Charles Dickens - A Tale of Two Cities |
Today's Market
by Dr Invest
I had thought some sense had returned to the market, but I was wrong! Bets on global central bank action to stimulate the economy have driven the S&P 500 up 10 percent since June 1. The headline today, "U.S. Stocks Rise Amid Speculation Fed to Act on Economy".
Those following solid principles in investing appear to be off-base and radical, while those who are speculating that the government must provide a stimulus because the future looks so bad, appear to be right in their perspectives. ALL REPORTS are showing that our economy and the world economy is slowing down, still traders are wildly buying stocks because they can only see the market continuing its climb even if only induced to do so by tax payer dollars. See: http://www.bloomberg.com/news/2012-08-10/u-s-stock-index-futures-decline-on-chinese-trade-data.html
In the face of the market telling us that all is well, we have to ask ourselves: "What am I going to do?". As I pointed out yesterday, some on wall street are excoriating the rich because they are not investing in stocks. I have to wonder, what do the rich know that I am ignorant of.
There is little to report today, excepting that our investment in TIP and BND did rise today, stopping the downward move in BOND ETFs over the past week. Eventhough our gains on TIP and BND sits around 1.41%, a little lower than the 2.14% earlier in the month, there is really no other investment opportunity at this time.
Yes, we could play stock trader, but that is what the whole market is trying to do which will result some painful losses in the weeks ahead. We typically see a market trend downward in August and September and it is not likely that Bernanke will use his stimulus bullets while the market is at a high point. I predict that the market will need to fall some 15 to 20% before Bernanke will take action.
I still think that between August 15th and September 1st, we will begin to see the market slide. I am not planning on doing any further investing until the end of October. I think that we will be smarting then from a market downturn and we will likely see a firm rebound in stocks by the 1st of November.
It would be wise to recognize that with all the hopes for a stimulus, the market could continue to rise. I don't see a continued rally really happening, but 2012 has been a year of contradictions. I will hang on to the TIP and BND position knowing that even a 4% return will beat a CD at a less than 1% return.
I will also keep STOP-SELLS on all investments and limit my risks for a loss. Keep to the plan set in May, utilizing the Ivy Portfolio method. You will see the best results by keeping to a proven investment method.
(note: the above article is for entertainment purposes only and not to be used as investment advice.)
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