From the Archives: "Not the Bottom"

This was something I meant to post on July 8, 2008, called "Not the Bottom", but I never clicked publish.

We may or may not be in for a short term rally, but this is not the end of the real estate crash or the bottom for the stock market or financial equities.
From the WSJ today:

Additionally, James Lockhart, head of the Office of Federal Housing Enterprise Oversight, said that Fannie Mae and Freddie Mac are unlikely be forced to raise more capital due to an impending change in accounting rules.
J.P. Morgan Chase Chairman and CEO James Dimon, who was speaking at the same event as Mr. Bernanke, also helped push financial stocks higher by saying that credit-market losses are likely to ease and that while serious issues remain "the future is very, very bright." Shares of J.P. Morgan surged 5.1%.

You can see in this Bespoke Investment Group report that today's rally was mostly short covering.

And it definitely wasn't the bottom! The S&P 500 was at about 1260 - exactly where it is today, over two years later.

By the second half of 2008, the figures mentioned in the WSJ article clearly must have known what a disaster their balance sheets were.