Today's Market
by Dr Invest


A little over 101 years ago, a ship was making its way across the Atlantic. Aboard were both the elite and the impoverished. They knew immediately when the ship struck an iceberg from the groan of the ship, as it slid past that hulk of a berg that cut deeply into its side. The initial impact wasn't really taken seriously, because this ship was virtually unsinkable. Called the RMS Titanic, there was only a little concern about the impact.

It took over two hours for the Titanic to break into and sink; some lifeboats were only partially loaded because the crew believed that the Titanic would remain afloat. The reason I even mention this story is because our economy has struck an iceberg of debt and the government's refusal to reduce their spending. The economic ship is sinking, while investors rearrange the chairs on the deck. 85 billion each month is spent on monetary easing, pushing the stock market higher. It is like having the band play louder to drown out the cries of those drowning in the icy waters of continued economic decline. Recently the Secretary of Health has asked corporations to make contributions to help implement Obamacare. This one entitlement will place such a drain on the economy, both the wealthy and the poor will suffer from its economic burden. The ship is filling with water while politicians discuss the importance of government initiating even more reforms, rules, and regulations for small businesses to follow. My general feeling is that this will not end well.

"The Street" ran an article: "Stocks Slip on Concerns Markets are Overpriced". Another article was titled: "More Poor in the U.S. Suburbs". Here is a paragraph from that article: "Once considered the definition of the middle-class American dream, the suburbs are now home to a larger, faster-growing poor population than urban areas, according to a new analysis. During the 2000s, the number of poor living in U.S. suburbs grew by 64 percent — more than twice the 29 percent growth rate in cities.

Overall, 16.4 million poor people consider suburbia home, compared with 13.4 million in big cities and 7.3 million in rural areas, researchers for the Brookings Institution said in a book published Monday. The shifting poverty demographic can be seen in Chicago's suburbs, where the number of poor increased by 99 percent in the last decade — from 363,966 to 724,233, said Elizabeth Kneebone, co-author of "Confronting Suburban Poverty in America."

The economic ship is sinking while the Captain and his Lieutenants argue over the state of the ship. The passengers are only now realizing that the water is rising and it is only a matter of time before the boat begins to sink. Hopeful voices remind the passengers not to panic. So while investors slip back into their lounge chairs for another cigar and drink, the economic ship continues to fill with water.  Every thing said about the economic situation being only a small problem, will soon be revealed as a big problem. Both the wealthy and the poor will rush for the boats, abandoning their claims for the gold, clothing, or baggage remaining in their rooms. In panic, their only goal will be to abandon ship. 

I am not trying to be particularly negative here, I just want you to know that now is not as favorable time to position yourself in stocks as it might seem. The ship will lift itself from the water in only a short time, and then plunge into the deep, taking with it every thing you possess. If you can, move to the lifeboat now. If possible put on your life preserver. If you are invested in stocks, put a stop-sell on your stocks and be ready to get out quickly. The market has risen too sharply without a pull back. There may be another few months of gains before the boat sinks, but the economic boat is now filling with water. 

Someone asked, "Where should I be invested?" I would rather be in Certificates of Deposit at the present time, than to be invested in stocks. Let the market decline 30 to 40% and then buy stocks.  The market is close to cycling into a downtrend, so wait. Waiting is the opposite of what the "herd" is doing, but your waiting will payoff with a much larger return. 

Please go back to the early posts in this blog and study each one or go to the sidebar and read the investment advice. Not only do we want to recognize MARKET MOMENTUM, we also want to recognize MARKET CYCLES. The market momentum is very strong right now, but the market cycle is at its highest point and will soon move to a downtrend. You don't want to be in the market when the market moves into a downtrend. 

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