Bob O'Brien
Head Instructor
bobrien@mywealth.com
It has been nice a rally, but it looks to me like we could easily see a 10% sell off in stocks. Considering that fact that we were on the verge of the next Great Depression this time last year and that the economy is still getting stronger things are really not too bad.
A sell off here is a healthy sign, because its proof investors are not getting too far ahead of themselves.
Be certain to check out Investing 101 course in order to take control of your Investing!
*****Question of the Week! *****
(Take a shot!!….Chance to Win a FREEInvesting 101 Course (VALUE: $99.00!!) by Emailing Us your answer no later than Friday 9AM EST and 3 Names will be randomly picked and named as Winners!! (Must be a blog subscriber) The economy has definitely improved in the last couple of months and although we are not technically out of the current recession, many people feel that we will have a double dip recession. Do you feel that there will be a double dip recession? a) no, because we are not coming out of the current recession b) no, there will be no double dip recession c) yes, there will be a double dip recession
You couldn’t help to start to get the feeling last week that the bulls were getting tired and with yesterdays ISM numbers being pretty good and then still having a big sell off in stocks. This should be an eye opener and proof to any investor/trader that the market wants to go lower for a while.
Has the run up since March been a bear market rally? Who cares! When the market hit its lows back in March of this year, even if you had been investing for 50 years, you had to refresh your eyes, throw out the old playbook, and say the whole game is either over or completely changed. You were looking at an economic mess that had not been faced in your adult life. There is definitely a new economy with a new normal!
This stock market is still very much a traders market and there is still a lot of cash on the sidelines. It will continue to be a traders market for at least a couple of years, because we are far from out of the woods, but at least we have moved away from the cliff.
As companies re-structure themselves and legislation is passed, it will take time before we see real economic growth again. The companies that are surviving right now are doing so at the expense of payroll cuts, and their competitors going out of business.
The China (Shanghai Stock Exchange) sell-off does not help, and as many analysts seem to be arguing as to whether or not the US market is positively correlated to China’s market, it is irrefutable that it is having at least some negative effect on the US stock market.
On the other hand, it is really hard to get too pessimistic for too long when you know that central bankers can print money and are not afraid to do so. The FDIC is running out of money, who cares? They can get money from the Treasury, who get their money from the FED.
Obviously this cycle cannot continue on forever, and there will be heavy inflation as part of any real economic recovery. This will also further postpone any real growth. Until then it will continue to be a traders market, with some big rallies, and sell offs.
Be certain to take our courses in order to get out in front of these challenging economic times.
