What’s Next?

With the markets having been in a tizzy fit all year, with no signs of imminent change apparent, investors and traders alike are having difficulty making sense out of the violent swings and unprecedented write-downs due to assets having gone sour.

Reader Steve had this to say:

I have been following your Blog and commentary, thanks for the good advice and guidance.

The market is so volatile and choppy; it is difficult to even trade in this environment. What do you think needs to happen before the market can correct and start a new Bull Run?

As I have repeatedly mentioned, the current credit crisis has to play itself out. Until it is 100% known which company holds how much in overvalued toxic assets, and all related skeletons are out of the closet, the current volatility and bear market trend is bound continue.

Right now, there are simply too many unknowns in the market place with former investment powerhouse Lehman most likely facing a bankruptcy/liquidation today while other death row candidates are having similar troubles and are trying to find a last minute partner for a shotgun marriage.

The key to investing in this environment is risk management. The risk right now is simply too great to make any wise moves, so watching this spectacle unfold from the sidelines is the best course of action. There will be great opportunities ahead; right now patience is your best ally in avoiding making stupid and costly mistakes.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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