I was thinking about holding stocks for the long run after reading a post by Jim Cramer on RealMoney today.

At noon today, I bought ETFs.  I am now long stocks. 

I am expecting a vicious bounce similar to the ones seen during the last bear market in 2001 and 2002 when stocks collapsed and were then followed by substantial bounces retracing 50%-60% of the losses.  I am guessing we saw the near-term lows on Friday, with the intra-day reversal on big volume followed by the huge gains today.

I sold my short hedges.  All of them. I am now net long.

I'm mainly in cash but I do own some stocks. 

I expect to start buying in the not-too-distant future.

Don't listen to me though.  Do your own thing.

The market is getting stupid

The Russell 3000 has dropped 23% this month.  That is in seven trading days.  This is, by any definition, a crash.

The market has given back all its gains since May 2003.  Heck, it hasn't done a thing since 1998. 

Since the intra-day peak a year ago today, the S&P 500 has fallen 43%.  The two worst bear markets since WWII, 1973-74 and 2000-02, experienced declines of 50%.  We are fast approaching those levels.

On my normalized earnings number of $75 per share, the S&P 500 is trading at 12x, nearing the lows of the past two decades.

From the World Economic Forum.

We are in a bear market.  This is plainly obvious.  Though I believe that a screaming bounce is coming, I think the market will ultimately go lower.

However, as I listen to the overwhelming negativity and pessimism in the market, I think we must remind ourselves that this is not the end of the financial system.  We will get through the mess.

The ban on short selling financial stocks is supposed to be lifted on Wednesday.  Whether or not it is removed remains to be seen.  At the time of this writing, an extension had not yet been announced.

Did the ban on selling short financials work?

We really do not know since drawing a definitive conclusion would require a control group of financial stocks that had not been shorted.

However, the ban did not stop the continued underperformance of financial stocks relative to the broad market.

How would feel if you were one of those Congressmen who switched their vote on the Bailout Bill? 

After your constituents send emails at a rate of 100:1 against, and after being disgusted with an industry that paid 27 year-olds fresh out of MBA $300,000 a year to start, you deep-six the Bailout Bill only to see the market tank 777 points.