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Plenty of themes out there, so I'll just start going through them in no particular order. For context, check out The Post-Crash Picture, where I laid out some short and long term concerns along with some trading strategies. In a nutshell, I think we're in a bear market rally, but I think eventually we go lower as deflation and a global slowdown sets in. Just a best guess, and as always I remain flexible. Big picture thoughts, for me, are just an atlas (not a GPS system). It helps to look at the atlas before I start or when I'm lost, but while driving (trading), I'm looking out the window with my hands on the wheel.
STILL LOOKING FOR A RALLY
The action continues to be volatile, but many professionals I follow are cautiously looking for a rally off the October 10 low. I don't want to speak for others, but I encourage you to discover for yourself the views of Todd Harrison at Minyanville, Jeff Saut at Raymond James, Carter Worth at Oppenheimer, and last but not least, Warren Buffett. They all have different approaches and time horizons, but what they have in common is a belief that it's not a bad time to buy stocks (with differing caveats for each of them).
The upside of this is that there are smart folks looking to add to positions going forward. Any decent rally could spur buying from slower moving folks like mutual funds, resulting in a "meltup" of sorts. The downside is that the "smart money" on the street is also flexible money, and if the market breaks the lows, these guys will get out and live to play another day. That would result in another "meltdown".
As usual, I'm somewhere in between. I have long, medium, and short term accounts. The long term account is very high in cash because I think deflation / recession lows are not yet in. The medium term account holds some core positions and trading positions that I'm adding to at decent prices (but I'll lighten up if we see the meltdown). The short term account is reserved for quick trades only, and enters most nights at 100% cash.
BE SKEPTICAL
If there's one thing that the 2008 stock market should teach us, it's to be skeptical. I could pull out an example a day for the next year, but today I'll walk down memory lane to the dry bulk shippers. In the fall of 2007, I remember reading the transcript of an analyst forum, and every analyst was bullish on the sector. They had believable arguments and declared that it was simple supply and demand--not enough ships to do the job and shipping rates at all-time highs with no end in sight. These comments, it turns out, came near the absolute top of the stock prices. Take a look at Dryships (DRYS) (click for chart).
What is the lesson here? The lesson has to be skepticism. I'm not going to say these analysts didn't know what they were doing--I'm sure they are smart professionals who know more about the shipping industry than I ever will. But when it comes to making money in stocks, we certainly need to take everything with a grain of salt and respect price action in order to protect our money. No matter how good the news sounds, it makes sense to ask the question, "At what point will I sell?"
Of course I'm not saying that one should panic at the first sign of a drop, but there is a balance between confidence and skepticism that must be struck to make sound investment decisions. This year, the skeptical have had the upperhand, and those who have panicked early (like back in January) have actually saved money.
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