Today's Market
by Dr Invest

On his hot July day, deep in the heart of Texas, there is an investor with little on his mind to worry about. Although he completely missed-out 12% gains in early 2012, he is not bitter because he also missed out on the 12% losses as well. This investor knows that the mantra of the finanical advisers is "Keep buying and buying. Stocks are cheap. Your'e gonna make a bundle. You can't time the market. If you were fortunate enough to buy in January using this ideology, you now have broken even. If you were stupid enough to buy in the first part of April, you now are smarting with at 12% loss.

To make matters worse, John Hussman is calling for market decline of 48%. If he is right, the "buy and hold investor" only has another 36% to loose. For the first time, CNBC ran an article by Roubini that highlighted the possibilities of a real recession. http://finance.yahoo.com/news/roubini-perfect-storm-unfolding-now-104907590.html  Roubini predicted in May, that four things would come together to create the perfect storm for the global community in 2013. We are well on the way toward Roubini's predictions.

Still, I'm sipping my iced tea and taking note that my investment into a BOND ETFs with 1/3 of my portfolio is slowly climbing. Today TIP and BND has gained 1.59%. If I see a 6% gain by the end of 2012, I will be delighted. An 8% gain will bring tears to my eyes. You can see, it doesn't take much to please me. The higher the gain, the HIGHER THE RISK. In a predictable market, you could see some remarkable gains...with some remarkable risks; but in an unpredictable market the risks out weight the gains. Make no mistake, there are professionals who have lost A LOT OF MONEY in this current market. That is a risk I am just unwilling to take.

We could still see a SUCKER'S BULL MARKET for three or four months, but the prevailing weakness in the market will eventually pull the market into a decline. If it is not Greece, it is Spain; if not Spain, it is Italy; if not Italy, it is Ireland; the canidates for finanical collapse are lined up to take their turns at stimulus. Combine this with financial weakness in the U.S. and China, and the wise investor needs to exercise extreme caution.

I think 10,600 on the DOW is possible, if not likely. This would be a revisit to the lows of September of 2011. The deal-breaker that could stop the drop is Bernanke. What he will do in an election year is questionable but as I have said before, he will likely stimulate the economy in the months before the presidient. This should give only a few months of an uptrend but long enough for a presidential canidate to be chosen.

For now, I'm going to limit my losses and enjoy my iced tea. If history is an indicator of things to come, the next few months ahead are going to get a lot hotter.

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