Today's Market
by Dr Invest

I wish there was something new to report, but there is little good news to report. A closer look at the housing start-ups show that most of the building was for the rental market, not new housing. Florida still has one of the highest defaults on mortgage. 1 out of every 32 home owners are defaulting on their mortgage and it is taking over 800 days to bring the owners into court to repossess the properties 

The good news is that the Federal Reserve is buying $40 billion in bonds (twist) and $40 billion in mortgages (stimulus 3) each month. Considering that a trillion dollars a year will go toward propping up the economy, it is easy to see that we will one day reap the consequences of this action. Removing all the stimulus would immediately sink the economy. The stimulus is our "life-support" and the economy could not proceed without it.

As an investor, I can't sit on my hands and watch the market's continual climb; but also, I cannot afford to take the risk of the market suddenly taking a downturn.

My total portfolio has recovered greatly. Having nearly 2.73% gains in WMT, Walmart sank around 7% after Christmas, only now nearing the original purchase price. RTH, a composite of a number of retail stores also fell into the negative and only now has risen 1.63% into positive territory. TIP has been a great performer, but has also seen negative territory. BND has been a poor performer with the Fed competing in the purchase of bonds with individual investors. I am hoping that BND will return to positive territory, where I will immediately and forcefully sell BND.  IAU, a gold trust, has fallen to a loss of 7.35% and only recently moved up to a loss of 5.21%.  The gold position is a long-term position with a window of one year to see a return.

Some of you have asked if I have some risk added investments. I would not recommend taking risks at this time but I will share with you a recent investment made at the end of December in RKUS. Ruckus Wireless is a new IPO and has some good history as a company and seems a good buy. I purchased RKUS on the 28th of December, returning 7.11% as of this date. I think that there is still some growth in this company but I would not recommend putting anymore than 10% of your portfolio into this company.

Another company I recommended was CATM. Oversold, it has begun to rebound. My suggestion was to buy CATM at the middle of December. CATM has now gained 16.34%. The immediate threat to these stocks are the decisions to be made on our DEBT CAP. The political haggling places a drag on the market and plunge the market into recession and a pull-back as much as 10%.

Rather thank blindly investing, one still needs to remain cautious, keeping stop-sells on all positions. Please go back to the SIDE BAR and look for RESEARCH AND MARKET REPORTS. Listen to me, ALL these reports are essential for your reading at this moment.

Hosington writes: The global economic environment is best characterized by an insufficiency of aggregate demand.  That is, the capacity to produce goods far exceeds the final demand for those 
products.  The root cause for this circumstance is debated, but we believe academic studies point 
directly to overconsumption relative to income in recent decades.  Borrowing, leading to overindebtedness, has funded this excess spending.  Economic systems must now repay or rationalize the debt in some manner.  Whatever the cause of the inadequacy of final demand, the result has been a deflationary environment.

This explains why an aggressive quantitative easing by the federal reserve is not moving the economy into immediate inflation and why central banks are having not better luck in moving their economies. People barely holding onto their jobs and other people without jobs can scarcely afford purchases of consumer items. The only hope of keeping profits high and world governments well funded is to keep people spending, so people without money must begin taking on debt to keep the economic cycle funded. Most Americans now have limited credit, reducing their ability to buy consumer goods; even more so in other parts of the world, the weight of debt has crushed purchasing power. The decrease of income to companies and individual provide less revenue to governments  Governments hungry for revenue, must increase taxes to pay for their own debts. As demands for goods decrease, companies have to cut prices to get more people to buy their goods. This is a deflationary condition that increases as the economy worsens.

The bottom line.... no one can predict the move of the market at this time. We will see volatility with significant rises in the market and sudden falls. Many believe we will revisit the lows of 2007. Simply go back to the sidebar and read the reports.

I suggest that you be vigilant to market movement and keep stop-sells in place. Some of these drops in the market could exceed 30 to 40%.  Your only protection is your immediate action to save your portfolio from market losses.

Note: the above information is for entertainment purposes only and not to be used in any way for investment advice.