The perfect storm with the following unknowns:
* Portugal, Spain and Italy could follow Greece. They are far larger than Greece.
Click here for detail.
* Trade war with China over currency.
Can we afford to have a trade war with China and take the risk of China pulling out their huge debt from us?
Click here for detail.
---
If one of the above two happens, we will see Dow below 9000. Otherwise it will cruise between 10,500 and 11,500.
When it goes up to 12,500, I'll sell most of my stocks as the roots of our problems have not been resolved.
If you believe we'll have a good Q3 earning announcements, year-end rally, huge cash held by corporations, and/or there are signs the wars are ending, you may want to act accordingly. I've started buying selectively and it could be the best time for a while for some stocks that have been beaten down badly.
My crystal ball is as good as yours.
(c) TonyP4 2011. Written in 10/7/11. Updated 10/24/11.
#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Subscribe to:
Post Comments (Atom)
Many reasons for the rise as follows. However, as long as the problems not fixed, I'll predict the prolonged bear market in 2012.
ReplyDelete#1. No (from my aged memory) market downturn on 3rd term of the presidential cycle - 2011 is the year.
#2. A lot of cash in rich folks, investors and companies.
#3 Inflation as some one mentioned. It is deflation for housing prices but inflation for precious metals. I predict super inflation in two years to have an invisible tax on the ones who have.
#4 Corporations still making money. Without higher employment and consumers, it will not last into 2013. You can cut cost that much.
#5 One war is supposed to end before election year and ending the other one could be the last card in Obama's hand.
#6. Year-end rally.
Should be able to have more reasons after a drink. However, I have about 35% in cash now, some contraETFs, commodities... and will increase them to provide insurance for my investment.
So far, Dow cruises between 11,000 to 12,500.
ReplyDeleteStill have a lot of stocks with great values and they're profitable. It is different from 2003 with valued stocks but most were losing money. It could be less riskier to buy. One's opinion.
It seems the market behaves like a baby book. The economy has been improved. The problems with China surface: house bubble, economy slowing down due to EU...
ReplyDeleteIt is a trader's heaven and an investor's hell. If you cannot take the heat, stay out of the kitchen.
Most recoveries should be done in 2 years and now we're in the 4th year. I still buy stocks with great value measured by earning yield. Sell most (not taxable accounts) when Dow is 12,300. It is a sideway, volatile market affected by good news and bad news.
ReplyDelete