A Week Investors Would Like to Forget
Monday, June 25th, 2007
By Michael Lombardi, MBA for Profit Confidential
As long-term interest rates in the U.S. continued to rise last week, the stock market put in worse performance in about three months. The Dow Jones Industrial Average was down 1.4% for the week, the S&P 500 down 1.3%.
With interest rates rising in the U.S., the fear banks would be caught in a profit margin squeeze spooked the markets and sent the prices of most financial stocks down. The biggest U.S. banks, like Citigroup Incorporated and Bank of America, saw their stock prices “hit” this week.
My concern is that as the reality of higher interest rates and the pathetic housing market start to be discounted by investors and consumers, consumer stocks will be the next to come under price pressure. Mortgage payments for many Americans are rising quickly as interest rates rise and old “low-priced” mortgages are reset to higher rates. As that happens, consumer spending eases, slowing the economy further.
Looking ahead, I see more difficult weeks for the stock market. In fact, the week we just had might be paltry compared to what’s in store for us. Keep an eye on the consumer stocks, as the next soft action will be there.
I continue to see gold producer shares as a bargain. With gold basically in a trading range for the past year, I expect to see gold bullion prices rise as interest rates rise. Investing in gold stocks over the past five years has been a very patient buy-and-hold play. But the strategy has paid off for investors willing to be patient.
NEWSFLASH-Construction of new homes fell in 2.1% in May according to the U.S. Commerce Department, while a new survey of home builders shows builder sentiment fell to the lowest level in 16 years. The carnage in the U.S. housing market continues, but we haven’t hit bottom yet.
Next Post: Interest Rates Set to Go Much Higher in Current Commodity Price CyclePrevious Post: Gay Travelers to Canada Offsetting Declining Numbers of American Tourists
Tags: gold, gold bullion, gold prices, gold stocks, stock market
Tweet
Sign Up for PROFIT CONFIDENTIAL and
receive a FREE copy of our exclusive report:
"A GOLDEN OPPORTUNITY FOR STOCK MARKET INVESTORS"
We respect your privacy and
will never share your e-mail address.
Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
