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Escape Financial Armageddon

By Tobin Smith

What to Look For

The markets will eventually begin to recover once the final purging is through. I can't tell you exactly when that will be, but here are a few signs to watch for:

1. Stocks will be ridiculously cheap.

2. Housing supplies will be tight.

3. The public will hate stocks.

4. The ratings of financial TV shows will be in the tank.

In other words, we'll be at a real, honest-to-goodness bottom in stocks.

But we have a long way to go before this great financial unwinding plays out. The financial credibility of the United States is severely damaged, and the financial services industry needs hundreds of billions of dollars in new equity.

Ultimately, that is going to come from a Resolution Trust Company 2.0 -- there is simply no other solution. We caused this problem, and we're going to have to solve it ourselves. The bridge to dumb money is closed.

Preserve and Protect

If you haven't protected yourself against the impending meltdown in the second half of 2008, then your entire portfolio is at risk.

And just because the market is headed for another leg down doesn't mean that you can't make money. At ChangeWave Investing, we're profiting from Wall Street's pain with several short-side exchange-traded funds (ETFs). (Join us today.)

Under these conditions, it's critical for investors to preserve capital. By the time the real estate market bottoms and the worst of the financial crisis is over, you will need the buying power to take advantage of the tremendous opportunities in the stock market.



Toby

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Tobin Smith is the founder of ChangeWave Research, the editor of ChangeWave Investing and ChangeWave MicroCap Investor and a contributing market analyst for Fox News Channel. His market commentary can be found in the ChangeWave WaveWire and he provides more specific recommendations and advice through his ChangeWave Investing service. Click here to learn more about ChangeWave Investing.