Very Little Stability In A World Full Of Uncertainties

The market mechanism is broken. Badly. More evidence of this may lie ahead. There has been massive technical damage in the market. Last Monday's down gap messed up so many charts and there was much collateral damage. I am not sure how this plays into the interpretation of a great many charts (which a lot of investment professional use to try to guess/forecast how stocks will act going forward). Last week retail investors withdrew $17 billion from domestic equity funds. I remain of the view that we are going to see the "death of the retail investor" as stocks and the way they act are so confusing and so volatile that it is both frustrating and scary to the average person saving for retirement (it's even frustrating and sometimes scary for me). I have been warning about the loss of liquidity for over a month. With retail investors getting religion the demand/supply equation for buying stocks has deteriorated. I will remind everyone that there will be damage, maybe serious damage, from the recent volatility in currencies, stocks, bonds and commodities: As I have warned, this past week's market schmeissing was preceded by unusual volatility in numerous asset classes -- stocks, bond, currencies, commodities and so forth -- in the previous few months. This mornings shellacking in the first 30 minutes was like a DEPTH CHARGE -- you simply don't get these moves in the aforementioned asset classes without some dead, levered funds floating up. The damage is not likely over after one day. While the computers and machines panicked this morning, it still is not clear whether the actual investor will panic next. Once again it appears corporations have been buying back their stocks at record highs (as this suprisingly has happened constantly over history). I do not like the market setup: It might be time to batten down the hatches. We have now entered the third month of the third-quarter reporting period. Given the currency volatility, the economic slowdown in China, the recessions in Russia and Brazil (the two biggest emerging market countries) and the jolt to confidence following the market's crushing, I expect warnings and sales/profit guidedowns in the next few weeks. I expect that we will continue to see the frustrating and scary massive moves up and down and I continue to believe the best approach is to err on the side of caution and be conservative and keep higher levels of cash in investment accounts. At the same time, on days like today when the markets are down huge, it can also be prudent to add (small amounts) of cash to the best investment holdings you own (these are investment you expect to own for the next 6 + months)... These would include high dividend yielding stocks, fast growing tech companies such as Twitter, the best performing U.S. Large Cap and Mid/Small Cap Mutual Funds, European/International Mutual Funds and High Yield Municipal Bond Funds ...I am staying away from Emerging Market, Asian, Latin American and International Bond Funds. With this wild market, It is not the time to be complacent with ones investments....