Bear Stearns collapse a bear market bottom signal?

A recession is defined as two consecutive negative economic growth quarters, and since there hasn't yet been one quarter full negative economic growth quarter it remains too early to tell if we are officially in a recession or not... But then again, who cares?

The stock market is way down on the year and most investors (myself included) have taken heavy losses. Recession or not, we are in the midst of a bear market and at the end of the day isn't that what we care about as investors? I am more than a little sick and tired of the endless debate in the press (especially on CNBC), over whether we are in a recession or not. Here is a suggestion... lets discuss the market, whats working in the current bear market, what isn't, and when do we get back in?

Many market annalists are pointing to the Bear Stearns collapse (and subsequent Fed sponsored JPMorgan bailout) as a bottom signal and I tend to agree. Over the last week the market has shown new signs of life, fueled I believe, by a feeling of relative security. You see the Fed has now made it clear that it will act to protect individual investors (i.e. Bear account holders), and now that there is some blood on the ground on Wall Street, they have also opened the discount window to a wider array of financial institutions on order to prevent more bloodshed.

New York magazine has an interesting article on the Bear Stearns collapse (complete with a handy Bear Stearns collapse timeline) here.

So, is it time to get back in to the market? I think you can slowly increase you position in equities that have been over sold. This may not be the absolute bottom but I believe it is a sign the we are close and as a result it is time to start looking for value in the bear market rubble. Happy hunting!

4 Stock Recommendations for a BRUTAL market

When you find yourself in an absolutely brutal market like the one we are experiencing now you can either pack-it-in and find a mattress to stuff what is left of your money under, or find a strategy that uses the down tape to your advantage.

2 strategies (and 4 stock recommendations) that that may turn this down market to your advantage:

Strategy #1 - Get defensive:
Coke (KO) is defensive in a down market AND it a carries a nice 2.1% dividend. Additionally KO 's international exposure set it up to benefit from the weak US dollar... Besides who could argue with owning a Warren Buffett pick.

Speaking of Warren Buffett, Berkshire Hathaway (BRK-A / BRK-B) is a great defensive stock... In fact Berkshire Hathaway has a whole portfolio of defensive stocks run by a financial genius. Additionally, as Jeff Macke said on CNBC's Fast Money "Buy the vulture, not the meat" and Berkshire Hathaway is the ultimate vulture in that Warren Buffett will pick through the down stocks to buy some of the best companies deep discounts.

Strategy #2 - Buy the fire sale:
Wells Fargo (WFC) is cheap down here at 26 and change with a PE of 9.89 and a 4.7% dividend. They are one of the few good banks left in this "sub prime slime" environment, and long-term stand to benefit from the mis-fortune of the other banks. Oh, and did I mention this is also a Warren Buffett pick?

And finally Intel (INTC) is WAY too cheap down here at 19 and change. Intel is another stock with great international exposure that can benefit from the weak dollar and the recent stock price drop has pushed the dividend up to 2.3%... And lets face it, an industry leader like Intel shouldn't fall this hard when their competition has fallen down like AMD has.