As of Noon CST today the Dow Industrials have dropped 2.8%. Back in September when the bailout was being talked about and all the scaremongering was coming over the airwaves from the Bush Administration I moved my 401(k) money into cash. It had already dropped $2000 that month and I didn’t want any more loss while I wait out this crisis. So I have managed to hold onto a good portion of the value in my account. A friend recently suggested moving that money back into stocks. Looking at the drop since the election I know that would not be a good idea.

Under normal circumstances (2-5 years ago) when there is a longterm dip in the markets and people are trying to ride them out, they stay in stocks and even add to their accounts and the curve, which is sinusoidal (based on a sine wave), reaches a lowest point and begins moving upwards towards and past the beginning point of the downturn. Then at that point many small investors begin selling since they have been buying at lower and lower prices for say, 6 months. This time doesn’t feel right. I don’t foresee any significant upturn in the markets for probably another one to three years. When our manufacturing base (China) is passing stimulus packages it’s clear the problem is much worse than we thought two months ago. I say our manufacturing base because whether or not we like that fact or how the companies wholesaling products to us run their businesses that’s who’s assembling the bulk of the products we use.

So my plan is to keep investing what I can afford and I am hoping the duration of the recession is shorter than what I have projected here.