Today's Market
by Dr Invest

There's really no new news today. (Read yesterday's blog.) The scenario is really the same as expected. Traders thought a QE from Bernanke was a certainty, but Bernanke made it clear that the Fed would take action if needed and that no action as eminent.

Just as I had said yesterday, the worst is yet to come and when we slide to last years lows, Bernanke will rush in to bolster the market just before the elections. Now is not the time Bernanke is going to stimulate the economy.

The traders were sorely disappointed that the Federal Government was not going to keep the gains coming. http://finance.yahoo.com/news/stock-index-futures-signal-pause-093302524.html Listen to the attitude here:

"Bernanke threw traders a curveball. After his vice chair made it seem like QE was a foregone conclusion, he really messed people up. We tried to shake that off, but there was a lack of follow-through and we lost momentum," said Phil Flynn, senior market analyst with PFG Best in Chicago."

Oh, really? And this guy is managing money for investors? The gains in the market over the past two days have been because financial managers have been betting that Bernanke was going to stimulate the economy. Now that no immediate stimulation is evident, what will happen to the market.

You can expect the market to remain flat, if not to begin a slow decline. OK, it may take two or three months, but in the end we will revisit the lows of 2011. Weakness is still in the market and there is no evidence that Europe is any closer to resolving their own economic disaster. China's economy is slowing and the U.S. economy is also showing signs of a slow-down.

About Gold

I have been trying to get excited about gold. Read my previous blogs on the subject at the first part of June. As explained to my Gold-Bug friends, gold is an investment and deserves your money ONLY, if Gold is rising in price and is in a uptrend. Gold, is no different than a STOCK. If gold is selling-off, get out of gold just as I did in February of this year. If gold shows a consistent rise in price, buy!

The problem is this, Gold has been slowly sliding downward in price. Today it fell $31.20 according to KITCO, a little over 2%. The danger here is gold falling below $1550. There has been a sideways movement, but nothing is really definative either up or down.



As I've said before, I'm not holding gold at this time. I would steer clear of gold for the present, unless it moves into a clear uptrend. For the last few days, gold has been moving lower, this isn't good news. If you bought gold when it was cheap, good for you. I'm glad you gained 20%, 30%, or 100%, but why take a 20% haircut to hold gold when you can sell at a profit and reinvest when gold continues its climb upward.



You will not like what I have to say next, but my investment in to the BOND ETF called TIP, has returned 4.3% YTD. Gold has returned 1.3% YTD (year to date). Please, in no way am I claiming that a BOND fund will out perform GOLD. What I am claiming is that your investment needs to be based on performance, not what is bright and shiney. If gold doesn't perform, dump it! I'm not in love with gold, oil, or stocks, I'm in love with a portfolio that is gaining.

As senseless as it is to attempt a "Buy and Hold" investment method over the past 12 years, it is equally as senseless to use a "Gold Hold" investment when gold is declining or failing to perform.

By April of 2011, I had gained 12% from holding oil stocks. (APA and HK) I sold the stocks with the crisis in Egypt and then repurchased HK. HK (Petrohawk) was purchased by Billington with a gain of 48% to my stock price. In November, I purchased DLTR, CATM, FDO, and PETM with gains of another 12%. There was no fancy trading here, just simple straight forward buys and sells. I promise, my return was better than the rise of gold in 2011.  Hands down, a return of 20% to 30% in gold for six of the ten years reported above is impressive, but those days are over.

Little matters about the returns of 2011, what matters are the decisions made this week, this month, and this year. Gold may surprise in 2012, but at this moment in time, I am underwhelmed.

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