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Market intervention from the Fed (via its constituent banks) aside, I do see stocks falling in value, gradually, through the year, but it will likely continue to rise as people leave bonds and cut their losses and go into equities, at first. When that influx of money jacks up the price of stocks, expect people to sell and hedge their winnings into medium term federal government bonds. Bond traders are inherently risk-adverse, and only go to the market as a way to boost returns in a bear bond market.
I, too, am worried about the states having so much debt. I think we'll see rising tax rates and a downward spiral, long term, as people move to flee high tax states into lower tax states (see the constant migration from California for proof of this). This will only cause the states with high taxes to go further into debt, and, eventually, insolvency, followed by a bailout from the Fed.
The silver lining in this, I see, is that if these events come to pass, then the Fed will simply churn out money like there's no tomorrow. Inflate away your debt. It will **** off investors and foreign governments, but it solves the problem. Thus, if you are into minerals or TIPs, you should make a killing. I'm still bullish on gold, long term.
My goal this year is to hedge against future inflation and sell some of my equities without dividends and get into ETFs or go hard (actually buying gold, silver, and other minerals). I will never be totally out of the market, but I will go from this profile:
25% foreign, 25% small cap, 5% bond, 45% large cap
to this profile:
20% "hard" ETFs or real assets, 25% foreign (the world will recover before the US does), 25% small and mid cap (small businesses will never lose their foothold in generating the most wealth in this country), 20% large cap, 10% TIPs
God bless y'all who are able to time the market and make profits. I don't know if I reflect the sentiment of most Americans, but I feel like I totally missed the boat and now am waiting (and waiting, and waiting...) for a decent pull back to put more cash to work. So far, it hasn't happened - the market appears to keep trending upward (albeit with a few small pullbacks here and there). I feel like as soon as I put my money into the market - it will immediately trigger a pull back. Still can't trust it.
God bless y'all who are able to time the market and make profits. I don't know if I reflect the sentiment of most Americans, but I feel like I totally missed the boat and now am waiting (and waiting, and waiting...) for a decent pull back to put more cash to work. So far, it hasn't happened - the market appears to keep trending upward (albeit with a few small pullbacks here and there). I feel like as soon as I put my money into the market - it will immediately trigger a pull back. Still can't trust it.
We only tell the positive exploits
For example, I placed a few disastrous trades last year. They turned out to be a good lesson.
I bought AONE, a potential ten bagger with lithium being the future and it shed 40% in the immediate two weeks
I started averaging down and finally snagged a major portion at the bottom. With Obama's involvement in clean energy and market hype, the stock popped and I got out with double the profits. But my first leg was a major disaster and it was 40% down for three months. I got out of it in late November with a handsome profit from my last leg which erased the pain of the first leg.
I made four positions as it trended downward and one of them was a short position, which helped hedge the first loss.
My next disastrous trade was Brocade. I entered at 6.05 and it popped to 6.5 and I released 2000 shares, and continued with the the remaining 2K. It missed earnings and dropped to 4.88 last month and I released AONE just in time and put those proceeds on BRCD at 4.88 and now BRCD is back to 5.9 and I'm planning to release it in the coming days.
What has improved my mood greatly was the uranium sector. My investments have returned 300% and it looks like I will have another 300% return as spot uranium keeps spiking. It's very volatile but patience is rewarding.
I may not release Brocade becoz cloud computing is sending investors into some form of St. Vitus dance. It is the future. All this has made me forget banks. I just use my ATM card
What bums me is that my friend who is blindly follows my investment trail is sitting on profits off Brocade, SIRI and UEC/URG without the slightest of research and time. I never have anyone to follow
God bless y'all who are able to time the market and make profits. I don't know if I reflect the sentiment of most Americans, but I feel like I totally missed the boat and now am waiting (and waiting, and waiting...) for a decent pull back to put more cash to work. So far, it hasn't happened - the market appears to keep trending upward (albeit with a few small pullbacks here and there). I feel like as soon as I put my money into the market - it will immediately trigger a pull back. Still can't trust it.
and this is why i just stick to my investment plan.. i dont care what the talking heads say or world events... time makes everything okay with a good plan and balance. while i have had some down years since 1987 ,even some horrible years the fact is over time it grew lots of dough...
its trying to time things and being either in or out or in what you think will go up and out of what you think will go down that has given the typical small investor less then 1/2 the gains the markets see over long periods of time.
well guys all I will say is becareful what you invest in at this stage the easy money has been made already now it is all hard earned bull vs bear money. you can safely sell options here and collect premiums all the way.
The ARMS is about to blow up in the face of all the banks erm I mean FEDs oops I mean tax payers.
Then there is also debt ceiling if it goes up inflation goes up and more food price increases.
If not, prepare for banks not making any easy money from borrowing for 0% and loaning 3-4% to Uncle Sam. That is why tax evading Treasury Geither said it was an emergency.
Debt woes from states, congress wants to pass state bankruptcy laws which will let them renegotiate. Watch riots from public unions when the rest is taking a haircut.
Will the mass media try to downplay or outright ignore these situations You betcha. Will the markets try as hard to ignore it YEP. Then once they cannot anymore the SHTF boom it blows all up again...
Well in the end it depends which way they want to go, deflation default or inflation default.
Pick your poison.
The stock market rise is only because of inflation of currency not true gains so becareful. We lost wealth not gained wealth.
It is the banks that gained wealth not us since they can leverage 10-1 from fractional reserve banking they can get free money from the fed as well they can pretty much make as much as they want while inflating the costs to the rest of society.
Remember in inflation those who take the money and invests it first wins and the rest loses.
In deflation those who hold money win while those who hold debt lose.
I dont know why you say so far we up only because of inflation. thats not true at all. corporate profits and revenues both exceeded market expectations by a wide margin. thats not just cost cutting and inflation. over the last 2 years earnings rose over 69%. the s&p 500 only rose 43%....
earnings this year for the s&p are slated to be around 95 bucks a share surpassing 2006's high at 87.72
the current PE is around 15 which is low by historical standards.
all in all its not just about the fed trying to inflate the markets, its about real earnings.
Last edited by mathjak107; 01-16-2011 at 07:55 AM..
I dont know why you say so far we up only because of inflation. thats not true at all. corporate profits and revenues both exceeded market expectations by a wide margin. thats not just cost cutting and inflation. over the last 2 years earnings rose over 69%. the s&p 500 only rose 43%....
earnings this year for the s&p are slated to be around 95 bucks a share surpassing 2006's high at 87.72
the current PE is around 15 which is low by historical standards.
all in all its not just about the fed trying to inflate the markets, its about real earnings.
I agree with most of what you're saying here. Although I disagree that a PE of 15 is low. It's actually more like "average". The long term PE is still somewhat inflated by the oversized PEs from the period of 1995-2005. Even the early 2000s bear market did not bring PEs in line with their long term historical averages.
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