Let's us all take a moment to thank the wonderful politicians in Washington for once again letting us down over the weekend. The "Super Committee", which was comprised of 6 Republicans and 6 Democrats, was formed specifically to tackle the U.S. debt problem and come to agreement on how to cut spending. Well, as has been the case for quite some time, the committee was unable to make any progress on the issue and consequently the stock market is getting crushed.
As I've said, one of the reasons I'm starting to find the stock market attractive going forward is because I think that at some point the circus that is Washington is going to have to get their act together, and while I don't see a great deal getting accomplished there, I remain skeptical that some progress and bipartisan (Republican and Democratic) work will get done....but as of this morning, I'm quite upset with the children in Washington.
Because of what I mentioned above, the markets (led by the financials of course) are down over 2.5%. My three favorite financials are getting wacked:
Citigroup is down by almost 5%
Suntrust is down by 3%
Synovus is down by 4.3%
Chimera Investments is down by 3.4%
I have not done so yet but I am planning on buying some stock in all four later today (small amount).
In looking at another stock that I own and constantly watch, Etrade (ETFC) has fallen to $8.20/share, which is a level that it hasn't seen since November of 2009. Based on a risk/reward analysis, Etrade represents an extremely attractive investment going forward. I've written before how I believe that the company will eventually be bought by another financial firm, but in looking at the company's business model and financials and based on the extremely cheap stock price, I think Etrade is one heck of a investment at this time. My price target on the stock over the next 3 months is $15-$16/share.
If anyone has started moving money back into U.S. stock funds over the past week (as I suggested would be prudent), I would use todays down market to move another small amount into the stock funds you may currently own. I think a good allocation to have right now is to be about 65-70% invested right now (or at least moving toward those numbers).
Ugly day so far, but at least we're not Turkeys.
