Is Your Portfolio Ready to Profit from Today’s New Price Trends?
Wednesday, June 21st, 2006
By Michael Lombardi, MBA for Profit Confidential
Trends in financial markets often take time to develop: Sometimes years, sometime decades. Unfortunately for investors, trends are often hard to say good-bye to as investors are often short sited, working against the change. In time, all financial instruments such as stocks, bonds, precious metals, interest rates, currencies, and real estate change price trends.
Investors had it pretty good in the stock market from the beginning of 1988 to the end of 1999. During that 12-year period, the Dow Jones Industrial Average rose from 2,000 to 11,700. The compounded annual return over that 12-year period was 16% per annum excluding dividends.
Unfortunately, the “up” trend in stocks ended in the beginning of the year 2000. Since then, investors in big Dow stocks have actually lost money, again excluding dividends. Investors simply have to accept the fact that since 2000 big cap stocks have been in a bear market that tries to lure investors back into the market via impressive rallies–only to continue to take money from investors again and again.
What’s my point here?
My point is that if we look at the price charts, we’ll see some obvious trends have changed in the past few years:
— Big cap stocks and big blue chip stocks, after having been in a strong 12 year bull market, started a new downward trend in 2000.
— Real estate, as measured by the Dow Jones Home Construction Index, after having enjoyed a tremendous up-trend in recent years, turned decisively bearish in the summer of 2005. This index is down 37% in the past 12 months.
— After a downward trend that lasted over 20 years, interest rates hit rock bottom in the summer of 2004. Since then, rates have steadily increased, establishing a new trend of rising interest rates.
— Gold, after being dormant for about 20 years, turned upwards in September, 1999. Despite a recent strong correction, I believe a new upward price trend in gold is well upon us.
How long will these new prices trends continue: Five years, ten years, twenty years, or more? No one knows for sure. All we can do is look at the price charts and see what they are saying today.
But, here’s a more important question to ask: Have you updated investment portfolio to benefit from the changes in various investment price trends? That’s the real question. If you haven’t yet, you might want to take a serious look at the new price trends discussed above and see how your portfolio benefits from the new investment trends developing today.
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Tags: bear market, bull market, gold, stock market
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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
