Thursday, August 18, 2016

Red October

September 30, 2009 by · Leave a Comment 

By Larry LaBorde, GoldSeek

Get ready for next month.  I always find myself approaching October with a little trepidation.  As soon as all those 3rd quarter earnings (or lack thereof) start coming in we could be in for quite a shock.  It just seems that surprises of the worst kind show up in the stock market in Octobers past (especially the most recent one).

It doesn’t take much searching for one to start to question the “green shoots” recovery.  Over at John William’s web site (www.shadowstats.com) the unemployment numbers are over 20% and climbing.  The Baltic dry index certainly does not show a recovery in world wide shipping.  Finally the S&P 500 p/e ratios are higher than before the dot com bubble in 1999 (and this in spite of all the stimulus money thrown into the economy).

With all this news what is a boy to do other than head for the bunker with bullets, bullion and beans?  Of course I do not think this is TEOTWAWKI.  Life will go on and the world will keep spinning.  But what to do about this dread in the pit of my stomach as I get nearer and nearer to turning another page on the calendar – to the dreaded investors month of OCTOBER?

Perhaps it is time to take a little defensive action.  Nothing as drastic as the 4 – B’s listed above mind you.  Here are my simple recommendations:

1. Move up those stop losses.  If you do not use stop losses then shame on you.  Tighten them up.  Maybe as close as 90% to 95% of your stock’s present market value.  Sure you might get stopped out on a small dip before a big run up but how many of you are wishing you had done so last October?  If the market continues to run up then keep moving the stop loss orders upward.  If it drops hard and fast you can thank me later.  The market just seems a little toppy to me but what do I know?

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