I covered my short position on the Dow Jones Industrial Average. But I’m sure the down trend will continue. There are just too many bad news and consumer sentiment is plummeting. Now we have experience with credit crunches, oil shocks, etc. We experienced recessions, even stagflation. So why should I worry?
The economy is driven by spending. Consumers and businesses alike are already affected by the credit crunch. With consumer confidence dropping, even more consumers will stop buying. Local governments are tightening their belts due to a lack of property tax revenues. So the only spending right now is military. We certainly spend a lot of money to finance the war in Iraq. Unfortunately, history has shown that not much good comes out of situations when war is the economic driver. But that is another story.
In the meantime, I’ll be watching the Dow Jones Industrial Average and most likely short the Diamonds again.
