Sell or Buy that is the real question!

They have been a big discussion right now in the entire world, about the stock market, some people recommend to buy with Warren Buffet, some others recommend to take out your money if you need in the next 5 years (as Jim Cramer did) , we think that is a bad recommendation to tell the people to sell what they have, because the markets are very volatile and in this year the value of their stock has felt down to the lower levels in 10 years, we can recommend to you to take the 25% of your investments and leave the other percentage to long term investment, even if you have invested directly or if you are investing in gold or in commodities this would be a great recommendation, you will loose some money by taking that 25% but you will have the necessary cash flow to survive this crisis, the history taught us that the markets always recover and you will gain a lot of cash, this apply to your 401k plan too. Some other recommendation is to invest in Mutual Funds but in your local currency, because the exchange rate volatility could affect your budget.

A though question is say when the market is going to recover, many people are thinking in 2,3,4 or even 5 years, you should put attention to the liquidity of U.S market, this could be affected by some factors, for example, the U.S presidential elections are in few days, and the polls give as winner Barack Obama, we truly think he will be a great president, in the past week the stocks felt more than 20%, and the world economy will see how positive will be the election of Barack Obama as president of United States of America; he said in a past speech at Chester, Pennsylvania in October 28, 2008 that : “As President, I will ensure that the financial rescue plan helps stop foreclosures and protects your money instead of enriching CEOs. And I will put in place the common-sense regulations I’ve been calling for throughout this campaign so that Wall Street can never cause a crisis like this again. That’s the change we need.”

If McCain wins (with very low chances, except that the Bush government caught Osama Bin Laden) the U.S will get into a depression, because he will continue with the wrong economic policies applied by George W Bush in the past 8 years. One of his campaign proposals is to continue with the irresponsibly war on Iraq, costing US $10 billion each month.

Also we can give you a vision for your future investments when Obama is elected president (this analysis is made based in the policies to be implemented by Obama):

Gaining stocks: Alternative Energy, Construction, Car & Technology companies

Loosing stocks: OIL, Pharmaceuticals, Health Insurance companies

Nowadays the countries are more prepared to recover from crisis, just remember the “Rumble Crisis” in Russia in 1998, they recover because of the increase of the oil prices or the recover of the “Swedish Crisis” in 1990, they recover after a year, we think that in the second semester of 2009 is the right moment to return to the stock market, because in that time we could have an stabilization of the Stocks.

The WEF editor for the Global Competitiveness Report and professor of Columbia University, Xavier Sala i Martin said a very interesting think about the crisis: “You should put attention of how the economy is resisting and how is prepared to challenge the recession, a crucial think is how U.S is stronger enough for maintain the Inflation & the Unemployment level in low rates”

We have to remember to world leaders something that many people know but some apply depending of the occasion, is the recognition of the global economy, and how the U.S economy impact directly to the world economies, this affect to all Latin America, but special Colombia, because this country has U.S as their biggest commercial partner; the economies of ASIA should know the importance of the globalization and that’s the reason 42 countries meet in Beijing for treat the Global Financial recession and what measures they have to appoint, one of those measures was the creation of a Common Crisis Fund (created by China, Japan & Korea) with US $ 80 billion dollars in reserve.

So, how to solve the crisis?,

We have seen that the biggest mistake were made by the banks and the Bailout is a Reward for their greedy Behavior,

So we want to share what we consider the essential work for solve the problem, and for fortune of all us is in the Michael Moore proposal entitled “Heres is how to fix the Wall Street Mess”

“There are 1.3 million homes in foreclosure right now. That is what is at the heart of this problem. So instead of giving the money to the banks as a gift, pay down each of these mortgages by $100,000. Force the banks to renegotiate the mortgage so the homeowner can pay on its current value. To insure that this help does no go to speculators and those who have tried to make money by flipping houses, this bailout is only for people's primary residence. And in return for the $100K paydown on the existing mortgage, the government gets to share in the holding of the mortgage so that it can get some of its money back. Thus, the total initial cost of fixing the mortgage crisis at its roots (instead of with the greedy lenders) is $150 billion, not $700 billion.

And let's set the record straight. People who have defaulted on their mortgages are not "bad risks." They are our fellow Americans, and all they wanted was what we all want and most of us still get: a home to call their own. But during the Bush years, millions of them lost the decent paying jobs they had. Six million fell into poverty. Seven million lost their health insurance. And every one of them saw their real wages go down by $2,000. Those who dare to look down on these Americans who got hit with one bad break after another should be ashamed. We are a better, stronger, safer and happier society when all of our citizens can afford to live in a home that they own.”

The mistake was made when the banks aloud to increase the loans to all the people, we should remember this same attitude in the Colombian stock crisis of 2007, because of excess of debt.

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This article was wrote in collaboration with Camilo Nova, he is expecting to graduate in Computer Science Engineer from Universidad Distrital in Colombia ; Colombian investor, current CEO of Axia Core and a Free software supporter.