Today's Market
by Dr Invest
I have been watching TIP and BND to see if they will meet the expected gain. You will remember that both of these ETFs are part of our BOND PORTFOLIO where we have 1/3 of our total investment portfolio invested.
Since July, we have seen the stock index rise 6% with TIP and BND falling. Now, stocks are overbought and bonds oversold. Monday, our bond portfolio sat at a .33% gain, Tuesday our bond portfolio sat at .75% gain, and today we sit at a 1.08% gain. This is a far cry from the 2.18% gain we had in the bond portfolio in July but is a significant three day rebound.
Once again hopes are rising for a FED stimulus. The report from the Federal Reserve meeting reveal just how weak our economy remains and the old voices of unreason are chanting "the FED must stimulate".
Remember, 2012 is a year where the economic fundamentals have been weak but hopes for a Federal stimulus has elevated the prices for stocks no just once, but numerous times. Here we are again with a report that the FED discussed stimulating the economy, leading speculators to continue buying stocks.
Today, we learned that the Czech people are resisting the austerity program, unseating politicans who attempt to implement it. Like Greece, Italy, Spain, and France. EuroCountries are saying, we will not seriously deal with our debt, but lend us money. The German people will not continue to pay for the tab where not effort is made to resolve debt and Draghi and the European Central Bank will not be able to secure enough bonds to pay for all the debt.
Once the dominoes begin to fall, even the FED will struggle to keep our own economy from sliding further into decline. I can't say that the stock market is at the bring of a downturn, but an array of economic enemies have assembled theirselves of which any one of the enemies could put the fragile economy over the cliff. For example, a little war between Israel and Iran will surely push the economy over the cliff. Even the withdrawal of several countries from the EuroTribe would certainly push the economy over the cliff.
With the Federal Reserve changing the rules in the market, there is no "safe place". The goal of the FED is to get the money out of your bank and into the pocket of others. They are claiming that they want to put your money to work, so people will have jobs, and you will make TONS and TONS of MONEY. What the FED fails to understand is that if you flood the market with investors money, it doesn't guarantee that people will buy all these goods. Look! If you have already bought stuff with borrowed money and cannot afford another loan, you will buy nothing but the basics for life. This is so simple, debt kills future earnings while you enjoy your present purchases. You buy a $80,000 car that is to be paid off in 8 years. Typically that takes you out of purchasing a car for 8 years. So for eight years, no money is coming into the auto sector from you. In theory, if every person in the U.S. bought a car and paid it off 8 years later, for that eight years, not one car would be purchased. This kind of debt wouldn't be good for the automobile industry. Now reality is not this simplistic, but unlimited investor money would not guarantee that any sector could be profitable.
The wealthy and many institutional investors are steering clear of the Stock market because the risk is too high. They understand the above ideas, and are reluctant pu5 money into a declining market over burden by debt.
The only cure is to REDUCE DEBT. It is not easy, but until the debt is extinquished, people will not have the excess funds needed for a healthy economy.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
by Dr InvestI have been watching TIP and BND to see if they will meet the expected gain. You will remember that both of these ETFs are part of our BOND PORTFOLIO where we have 1/3 of our total investment portfolio invested.
Since July, we have seen the stock index rise 6% with TIP and BND falling. Now, stocks are overbought and bonds oversold. Monday, our bond portfolio sat at a .33% gain, Tuesday our bond portfolio sat at .75% gain, and today we sit at a 1.08% gain. This is a far cry from the 2.18% gain we had in the bond portfolio in July but is a significant three day rebound.
Once again hopes are rising for a FED stimulus. The report from the Federal Reserve meeting reveal just how weak our economy remains and the old voices of unreason are chanting "the FED must stimulate".
Remember, 2012 is a year where the economic fundamentals have been weak but hopes for a Federal stimulus has elevated the prices for stocks no just once, but numerous times. Here we are again with a report that the FED discussed stimulating the economy, leading speculators to continue buying stocks.
Today, we learned that the Czech people are resisting the austerity program, unseating politicans who attempt to implement it. Like Greece, Italy, Spain, and France. EuroCountries are saying, we will not seriously deal with our debt, but lend us money. The German people will not continue to pay for the tab where not effort is made to resolve debt and Draghi and the European Central Bank will not be able to secure enough bonds to pay for all the debt.
Once the dominoes begin to fall, even the FED will struggle to keep our own economy from sliding further into decline. I can't say that the stock market is at the bring of a downturn, but an array of economic enemies have assembled theirselves of which any one of the enemies could put the fragile economy over the cliff. For example, a little war between Israel and Iran will surely push the economy over the cliff. Even the withdrawal of several countries from the EuroTribe would certainly push the economy over the cliff.
With the Federal Reserve changing the rules in the market, there is no "safe place". The goal of the FED is to get the money out of your bank and into the pocket of others. They are claiming that they want to put your money to work, so people will have jobs, and you will make TONS and TONS of MONEY. What the FED fails to understand is that if you flood the market with investors money, it doesn't guarantee that people will buy all these goods. Look! If you have already bought stuff with borrowed money and cannot afford another loan, you will buy nothing but the basics for life. This is so simple, debt kills future earnings while you enjoy your present purchases. You buy a $80,000 car that is to be paid off in 8 years. Typically that takes you out of purchasing a car for 8 years. So for eight years, no money is coming into the auto sector from you. In theory, if every person in the U.S. bought a car and paid it off 8 years later, for that eight years, not one car would be purchased. This kind of debt wouldn't be good for the automobile industry. Now reality is not this simplistic, but unlimited investor money would not guarantee that any sector could be profitable.
The wealthy and many institutional investors are steering clear of the Stock market because the risk is too high. They understand the above ideas, and are reluctant pu5 money into a declining market over burden by debt.
The only cure is to REDUCE DEBT. It is not easy, but until the debt is extinquished, people will not have the excess funds needed for a healthy economy.
(Note: the above information is for entertainment purposes only and not to be used as investment advice.)
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