You would have thought that people would have learned their lesson. You would have thought that since the great crash of 2008 that people would be more wary of the markets.
There has been much talk of a 'V' shaped recovery. It is foolish. In my lifetime I have never witnessed such a phenomenon and probably never will. I've seen a few 'U's and a Japanese 'L' as well as a "head and shoulders' and many square roots. But a perfect 'V', never.
| 1929 Crash and the Current Bear | Shift the Overlay by 10.6 Months | ||
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Market volumes have dropped. A lot. If institutions are on the sidelines, there is good reason.
Insider selling is at a high for 2009. If senior executives at S&P corporations are dumping shares, there is also good reason.
If President Obama, VP Biden and Larry Summers, the Director of the White House's National Economic Council say that the worst is not over, then I tend to believe them.
There is no certainty that the markets will fall, but there is uncertainty in the markets.
People have been waiting for the cataclysmic event. The big crash that creates history. But thats over. Thats 2008. There will probably be no more nuclear explosions in the markets but the fallout will be radioactive. This market is in slow bleed mode.
Unemployment will be a drag on growth. According to super-analyst Meredith Whitney, unemployment could be going as high as 13-15% in the US. How many of those workers were to be retirees that have now chosen not to retire thus clogging up the job market?
Unemployment will be a drag on growth. According to super-analyst Meredith Whitney, unemployment could be going as high as 13-15% in the US. How many of those workers were to be retirees that have now chosen not to retire thus clogging up the job market?
How many of the 13-15% are property owners with prime loans in danger of foreclosure? What will the effect be of lower contribution levels from 401k's and IRA's?
Too often we look at the equity markets as an indicator of financial well being. They are not. They respond to drivers such as earnings expectations and perception. Perception can bring markets down. It is perception that makes markets fall in lockstep, despite minimal correlation. It is also perception behind the low trading volume that we are experiencing.
This chart is called "Diversification Works Until It Doesn't!" and it illustrates the fact that perception can make markets drop in harmony with minimal deviation.
I am searching (in vain?) to find the catalyst that will continue to push this market up or for reasons that will help it maintain this level for the next few months.
Instead, I am glad that I am holding US$, JPY and some gold bullion rather than equities in my lump sum portfolios.
My monthly savings plans are generally in cash with new contributions invested in the hard hit, still deleveraging mining and oil sectors. Energy and commodities offer terrific long term value for monthly savers by dollar cost averaging with heavily discounted units. With only monthly contributions going in, the risk is negligible with a massive upside.
There is a phrase that has become rather fashionable in investment circles recently. It is "Ignorant Capital". It is used to describe investment into some fund of fund hedge funds. I believe that it can also be used to characterise investments left to the whims and caprice of an uncertain August by investors and advisers who do not take heed.
I am searching (in vain?) to find the catalyst that will continue to push this market up or for reasons that will help it maintain this level for the next few months.
Instead, I am glad that I am holding US$, JPY and some gold bullion rather than equities in my lump sum portfolios.
My monthly savings plans are generally in cash with new contributions invested in the hard hit, still deleveraging mining and oil sectors. Energy and commodities offer terrific long term value for monthly savers by dollar cost averaging with heavily discounted units. With only monthly contributions going in, the risk is negligible with a massive upside.
There is a phrase that has become rather fashionable in investment circles recently. It is "Ignorant Capital". It is used to describe investment into some fund of fund hedge funds. I believe that it can also be used to characterise investments left to the whims and caprice of an uncertain August by investors and advisers who do not take heed.
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