Tomorrow is going to be a blood bath. This weekend saw Lehman preparing to file for Bankruptcy before the opening bell. To add fuel to the fire, Bank of America has agreed to buy Merrill Lynch. The good news for Merrill stock holders is that it appears that Bank of America will pay a significant premium over the price at the close of business on Friday. This may balance out the fear that the market will have after the collapse of Lehman.I'm expecting significant pain for myself in my portfolio. When I look at what I have, it should on the surface be OK. I have some consumer staples and some energy, which should be fine. I have no financials in my portfolio, having sold of Goldman Sachs when it was 20% higher than it is right now. My big fear is in my technology and my international positions. My largest position is in some international mutual funds. These have been getting killed lately, and I expect there to be more pain in the short term.
That being said, I am hoping for a serious plunge. I have a long term view of the situation, and I've been waiting for the market to be taken out back and shot. I'm not sure this will mark the bottom, I really do think we have a few more months to go, but we will hopefully get close tomorrow. But then again, given how the market seems to do the exact opposite of whatever it is supposed to do, maybe we will see an up day. If that happens, continue to stay on the sidelines. I have for the most part, and I'm looking pretty smart for it.
[...] My prediction on the market turned out to be prophetic. The Dow took a 500 point plunge today. Considering the heavy selling at the end of the day, this pattern looks to continue in the morning. How did we get into this mess? We have just seen Lehman Brothers, a company over 150 years old, a company that survived the Great Depression, just declare Bankruptcy. How does something like this even happen? [...]
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