So my brother came by last night for a visit and we started talking about the stock market.  He and a buddy of his want to massively short the Dow Jones Index for 3rd or 4th quarter of 2009.  He asked my thoughts on the strategy and I told him to be careful.

I actually believe the market will fall as he predicts.  The market, in my opinion, will crash in May or August/September time frames but the problem with shorting or buying large amount of puts is that there is a high likelihood  that if the market begins to crash, the government will step in and halt trading.

I can already hear Obama’s words, “These are unprecedented times and the markets aren’t functioning properly……so I’ve ordered the suspension of trading on the major US exchanges for a period of …. after which we’ll reopen trading.”

If you’re in a massive short or put position, the closure of the markets will likely put you in a bad spot.   This is one of the reasons that I’ve effectively abandoned the stock market.  I still hold positions but I suspended 401k investments, further cash flows into the market and have been holding on to cash because of frequent, unpredictable government meddling in the free market.