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Living between two fears

This past Friday was a pretty nice little rally.

True, the volume of buying wasn’t that great, given the fact that it was at the end of the holidays. But the Dow’s jump of 258 points on Friday was nothing to sneeze at given the mostly flat, go-nowhere activity we’ve seen in recent weeks.

And that scares me.

It scares me because I know that the market’s been decimated more than 40 percent, and a decent surge like that after all the flatness we’ve seen could signal that people are ready to step back in again.

It scares me because I know that the money I have locked up in a CD that would have been allocated for stocks will make nothing even close to what it would in a decent bull rally off a market bottom, even if it did turn out to be one of those short-term cyclical rallies.

For instance, when I wrote about Dryships (DRYS) in my column last Monday, it was at about $9 a share. It closed on Friday at $12.49. That would have been money already made, and probably more to come if the bullish sentiment holds.

But that’s a big “if,” and plenty of other stocks that I actually owned are at or below the point where I sold them before getting completely out of the market several weeks ago.

And that also scares me.

People have been heralding the bottom for months now. They did it when the Dow was at 11,000. They did it when the Dow fell below 10,000. They did it — well, you get the idea.

True, no one — not even the best of them — can accurately predict a precise market bottom.

But there’s no reason to ride stocks down another 40 percent or 50 percent as one local economist predicts.

Rodney Johnson, president of H.S. Dent investments in Tampa, told the St. Petersburg Times that he thinks the Dow will peak between 9,600 and 10,000 during 2009, but will fall again, leading to a true and deep bottom in 2012.

How low will it go?

To between 3,800 and 4,500, Johnson predicts.

Yikes.

Of course, Johnson was in the minority of the other investment experts the Times interviewed.

Their predictions were more optimistic, yet still guarded in terms of how much of a climb we might expect to see this year.

Will I enter the stock market again this year?

Probably.

Will I be faked out by what appears to be a decent rally and lose money?

I’d put those chances at about 50-50.

Am I enjoying some relaxation and better sleep knowing that my money is in an old-fashioned CD instead of worrying about what bit of misguided news or some analyst’s comment will do to the share price of a stock I own?

Absolutely.

But if I see another couple of days like Friday this week, I might start losing sleep for a different reason.

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