Today's Market
by Dr Invest

What a three-ring circus. In one ring are pundunts explaining the importance of taking advantage of this buying opportunity. In another ring are traders and brokers with rivlets of sweat streaming down their faces, who are focused on liquidating their stock positions. In yet another ring are individual investors with one holding a sign that says, "buy gold", another holding a sign that says, "sell everything", another holding a sign that says, "buy bonds".

Though entertaining, one could debate whether anyone has made any real money from the circus. Those recommending gold, have and investment that is down 19% from the high in August. Those recommending stocks have lost over 50% of their gains from the start of the year. In that ring, advisers are still recommending that investors hold their stock positions eventhough their positions are accelerating downward.

The above chart provides some typical downturns in the market. I have not included the dramatic fall of the market in 2009 because of the enormity of the financial collapse at that time. Also, I did not include compounding in a series of market downturns. I am simply using the typical downturn, noting the depth of a typical downturn and the length of a typcial downturn.

Though no one can adequately determine, project, or analyze where the market is truly going, there are some interesting patterns. No downturn is identical, but many of the illustrated downturns are remarkably moving at the same depth and length. This is only interesting because it appears that we are on-track to revisit the lows reached in August of 2011.

This downturn may not be STRAIGHT DOWN and could include several rebounds before continuing toward the lows of August of 2011. Should the market take several stairsteps down, we would arrive to the month of August. It seems that we are repeating the 2011 downtrend. Today the FED promised that they were watching the market downturn and would implement further easing, when necessary to support continued growth in the market.

It would seem that the market voted with their feet today, regardless the promises by the FED to look into further easing. Remember, continued government intervention into the markets change all formulas, projections, and rules. How you lose 2 Billion Dollars? You let the FED implement an artifical market!

Marty Feldstein, economic adviser to Ronald Regan, and Harvard Professor gives us his wise opinon today. This is worth your listen.
http://finance.yahoo.com/blogs/daily-ticker/marty-feldstein-more-air-going-come-stock-market-114307713.html


 ECRI's Lakshman Achuthan gives detailed information on the downturn. Please notice the arrogant protagonist. It is typical of the attitude of many young economists who believe you can control the market.
http://online.wsj.com/video/why-us-economy-is-heading-back-into-recession/243FCFBE-0A8D-4168-9EA2-182E5850EC1B.html



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