Today's Market
by Dr Invest

Yes, I understand your concerns. The market keeps climbing... and climbing.... and climbing. Think of all the money you could be making. If you are presently in the market and enjoying the climb, don't sell. Do determine how much you are willing to lose should the market turn downward, put a STOP-SELL on your investments.

The VELOCITY in which the market rises, equals the VELOCITY in which the market falls. Even a healthy market cannot sustain growth forever, at some point in time, the market must collapse. So we have wealth creation and wealth destruction. Wealth Creation comes from the perceived value in the market by its participants, likewise; Wealth Destruction comes from the perceived loss of value in the market by its participants. 

Listen to the news media as they paint a happy face on the recovery of the market. The amateurs rush in to take the profits, but the institutional investors remain cautious. The amateurs push the market higher and higher. Other amateurs get excited with the reports of easily gotten gains and buy into the market, pushing the market even higher. Even though stocks are overvalued, they continue to climb higher. This is a recipe for disaster, the market will collapse at some point. This collapse might come from a change in market sentiment, or from political winds, or from a world conflict, or from some economic failure whether domestic or international. But mark my words, as quickly as the market has risen, it will fall.

Hussman Funds Report

John Hussman reported:

As of last week, the stock market remained characterized by an overvalued, overbought, overbullish, rising-yields syndrome, coupled with an "exhaustion" syndrome that has historically been followed by declines on the order of -25% over the ensuing 6-month period. Our return/risk estimates remain "hard negative" here. http://hussmanfunds.com/wmc/wmc120213.htm

The problem here is that, in spite of the glowing media reports of a growing economy, we have a weak economy. Bernanke has affirmed that our economy will likely grow only 2% in 2012. The draq of Europe is going to continue. This past Thursday, the DOW rose upon the reports that Greece had agreed upon a deal to curb a default, yet the Eurotribe is uncertain that they want to give Greece the money.

What we see as the rapid rise in the value of stocks, only indicates the coming collapse of the market in the days ahead. For me, I am not a true believer in the perceived recovery, and believe that a market decline is imminent. If what John Hussman has predicted is true, the 5% gain from January and February may result in a 25% loss later this year. Simply said, you are putting your money at risk to gain 5%, when you could lose 25%.  

see:  http://www.johnmauldin.com/images/uploads/pdf/mwo021312.pdf

I understand that as we move into the political season this fall, a good economic show will needed to prove the veracity of the candidates. I am in no hurry to lose money and know that the most opportune time will be this fall. Wait!

(note: the above information is for entertainment purposes only and not to be used in anyway as financial advice.)