Thank you very much for your report. You’ve done a very good job evaluating conditions, etc., but I wanted to try to help you (by sharing the resources linked below in this comment) with two points.

First – according to this article analyzing actual public data, there is not actually a “credit crisis.”

A. http://www.lewrockwell.co…

B. http://www.independent.or…

Second – in your allocation of blame, you omitted the most culpable party of all – the U.S. Federal Reserve. The government’s expansion of the money supply causes bubbles (and contraction of the money supply pops them).

A. http://www.lewrockwell.co…

B. http://research.stlouisfe…

I recommend including reference to central bank monetary policy in both your analysis of markets and your advice to clients.

Thanks again for a great and wise report and a great and valuable website.

On my mind since I started reading Security Anlysis, which G & D spend considerable time on that aspect of the market.

Just wondering if anyone has done any looking?

My question is if you were fully invested (which I think a lot of “regular” investors were) during the beginning of this crisis, what do you do now? It’s been a really tough question for me to answer. Do I tell them to sell at a 40% loss?

This crisis will take many years to unwind. Most Americans have most to all of their net worth tied to their house or their investments. When you take a -30% hit on your house value and -40% hit on your investment AND you are highly leveraged from home equity loans, credit cards, etc, you have a big hole to dig out of. Everyone from individuals to companies to banks to governments have to deleverage, this process will take years.

With that said, I still think these are opportune times to be an investor. Good Hunting!

Curious, though, about the performance, it looks like f wall street’s portfolio is down about 5% or so (from $100,000 to about $95,000 – I’ve been tracking it in Yahoo. sorry Joe if he never made a change. I assume he has opinions about these companies but I doubt he’s rethinking his methodology or basic strategy. I think that’s what he meant.

Personally, I moved to bonds and cash after I read Joe’s Stocks Stink! article in February. This stuff fascinates me, but I realize I am not the next Warren Buffett. I don’t know if you were being curious, joking, or rude, but if I were still a stock market investor during the worst market drop in history, I’d take Joe’s 5% loss over some overpaid fund manager’s 40% loss any day and I bet his actual clients that pay him to do this stuff did better than all of us reading this site for free.

My two cents (and thanks to Joe, I still have them!)

When there is fear it can lead to panic. Panic causes things to go from bad to worse.

Which means that on occasion the recent bargain which you thought was a bargain slips another 30-40%-50% or even more. (I mentioned about this on my earlier blog post, where I suggested one takes one%u2019s time before investing, I feel it needs a little more elaboration, with regards to Joe’s report, so here goes.)

Having said the above, if one looks at the current crisis, it seems different compared to other crisis, as a lot of businesses and people who depend on debt are going to find the going extremely tough. Even business without debt are going to have a difficult time as people might not spend as much, and so Joe making the general report for the benefit of all, where he says it might make sense for the conventional investor to get out of the market and stay in cash and fixed income investments is justified.

I welcome even more panic which would lead to a crash that just means things will get better faster. On the other hand the solutions to this current crisis might cause a prolonged crash and will not solve things immediately (1-3 yrs). However, these steps or new ones in time will restore confidence. The question is how much time?

Depending on where you are in terms of age, the impact of this time can be a dangerous situation for most people. Take 4 sets of differently aged people and the impact of time due to the current crisis will become obvious:

Set 1: 30-40 yrs-%u2013Set 2: 40 – 50 yrs-%u2013Set 3: 50 – 60 yrs-%u2013Set 4: 60 yrs

For each set, assuming they are investing in the markets now, below are probable impacts depending on the time this crisis lasts.

Crisis time period 10 years (i.e market starts to revive after 10 yrs):

Set 1: They can thrive; they have a number of working/investing years left

Set 2: They can still make it, though their fortunes would be late in life.

Set 3: Slim chance

Set 4: They are fuc#$

Crisis time period 5-10 years: (Market starts reviving sometime between 5-10 yrs)

Set 1: They can thrive, they have a number of working/investing years left

Set 2: They can still make it

Set 3: Slim chance

Set 4: Very Slim chance, mostly fuc#$

Crisis time period < 5 years (market revives within 5 years), most people should be ok%u2026%u2026%u2026

When you consider the time factor your investment perspective will change. This is the challenge which most individuals need to figure out for themselves as it will be different for different people. I gave time as a dimension to consider; another important one is how much can you afford to invest considering that time is unknown, considering your job, your family and other liabilities. You are each bound to reach different conclusions, just as each individual would value a company for investment differently. Even though you might have a huge margin of safety, fear could cause that stock price to drop another 30% from the current discounted price or it might not. You need to be sure you can stomach that chance and that the company you%u2019re investing in is a good value in both good and bad times. And ya the bad times can get real bad right now….

Happy Investing

Sanjay Shetty

I blog at http://indiainvestor.word…

Hey Joe, are you going to continue with Phil Fisher’s 15 Points to Look For in a Common Stock? I loved the current examples of his principles. It helped put a classic book into perspective.

Obviously I’m one of the “non-conventional” investors. I’m even encouraging my kids to start or increase their cost-averaging plans. I’m not only not “panicked”, I’ve been looking forward to this environment. Yes, I feel bad for those people who have lost “11 years of savings”, but as Joe says, they should never have been in stocks. WB said “If you can’t stand to see your stocks go down 50%, you shouldn’t be in equities” or something to that effect. He also said “Be fearful when others are greedy and greedy when others are fearful”. Now we will see who walks the walk and not just talk the talk. Like WB, I am certain that the U.S. will be better in ten years and better in twenty years than in ten years from now. Look outside the U.S., as bad as we have it, just about everyone else has it worse. We still have all the tools and the rest of the world only has some of the tools even as they have been learning.

If I had a million to invest today, I would not put it in all at once at this point. There is huge risk out there right now. Therefore, I don’t need a million dollars, I just need what I have, the ability to buy a good company for cheap 100-300 shares at a time every couple of months. As far as I’m concerned, it’s poaching season!

http://www.fwallstreet.co…

As always…great blog!