How deep is the recession?

This recession is more serious because it is not typical business cycle downturn, which normally lasts 12-18 months. This is a recession caused by a big financial crisis and a breakdown of system that supports the economy.

To say that 2008 is tumultuous year is an understatement. It is historic. The whole business financial model has broken down. All six big investment bankers were either taken over, converted to bank or bankrupt. The result is a cumulation of years of reckless spending, consumption and greed.

So, it will take a few years to recover. There will be bear market rallies followed by new waves of crisis. I expect the next waves will be the collapse of commercial real estates and credit card defaults. It should come within the next 6 months.

The Fed is probably running out of options having fired the last silver bullet having reduced interest rates to almost zero percent.

So I am not optimistic about the market. With the rallies over the last few weeks, I am looking for the right opportunity to short the market. The timing could come anytime but it could come in a few weeks to 2-3 months. Normally, bear rally can also overextend itself. Very likely, there will be quite a bit of optimism in the beginning of 2009 with the inauguration of a new president who has also made history.

I am hoping for the best but am prepared for the worst.

Following are some my investment directions:

o long on oil and gold although at the right timing I may get out.
o put some money ( about 10% ) to buy physical gold
o shorting 20 years US Treasuries and US dollars
o Iooking for opportunity to short the market testing the tops. Have failed when S&P tops 930 today. Next target is S&P to hit 950 – could be a major top. If not, it could run up 1000 before it comes down.
o Conserve cash

My advice to people is to conserve cash, stay out of the stock market if you are not familiar with it, simplify your lifestyle, stay out of debt and enjoy your family.