Financial Funds Slide 25% This Week

With the S&P 500 recording its worst week ever, people opened their third-quarter brokerage-account statements and capitulated to panic-selling across virtually every sector other than precious metals.

For the week ending Thursday, Oct. 9, the S&P 500 crashed 18.3%, the Dow Jones Industrials slid 18.1% and the Nasdaq-100 dove 14.5%. Financial stocks did worse, with the KBW Bank Index of 24 money-center banks careening 30.4% in search of a bottom. The average financial sector fund we track lost 25.4% of its value.

One impediment to finding the bottom is the lingering question of, "When will the recession begin?" As long as that guillotine is hanging over our heads, the market outlook remains bearish. Once the official economic cycle dating committee of the National Bureau of Economic Research admits our economic problem began back in January of this year, we can work through the pain and look ahead to better times. ...