A Plan To Save The World

When Paulson came out today and stated that his earlier plan to save the western world was not working, he offered up a plan "C" (or is it "D") to relieve pressure on consumer credit, scrapping his earlier effort to buy the value mortgage assets.

No matter what happens or what the next plan is here, are the 3 reasons I believe stocks are headed lower.

* Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.

* Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.

* Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.

New Video analysis of what could really happen:

VIDEO LINK

Okay, so let's look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the '70s. That bear market was brutal as it did not let anyone out. Over the course of the early '70s, the bear market basically wore people out to the extent they eventually just threw in the towel. We believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.

The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope. The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace. Only when we see the new regime take! off ice this coming January will we see any meaningful changes.

The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama can not make any sweeping changes until he is sworn into office. Yes, he may hit the ground running, but the reality is, it's not for over two months from now and a lot can happen to the market in two months. The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and I expect they will be, it's going to push this market and everything else down to new lows. It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.

Having lived through the bear market of the '70s, I know firsthand how difficult the journey we face is going to be. Now this may seem like a very pessimistic outlook and in some ways it is, however there are always opportunities to make mone! y i n the marketplace. These opportunities may not be in stocks! , it may be in forex or the commodity markets.

So buckle your seatbelt. I think we are in for a bumpy ride...check out the new video analysis:

VIDEO LINK

Adam Hewison,
President, INO.com
Co-Creator, MarketClub

Deciding Your Stock Investment Time Frame

We often wonder for how long we should hold our stocks before we sell it, and the answer that comes to mind is to leave it as it continues to rally and make us more profit. However the moment we see a slight down turn in the market we panic and become restless...why?

The reason we find ourselves caught up in the above is because we do not plan our trades before we execute them, and we do not apply methodologies with proper money management. For instance, Mr A holds his stocks for X years because he is investing for growth and Mr B holds his stocks for Y years because he is investing for income. What we have here are two individuals with different goals in mind. This goal is what determines how long we stay in the market on a particular trade, and the deciding factor on how long it takes to realize our set goals.

So before you dump your money into the stock market and walk off to brag to your friends about how you trade the markets, it is worth while for you to take a moment and visualise what is happening in the market at the moment you intend to invest and decide how long you intend to hold the investment for. The reason you need to do this is because you are setting for yourself a pre determined level of involvement before hand, also deciding at what point to exit the market acts as a guide to tell you when you have moved from the realms of investment to out right gambling.

Before you enter a trade there must be a reason why you think that stock is a good buy at the time and if for any reason you wake up tomorrow to find that this reason is no longer present, then it might be time for you to think long and hard about staying in that position. There is no rule of thumb about how long an investor should hold their stocks so stop looking for one and simple follow the plan you had drafted before you entered the trade.