I was determined not to watch the markets when they opened.

We left our online stock trading club meeting. I walked home, because the restaurant was not that far.

We had had a featured speaker at our online stock trading club, Mr. Callahan. Mr. Callahan was an options trader and stock trader, but was active on the Chicago Board of Trade during the Panic of 1929. He had shorted the marker prior to the Crash, and had made a fortune.

He had known a number of historical figures over his long life (he was 101), and he recounted how some really great fortunes were made after the blood was finished running in the streets, when everybody had given up and sold their last stock. He advised that we take any profits on any stocks that we had been long in for many years, hold it in cash or government bonds, and then wait to see how the government will either screw up or save the financial markets and financial system.

He believes that just like the Panic of 1929, the government will try to fix what should be left alone. In fact, they are already doing it. George W. Bush is busy trying to become the Herbert Hoover of today. And he has plenty of help from a willing and complicit and fearful Congress.

This panic could well be one that sends stocks down and keeps them there, instead of sending them down and having them claw back up when the bottom feeders come in. This current government, and governments and central banks across the world, could be committing a collective suicide.

So, I would not look at the news as the day went on. I would not try to sell or buy. The bottom would not be reached this day. I was determined to take a portion of my cash and buy into certain companies and sectors.

I had stared examining the most feared sector of the market, the financial and banking sectors, and had identified two different regional bank stocks, Huntington National Bank and TCF Bank.

Both had virtually no exposure to sub prime mortgages and both had good P/E ratios and seemed to have a management team in place that was on the ball.

My next look was at American Express. This is another company that survived the Great Depression. In fact, when banks were closed during FDR’s bank holiday, American Express travelers cheques were still accepted.

American Express stocks had fallen, like most of the rest, but it had a good P/E ratio and its card holders tend to be in a higher demographic than those of Visa or Master Card. Yet, I know they have their problems. Puts into 2010 are very expensive.

Tags: online stock trading

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