Today's Market
by Dr Invest


You might wonder if I am on vacation... and in some way, I am. Psychologically, I am disconnected from buying into the market right now.  In spite of all the "hype", the bull is drowning.

Here are some of the headlines on Yahoo Business today: "An Improving Economy Means Republicans Need a 'Plan B' to Beat Obama", "Goldman:Best Time in a Generation to Buy Stocks, Sell Bonds", "Home sales show strength, prices rise".  Companies with a "vested interest" in your money are applying pressure to MAKE YOU PUT YOUR MONEY INTO THE MARKET. After all, if the headline is correct: "Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds", then all of us need to empty our bank accounts and buy up those stocks while they are cheap.

Here is a more appropriate headline for today's market: "When Wall Street Is Bullish, Investors head for the Exits".  The theme goes something like this: All of Wall Street's wildly bullish calls on stocks may be having just the opposite effect, driving wary mom-and-pop investors out of the market despite the long-standing rally. After all, they've been down this road before: One big-name analyst after another advocates a buy, buy and buy some more strategy, only to see a bubble burst that ends up trapping late-to-the-game individual investors.

In just the last week alone investors pulled another $126 million out of stock-based mutual funds and shoveled $10.7 billion into bond mutual funds, according to the Investment Company Institute.

The total outflow from stock funds was comparatively small to recent weeks, but the move is significant in that U.S-based stock funds, despite a stunning gain of more than 30 percent off the October lows, lost nearly $1.4 billion.

"There's a feeling that another shoe is going to drop somewhere, and they don't want to be caught in a situation where they can't get out," says Quincy Krosby, chief market strategist at Prudential Annuities in Newark, N.J. "What they don't want to get involved in is some trap that is being set by hedge funds or asset managers to get in so (the managers) can get out."

http://finance.yahoo.com/news/wall-streets-bullish-investors-head-195422829.html

Wall Street is wondering how, in spite of their barrage of their media misinformation that the time for investment has never been brighter, the little investor could possibly STAY OUT OF THE MARKET.

How could the "little investor" possibly think that the STOCKGAME was RIGGED. After all, they have all their investments hedged and sophisticated algorythms to tell them when to run. As the "little investor" you only have your wisdom to keep you from losing 1/3 of your portfolio.

ADVICE FROM JOHN HUSSMAN

Go to Hussman Funds and review their research for March 19th, 2012. Read all of it carefully. Yeah, a bit boring, but you need to be wise and understand all the free market advice from MSN or Yahoo is provided by people who want to get into your bank account and pillage your money.

Dr Hussman refers to "BOLLINGER BANDS". Go read up on the Bollinger Indicator so you can understand what the indicator is showing on a graph. In short, the upper band is showing that most stocks are OVERSOLD. This means that you are PAYING TOO MUCH FOR A STOCK.

This always indicates a radical downturn in the near future. Dr Hussman explains that some of his clients ask, "Well, why can't you position me so my portfolio can take advantage of continued upward climb of the market?" Dr Hussman rightly points out that one cannot predict when the downturn could take place. For example, If I bought the DOW JONES index on Monday, today it would have retreated around 1%. I don't really know if the market will continue downward... and the likelihood of the market moving downward from an all-time-high is greater than the market continuing upward. Are you getting it yet?

Why attempt to risk a large percentage of your portfolio in the market when it is most likely to turn downward? This is just good common sense. My take is that if we see a significant downturn before the election, you could see 6% to 12% gain in the fall. You don't need to make any more from your portfolio than that. "Pigs get fat, hogs get slaughtered."  Don't take a chance for a loss when the game in not in your favor. If "little investors" will keep bidding up the price, and some will, the professional traders will escape with the money and the retail traders (that is you!) will not find it funny.

For your investment's sake, go to Hussman Funds and read the Weekly Market Comment. http://hussmanfunds.net/wmc/wmc120319.htm

IF I WERE YOU

If I were you, I wouldn't take a chance at investing into the market at this time. Yes, I know, APPLE, APPLE, APPLE; but a market downturn doesn't care how well Apple has done or whether they are paying a dividend. If the market turns downward, so will the Apple stock.

The market follows CYCLES.  We are at the top of the cycle at this moment. The market has remained flat for the past 11 years, largely due to debt. It doesn't seem to me that we are going to escape this FLAT market and now that the high has been hit, we will see the market cycling downward, to hit a new bottom.

The S&P 500 Index shows us the sideways motion of the market. Check out the graph below:

For the past 11 years, your portfolio has gained little. A "buy and hold" method was quite lucrative from 1975 to 2000, but after 2000, investors have lost as much as they have gained. Even if the market once again hits the top redline, it is not worth the gut wrenching experience of not knowing when your entire portfolio may fall into risk.

As I said in January, stay out of the market. There are better days ahead with lessor risks.

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