Market Update: 2008-10-06

If you look back at history, October is not always the best time of the year for the stock market. The Black Mondays (October 28, 1929 and October 19, 1987) and Black Tuesday (October 29, 1929), both famous stock market crashes, occurred during the month of October! They occurred after days of negativity and downward pressure on stocks that were followed by nervous weekends. Last week the major U.S. market indexes were down 7-10%, and that was after a failed rally attempt the middle of last week. Last Friday’s sell off confirmed that the markets are not convinced the bailout will work. Now it is Monday morning, the credit crisis is not any better, and Europe is seen as falling apart over the weekend. The euro is tanking because it is a currency that doesn’t even have a country, and those countries it is used in are in trouble without one central government that can make any decisions about what to do! Despite the fact that the U.S. dollar is up against the euro today, you could say the dollar is this morning it is down against the yen and gold this morning. The dollar-euro rate is useless since Europe is no better off than we are. Another interesting point is that we are getting ready to start the Q3 earnings procession, and earnings are likely to disappoint.

And as I finish writing, the Dow has just breached the key 10,000 level and the Nasdaq is back in the 1800s.

Will we write a new Black Monday or Black Tuesday into the history books this October of 2008? We will know more about that later. Until then, Happy Investing!

Gregory