Stocks are undergoing a major move at this time. Examine the Dow Jones Industrial Averages, then look closely at the last four months. If you are familiar with chart patterns, you know what a reverse head and shoulder formation is. If you do not, you should look it up and familiarize yourself with it. What you see is that, now, the bottom of the right shoulder is still a little higher than that of the low of the left shoulder that was made in the last half of October. If the averages do not drop below the left shoulder low and the cycle moves up and goes higher than it has been since the late November bottom, it will confirm that the next bull market has begun. Otherwise, we would have to look for a double bottom, that is for the averages to approximately equal the very bottom or the market low of the last half of November. So, why is the volume so heavy now on this right shoulder? My assessment is that there is an agreement with some of the biggest traders, hedge funds and/or other financial interests to hold the line there. They are buying the stock that the great mass of timorous investors are selling in a panic, those who are selling because being for too long sleepless with worry over the constant bad economic news. Should the market hold, the market will head up as soon as the volume lightens up. As soon as it rises above where it was before it drifted down to test the left shoulder low, it will gain momentum on the upside. The stock market recovery from this credit collapse will be dramatic. There is a lot of funds in the system because of the stimulus and we can be sure other stimulus programs will follow as needed. A lot of panicky investors and institutions have put their money in treasury notes and bonds for safety. As soon as the stock trend is up, that money will begin to flow back into stocks as well as buying up bargain priced residential real estate---not to mention gold, platinum and silver. There is every reason to believe the economy will turn around and rebound as fast as it had collapsed. This is not going to be a repeat of the 1930-1933 Great Depression. Then, Pres. Hoover was so fed up with the big financial interests who were responsible for the 1929 crash that he refused to stimulate the economy. He made them suffer for it! It will be different this time. Now, the stimulus packages have been inflating the money supply and, hence, inflating the future price level, while stock and real estate prices have plummeted. That means that both will be perceived as exceptionally cheap as soon as stock prices are seen to be in a rising trend again. If the stock market does indeed turn up from this level, the real estate market and business in general could turn around as soon as this April. Charles http://atheistic-science.com
Remember that the Japanese stock market is still down more than 70% from its all time high in 1989. Recovery is not a given.
Surely it was an over supply of money that has brought about this mess. Are you saying that the " Stimulus " another word for more money is going to solve the problem ?? I think not. There is much more shit to hit the fan yet IMHO.
I find it encouraging that there is so much pessimism. It means that, as always, that the unexpected always happens, that a quick and soon recovery is the more likely. charles http://atheistic-science.com
If wide spread pessimium did mean a reversal to good times was near, then Germany would have won WWII.
Lots of places are offering to buy old gold that you don't want anymore. That means lots of people think the dollar is going to swan dive into an empty swimming pool. Invest in guns and food.
I would interpret it as a reason to BUY gold! The public is usually wrong in the market. Actually, gold prices and gold stocks are rising now. charles http://atheistic-science.com
let it be well known you have the guns, but keep quiet about the food. (Many others in the USA have guns too.)
I don't understand the stock market at all. Latest news about the stimulus package is that support for it is slipping and time is running out to get it approved, bad news for the economy I would think. So why then is the DOW up 200+ points today? And is this guy right? Sounds plausible to me.
Invest in skills development. Learn a new trade or skill that might augment your own right now. If you are an optimist - learn some more computer/trade-welding-electrician-craft, or take some managerial headupyerass courses. If you are a pessimist learn to clean and repair firearms, how to use firearms. How to collect water/gather food/hunt. How to negotiate with potentially hostile strangers without having to resort to violence every time. Invest in real estate? What houses with all the copper missing or paying to kick the squatters off the land? People also aren't as obedient as the 1930s, in case you haven't noticed. Maybe invest in the evil shit to hedge your bets. Cigs/booze/arms makers/merc companies/prono/anything fags like.
Perhaps you have noticed the extreme pessimism here and in the news. To me, this is an excellent sign that the turn is about to happen. The market never does what everyone expects. Look at the stock markets in China, Japan, Dubai, etc. You find the same pattern. When ours really starts going up, all the others will also. This stock market bottoming out is already about 4 months long. By the time most people here think it is safe to buy stocks again, they will be so much higher that they will think they are too late and miss the recovery entirely! charles http://atheistic-science.com
Possibly, but I would still hold 10 to15% cash for buying later. The Brazilian "dow" climbed 8.8% yesterday.
I am broadly in agreement with you, Charles. Fear has created enormous possibilites for profit! I reported in another thread that I had gone back into the market in mid-November with the purchase of 50,000 UK Coal shares at 56p. On Friday, they hit 156p. As a second investment, I bought the same number of Lloyds Banking Group last month at 68p. Now 108p. That's £70,000 profit on an outlay of £62,000. (To be fair, I lost about £20,000 quitting the market earlier in 2008.) The next opportunity is going to lie in real estate. The shares of several companies are severely depressed by large borrowings set against falling property valuations. Take a look, for example, at Mapeley (MAY.L) which may well get wiped out. The art will lie in buying into a company where the shares have been scared down to nonsense levels -- just before the dawn! My researches continue . . . There will be a huge flood of money from Sovereign Wealth Funds when there is any sign of an upturn in the US and European economies -- all the stronger as they become fearful of holding currency. One thing to be wary of is pension fund liabilities. These will be increased for many industrial companies in an inflationary scenario, but this is not an issue for real estate companies because of their relatively few employees.
I certainly agree with this. If for example the dollar (or Euro) drops by 1/3 in purchasing power then real assets will have great demand as a store of value which the dollar no longer gives. This increase in demand will make these real asses appreciate more than just to keep their value. (That would boost their nominal price by the 1/3that the dollar dropped) I.e. the real asset will increase by more than 1/3 so there is a gain in real purchasing power. The only "rub" is when assets sold, a large part of the nominal gain is the 1/3 that is due to inflation. - You will pay capital gain tax on that "false profit" also.
Strange how we all need to experience the market for years in order to fit ourselves to it. For example, I find I must never tell anyone what stocks I own. I find that once I do, then I am more affected by what the other person(s) think of me and my astuteness (status) then what it's moves do to my capital! We are hostage to our emotions, but it doesn't always affect everyone the same. Also, I never buy on margin or short stocks because if I do, I cannot sleep nights. The psychology of investing/trading is very important, and you have to sleep well to keep objective. charles http://atheistic-science.com
