There were some who questioned my judgment when I told anyone who would listen to buy banking and insurance stocks back in April.  Those who took my advice, doubled, and in some cases, quadrupled their money.  Last week, I advised friends and family to sell their stocks.  And, again, my judgment was questioned.  Today, some of those very same people are kicking themselves.  Not me.

While those who failed to heed my advice lost money, I shorted the market and made money- a significant amount of money.  Now, I don’t portend to know what the market will do everyday, but what I do know and understand are how the markets work.  I watch, read, listen, digest, and use commonsense and instincts to make solid investment decisions.

I said last week that the market was over-bought and that there was no solid economic news to support the steep rise in stock prices.  I recommended that holders of securities liquidate their positions and wait for a 5-10% pull back in the market before getting back in.  In just the past two days, the Dow has lost more than 2.5%.  I’m anticipating a continuation of this decline as the August jobless rate is released on Friday.

Let’s be honest, the economy is not getting better.  In fact, it’s getting worse.  It will continue to deteriorate  as long as our government continues to have deficits at more than 10% the Gross Domestic Product and as long as they continue to increase taxes to fund discretionary programs.  Time and again, it’s been proven that across the board tax cuts provide a stimulus to the economy and helps to create jobs.  Unfortunately, we have leaders who are unwilling or too obstinate to admit that government spending hinders economic growth.

Unless this President and this Congress take a step back and curtail their runaway spending and provide tax breaks to businesses and taxpayers, I am predicting a double-dip recession that will take 3 more years to recover from.

For those of you who heeded my recommendation to sell, I’m happy for you.  And to those who suggested I was wrong. I told you so.

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