For me, I'm well positioned. I've actually taken my lumps like a lot of people, some of them far far worse than the market, but I'm in relatively good position because I've maintained a large position in cash. In fact, I'm about 70% cash right now and have been for a long time. As the market crashes around me, I'm going to update my shopping list (which I haven't done in a while) and start to look for things to buy. So what are my thoughts right now?
- Financials are cheap, but going cheaper - I really want to buy some banks right now, and probably will soon. Nobody wants to own them right now, and that's the best time to own them. People are running away from the financials because of problems faced at Indy Mac, and Frannie and Freddie. I'm not one to try and pick a bottom, so i'll start looking at which ones I want to own soon. Two of the banks I have my eye on are US Bancorp and Wells Fargo. I might also get into some of the brokers like Goldman Sachs. But like I said, the financials are going cheaper from here so if you can't take the pain short term, avoid.
- Oil is up, and going higher - People keep waiting for the bottom to drop out of oil. I'm not one of them. I for one think that the high price of oil is here to stay for the foreseeable future. I believe that worldwide demand is going to remain high and if the oil producing countries could bring down the price of oil right now, they would. I still think some of the better oil names have a ways to go like Schlumberger or Conoco Phillips (which I own)
- Short the market, just get ready for the bounce - I think the market could easily go down another 20% from here. That being said, it won't go down forever, so be ready for a quick bounce back up. I would just hedge my bets. If I start buying a tech company or two, I would probably short the Nasdaq (QID). This way, you hedge against the market doing anything crazy.
- Buy high quality names - I still like a lot of the bigger names. I am still loving Johnson and Johnson. They announce earnings tomorrow and I think they will do well there. Even if they don't, I still like their long term prospects. This is the best time to pick up some of the best names because they are so cheap.
I've sat on the sidelines for a while, and avoided much of the pain that a lot of traders have faced. But things are starting to look interesting, so I may decided to jump back in soon.