Today's Market
by Dr Invest
A quick look at bloomberg.com leads one to believe that the economy has never been better. The FED is projecting a rousing and robust economic future, and the bevy of financial advisers and analysts are firmly committed to investing in a stock market that they claim is undervalued. One analyst reminded the viewers that you can never trust PE as a measurement of the value of a stock. Another analyst assured the viewers that BONDS would not move lower and would remain a great buy as deflation kept the price of oil low and no major changes in the interest rate would occur.
STAYING OUT OF THE MARKET
I asked a few friends about their view and whether now was a good time for them to invest. The unanimous response was "I'm staying out of the market for now!" This is no surprise because in
spite of stock prices moving higher and higher, participation in the market is moving lower and lower.
This chart demonstrates that there is a declining VOLUME with rising PRICES in the S&P 500. Simply said, "Fewer people are participating in the stock market even though there are rising prices". This is because people generally are not fooled by the hype and are unwilling to participate in higher risks for financial losses. Those in the market are enjoying some great returns, but will suffer tremendous losses when a down turn finally hits.
INSTITUTIONAL INVESTORS IN REAL ESTATE
Calls that unemployment is at an all-time low and that our economy is finally responding in a robust way to the brilliant actions of the FED has created the belief that things are returning to normal. Black Rock, after the collapse of the housing bubble, began to purchase distressed properties across the U.S. As the price of housing increases, Black Rock will, along with other institutional companies, begin to divest their selves of this real estate.
The problem is that their is a "NEW NORMAL". For most people, their one and only real investment has been their home; now, retiring and needing income, there is a flood of real estate coming onto the market. Individuals and institutional investors will be seeking to sell their properties. When you have too many sellers, the price always goes down.
I live in the Austin, Texas area. My tax evaluation on a property has increased by 44% over the past two years. That is a rise of 44% in the increase of property taxes as well. Currently, there just isn't enough housing in our area, even though builders continue to build as fast as they can. But as more seniors begin to sell their homes, the panic to sell will drive the prices lower for housing in our area.
The above chart shows the peak of BOOMER YEARS being from 1958 until 1962. This means the largest number of seniors will be potentially selling their homes and down sizing over the next ten years. Expectations is a deflation in the real estate market.
THE TRUTH ABOUT DEBT
One of my favorite economist is Dr Lacy Hunt in Austin, Texas. His credentials go on and on, including his time spent on the Federal Reserve board. He knows the angles, but has begun to share just a bit of his perspective. Take a moment to listen on YouTube. Click Here for Dr Lacy Hunt
The Federal Reserve and our politicians have put us into a place that is becoming harder to get out of. Continued national debt and private debt has pushed us into a Japan like scenario at least and a Greece like scenario at worst. We can boast of the strength of the dollar, but only because all the other currencies are doing so poorly. In the next ten years, the interest in our U.S. debt alone will push us near bankruptcy. Even worse, to sustain current levels of spending growth would more than saturate our capacity to pay for all the benefits. Our average GDP since 1776 has been 3.8 and over the past decade we have averaged 1.9 GDP. Even that average of 1.9 GDP has been declining over the past two years.
WHAT TO DO
We will continue to see a flat to declining economy. There is no lift-off in the economy, only a continued lift-off wish used to get investors into a declining market. As hard as it might seem to stay light in stocks, keeping a larger cash position is a better choice at this time. After a market decline, then you can consider the stock position.
Wait for the 15%, 30%, even 50% fall in the market. Then you can re-enter a stock position. Once a recession begins, expect about a year or two in the decline. Most of all, use good judgment. In an era of experimental economics by the FED there are any number of poor outcomes.
(Note: the above information is for entertainment purposes only and should not be used in anyway to make financial decisions.)
by Dr Invest
A quick look at bloomberg.com leads one to believe that the economy has never been better. The FED is projecting a rousing and robust economic future, and the bevy of financial advisers and analysts are firmly committed to investing in a stock market that they claim is undervalued. One analyst reminded the viewers that you can never trust PE as a measurement of the value of a stock. Another analyst assured the viewers that BONDS would not move lower and would remain a great buy as deflation kept the price of oil low and no major changes in the interest rate would occur.
STAYING OUT OF THE MARKET
I asked a few friends about their view and whether now was a good time for them to invest. The unanimous response was "I'm staying out of the market for now!" This is no surprise because in
spite of stock prices moving higher and higher, participation in the market is moving lower and lower.
This chart demonstrates that there is a declining VOLUME with rising PRICES in the S&P 500. Simply said, "Fewer people are participating in the stock market even though there are rising prices". This is because people generally are not fooled by the hype and are unwilling to participate in higher risks for financial losses. Those in the market are enjoying some great returns, but will suffer tremendous losses when a down turn finally hits.
INSTITUTIONAL INVESTORS IN REAL ESTATE
Calls that unemployment is at an all-time low and that our economy is finally responding in a robust way to the brilliant actions of the FED has created the belief that things are returning to normal. Black Rock, after the collapse of the housing bubble, began to purchase distressed properties across the U.S. As the price of housing increases, Black Rock will, along with other institutional companies, begin to divest their selves of this real estate.
The problem is that their is a "NEW NORMAL". For most people, their one and only real investment has been their home; now, retiring and needing income, there is a flood of real estate coming onto the market. Individuals and institutional investors will be seeking to sell their properties. When you have too many sellers, the price always goes down.
I live in the Austin, Texas area. My tax evaluation on a property has increased by 44% over the past two years. That is a rise of 44% in the increase of property taxes as well. Currently, there just isn't enough housing in our area, even though builders continue to build as fast as they can. But as more seniors begin to sell their homes, the panic to sell will drive the prices lower for housing in our area.
The above chart shows the peak of BOOMER YEARS being from 1958 until 1962. This means the largest number of seniors will be potentially selling their homes and down sizing over the next ten years. Expectations is a deflation in the real estate market.
THE TRUTH ABOUT DEBT
One of my favorite economist is Dr Lacy Hunt in Austin, Texas. His credentials go on and on, including his time spent on the Federal Reserve board. He knows the angles, but has begun to share just a bit of his perspective. Take a moment to listen on YouTube. Click Here for Dr Lacy Hunt
The Federal Reserve and our politicians have put us into a place that is becoming harder to get out of. Continued national debt and private debt has pushed us into a Japan like scenario at least and a Greece like scenario at worst. We can boast of the strength of the dollar, but only because all the other currencies are doing so poorly. In the next ten years, the interest in our U.S. debt alone will push us near bankruptcy. Even worse, to sustain current levels of spending growth would more than saturate our capacity to pay for all the benefits. Our average GDP since 1776 has been 3.8 and over the past decade we have averaged 1.9 GDP. Even that average of 1.9 GDP has been declining over the past two years.
WHAT TO DO
We will continue to see a flat to declining economy. There is no lift-off in the economy, only a continued lift-off wish used to get investors into a declining market. As hard as it might seem to stay light in stocks, keeping a larger cash position is a better choice at this time. After a market decline, then you can consider the stock position.
Wait for the 15%, 30%, even 50% fall in the market. Then you can re-enter a stock position. Once a recession begins, expect about a year or two in the decline. Most of all, use good judgment. In an era of experimental economics by the FED there are any number of poor outcomes.
(Note: the above information is for entertainment purposes only and should not be used in anyway to make financial decisions.)
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