CNBC never made average Joe rich in good times so why would a person listen to their crummy commentary? The party in the stock market ended in 2000. By the end of 2008 all that happened was that the people still dancing when the music had already been turned off finally got the clue that the party was over. Financial advice is for suckers. Should I also pay for advice about how to place my bets at the casino? The stock market operates as it always has throughout its history, as a kind of pyramid scheme, because in order to profit you need fresh buyers to pay higher prices than you paid. Without those buyers (whether suckers or simply the less initiated) there is no upward momentum and we have a return to lower valuations.The S&P 500 cash index had a breakdown below the November 2008 lows on 2/27/09.
Anyone screaming that now is the time to invest because a rally in stocks is on the way leaves out some logical considerations, a rally will not significantly alter your net worth, it is always better to cap a loss than it is to expose your capital to a significant decline for a small return or short-term boost, and during the week of October 6th through October 10th, the market dropped 18%
so why should I listen to someone that couldnt see the downside risk then and cant see the downside risk now?There are plenty of insightful folks that can make a profit in good times and in relative turmoil
and they arent getting their advice from the financial press. They do their own thinking and their performance speaks for itself. When you think about it some of these guys make more than the media outlets that report on the market and parade analysts before the viewers
and these guys certainly make money rather than talking about making money.Currency fluctuations:Since last summer, the dollar has strengthened against most major currencies. Heres an example with the Euro on a weekly chart (using the Euro/dollar cross a downward movement equals a stronger dollar):The strength of the US dollar reflects that nobody has found a better reserve to store cash. Clearly the upward momentum began prior to the new administration but Im wondering if the new president gives the international community greater hope for a more promising global outlook. McCains Country First slogan did nothing to inspire international confidence.Until global perception changes the US dollar will hold its value and as it rises it makes it easier for any US player to acquire international assets or companies.There is a definite US media approach to say that real estate is turning around which is really playing a game with how the data is measured. The economic report on housing starts reported a gain but considering that the data goes back roughly sixty years what the financial press is saying is that there is a very minor increase after comparing it to a sixty-year low
not enough to be of any concern yet the press is talking about a recovery in real estate! How foolish
nearly all of the gains in housing starts reported for February were for multifamily dwellings (apartments); so the number of single-family homes started remains at an all time low.This chart from Briefing.com shows that the touted gain in February housing starts is barely noticeable from a historical viewpoint (SAAR, seasonally adjusted annual rate, using the monthly number to project an annual number with some allowances for seasonal tendencies). Its using creative license to interpret the data as a recovery in the real estate sector. Stocks indices arent a great investment, real estate isnt great, nor have real estate stocks been boosted by the announcement, so the only answer is to come up with a creative answer of your own about where is the best place to invest, and the answer may be not to take on any new investments until conditions are overly favorable to you
timing
when most others are out of cash and cannot continue to play the game while earnings improvements are on the cusp of returning. But that might be many years away
a professional investor comes to terms with a practical approach, you cannot force anything, you can only prepare. Its not about being in a particular market a longtime that makes you wealthy; its about using your capital effectively and efficiently.
This entry was posted on Thursday, March 26th, 2009 at 19:28 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.