Today's Market
by Dr Invest
I am always amazed at how greed moves the market. 2012 will be known that the stock market that was moved by the promise of another stimulus. Think for a moment, when did Bernanke stimulate the market in 2012. Yes, there were some ongoing bond purchases, but when did Bernanke initiate another stimulus package?
Investors were so devoted to the idea of another stimulus package that they continued bidding the market higher and higher until the harsh realities struck in May, even then the realities were short-lived as the ECB (European Central Bank) made their own promise of stimulus. When Draghi made the promise of unlimited bond purchases to keep the Eurotribe together, he forgot that France was on the verge of recession, that Spain was already in recession, that Greece had no intention of meeting the deadline to implement debt reduction and would ask for a one and a half year extension before meeting the deadline, and Oh, Italy is still swimming in its own debt debacle. Most importantly, Draghi forgot that ONLY THE GERMANS has the assets to pay for such a promise. Yesterday, the Germans reminded Greece that they MUST meet the deadline or they would not receive the remainder of the stimulus promised by the ECB.
The harsh reality is THE BOAT IS SINKING and Germany will not pay for all the deadbeat countries that do not try to rein-in their debt.
The economy has been slowing for months. There is the semblance of a rebounding economy because major corporations are sitting on cash and have reduced expenses and employees. But these companies are not hiring new employees, they are not expanding, and they are keeping their cash away from stocks. Institutional investors have been moving out of stocks into bond investments, while individual investors/stock traders have been buying low and selling high.
All of the fundamentals are pointing toward a decline in the stock market. With the stock market at a high for 2012, it is unlikely that Bernanke will quickly stimulate the market. In fact, the market needs a decline. Our bond investment in TIP and BND has been oversold and stocks appear to be overbought. This means we are ready for a regression to mean....a reversal of stock prices.
This is why I recommended NOT SELLING your TIP and BND investment at this time. Though I am showing a .33% gain for my investment at this time, I think that we will see TIP and BND return above the 2% gain noted in mid July. We should see a 6 to 8% return on TIP and BND by the end of the year, but nothing has been NORMAL about 2012. Still, a 2% gain is better than you can get from a Certificate of Deposit.
At the end of October, we will re-visit STOCK BUYING OPPORTUNITIES. I expect that the in-flow of money from political campains will infuse the economy with some new energy. Reuters suggested the number to be 6 Billion dollars to be spent on political campaigns in 2012. You can't put that much money into the economy without promoting some economic growth.
I would predict a decline in the stock market, losing 12 to 16% and then a rebound over the holiday seasons. (Halloween, Thanksgiving, Christmas, and New Years) Again, who can really predict the course of the market when the FED keeps changing the rules. In May, many investors suffered a 12% loss, getting out of the market from discouragement. In September and October, we may see another 12% decline and billions lost by individual investors. Of course, the traders will love the market swings, selling and taking the money offered up stupidly by individual investors.
The past few days have not swung up nor down. I would not be suprised by the market moving even higher, but I think the energy is quickly coming out of the market and the market is being setup for a decline.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
by Dr Invest
I am always amazed at how greed moves the market. 2012 will be known that the stock market that was moved by the promise of another stimulus. Think for a moment, when did Bernanke stimulate the market in 2012. Yes, there were some ongoing bond purchases, but when did Bernanke initiate another stimulus package? Investors were so devoted to the idea of another stimulus package that they continued bidding the market higher and higher until the harsh realities struck in May, even then the realities were short-lived as the ECB (European Central Bank) made their own promise of stimulus. When Draghi made the promise of unlimited bond purchases to keep the Eurotribe together, he forgot that France was on the verge of recession, that Spain was already in recession, that Greece had no intention of meeting the deadline to implement debt reduction and would ask for a one and a half year extension before meeting the deadline, and Oh, Italy is still swimming in its own debt debacle. Most importantly, Draghi forgot that ONLY THE GERMANS has the assets to pay for such a promise. Yesterday, the Germans reminded Greece that they MUST meet the deadline or they would not receive the remainder of the stimulus promised by the ECB.
The harsh reality is THE BOAT IS SINKING and Germany will not pay for all the deadbeat countries that do not try to rein-in their debt.
The economy has been slowing for months. There is the semblance of a rebounding economy because major corporations are sitting on cash and have reduced expenses and employees. But these companies are not hiring new employees, they are not expanding, and they are keeping their cash away from stocks. Institutional investors have been moving out of stocks into bond investments, while individual investors/stock traders have been buying low and selling high.
All of the fundamentals are pointing toward a decline in the stock market. With the stock market at a high for 2012, it is unlikely that Bernanke will quickly stimulate the market. In fact, the market needs a decline. Our bond investment in TIP and BND has been oversold and stocks appear to be overbought. This means we are ready for a regression to mean....a reversal of stock prices.
This is why I recommended NOT SELLING your TIP and BND investment at this time. Though I am showing a .33% gain for my investment at this time, I think that we will see TIP and BND return above the 2% gain noted in mid July. We should see a 6 to 8% return on TIP and BND by the end of the year, but nothing has been NORMAL about 2012. Still, a 2% gain is better than you can get from a Certificate of Deposit.
At the end of October, we will re-visit STOCK BUYING OPPORTUNITIES. I expect that the in-flow of money from political campains will infuse the economy with some new energy. Reuters suggested the number to be 6 Billion dollars to be spent on political campaigns in 2012. You can't put that much money into the economy without promoting some economic growth.
I would predict a decline in the stock market, losing 12 to 16% and then a rebound over the holiday seasons. (Halloween, Thanksgiving, Christmas, and New Years) Again, who can really predict the course of the market when the FED keeps changing the rules. In May, many investors suffered a 12% loss, getting out of the market from discouragement. In September and October, we may see another 12% decline and billions lost by individual investors. Of course, the traders will love the market swings, selling and taking the money offered up stupidly by individual investors.
The past few days have not swung up nor down. I would not be suprised by the market moving even higher, but I think the energy is quickly coming out of the market and the market is being setup for a decline.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
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