outcome from the meeting. We do have to attribute some of this financial rally to the anticipation of an outcome, so staying in financials for all day Monday, could be a gamble. If banks get one more push Monday morning, I most likely will get out of my remaining BAC in case of a post meeting sell off. At any rate, the outcome will not eliminate banks problems and there will still be a pile of distressed debt waiting for banks to deal with, so either way I don't see much to cheer about for banks.

In just a few days, we have seen the destruction of FAZ, which is the big reason I held off in buying some at this point. At $40, it's hard to pass up on it and if it indeed gets any lower, I have to start considering getting in. Even if we see FAZ drop lower, I don't see it getting lower than $30. So, as you can tell, I am becoming very antsy to get in, it's just that past experience has taught me that a bit of patience can pay off big time. So, the time is close, and I assume by this week I will begin taking positions on the short side.


One problem we face in our current economy, is the nature of our cyclical capitalistic economy and how the current government is working to try and stimulate it. Although much credit is given to FDR's plan to pulling us out of the Great Depression, I don't feel it had much to do with it. Sure, there were some benefits that helped "preserve" some jobs and keep things stable, but it was time and World War II that, in my mind, were the big driving forces pulling us out of the depression. Today, we have much of the same style of government which has the theory of big government spending, increasing taxes, and having the government try and to stimulate the economy by controlling where money will be spent and than taking care of the people. At some points, it sounds nice, but I feel it can also be a crutch to us in our recovery.

In his interview this past week, Warren Buffett said that he thought he could see an increase in taxes for the wealthy in the future, but that this was not the time to do it. Other areas need to be more focused on. From the chart below, take a look at the change of the marginal tax rate following the depression. From 1931 to 1932, it more than doubled. So you can probably expect taxes to get significantly higher in the near future. Considering over 70% of our GDP is measured by consumer spending, it is so important to make sure that consumers continue to spend! By taking half of their income in taxes, this will not create that spending. I believe we need to be focused on getting more money into consumer's pockets and really focus on job creation and preservation. Those two driving forces can have the greatest influence in increasing GDP. So, I believe if we continue to go down the road of taking money away from small businesses and consumers, it may take much longer to see us come out of this crisis.


It is for this reason I chose to run a MyCorporation banner discussing starting up LLC's or S-Corps. These entities can provide a big tax shield for those making significant incomes, especially through stocks or other investments that have large short term capital gains. An accountant or MyCorporation can consult with you on how these vehicles can help save thousands of dollars in taxes. I, myself, am a independent contractor, so these types of entities are very appealing and provide a huge service. In the future, the terms of these entities could be changed by the government, so it's good to look into them now while they're still up and running.

My first podcast will go out today. I plan to do two to three a week (or more depending if significant news needs to be talked about). I will expound on subjects that don't make it to the post and also discuss my portfolio changes more thoroughly. The service I use is a paid service to maintain the podcast, so there is a small monthly fee to subscribe. My hopes is to provide additional information that can be useful in breaking down this market and the significant movements that will be coming in the future. As soon as it's up I will post it in this post as well as in the sidebar.

So Monday should be another day of fireworks with hearing the results of the FASB meeting. Hopefully, I can start making some moves into the shorts and can begin on the road to profits. Have a great weekend everybody, Happy Trading and see you soon.

****Update- The podcast service is up and the first podcast is available. I am making the podcasts free for a week so you can see if it's for you. Enjoy! CLICK HERE TO SUBSCRIBE TO CRASH MARKET STOCKS PODCAST