Featured Content

TRIPLE YOUR MONEY IN A MONTH!

TRIPLE YOUR MONEY IN A MONTH!

Still worried about the economy? Become an elite charter member of George's DAILY PROFITS and you could... TRIPLE YOUR MONEY IN A MONTH! George gave us the $2.8-billion IT infrastructure provider, up 4,745.20%; the $1.8-billion advertising agency, up 1,295.44%; and the $762 million business software company, up 1,213.19%. Only charter members can follow George daily. Learn how here!

The Fed’s Running the Show and Risk Keeps Going Up

By

250213_PC_clarkThere just isn’t enough real economic growth out there for a rising stock market—at least not much more than has already been achieved. News from the Federal Reserve of the central bank considering how to end quantitative easing sent the stock market much lower, revealing just how artificial the whole system is.

I actually think the current stock market is fairly valued, but it shouldn’t be going up in value with modest revenues and earnings growth. The Federal Reserve is the catalyst for today’s trading action, but first-quarter earnings season will be a catalyst for investor sentiment. Some companies and industries are doing better than others. The choppy recovery in the U.S. economy is now being reflected in earnings results, as corporations can no longer cut any more costs. Revenue growth is now the key.

On the release of the minutes from the Federal Reserve meeting, stock markets around the world sold off, literally. All the positive action so far this year has been incredibly tenuous, and the low trading volume said it all. I think we’re now in a mini-correction, induced by recent news from the Federal Reserve, although it won’t be a market-breaking pullback.

Right now, the prospects for gold, silver, and oil are terrible, and the near-term action in resource stocks is headed downward. We also have a lot of solid, dividend paying large-caps that are trading right near their highs and are due for a break.

It’s odd that the stock market reacted so negatively to the Federal Reserve’s latest news. Investors have been complaining about all the easy money and artificially low interest rates. The predictability of the stock market’s reaction to the Federal Reserve is telling of the herd mentality of the system. Wall Street really is just a big game.

The stock market is going to be convulsing near term, and the key for investors will be to keep focusing on what corporations are saying about their businesses. Wal-Mart Stores, Inc. (NYSE/WMT) reduced its first-quarter guidance just slightly because of higher gas prices and increased payroll taxes, but its fourth-quarter earnings beat consensus. The company also announced an 18% increase to its quarterly dividend, which is always welcome news. (See “Show Me the Money? Just Ask Costco.”)

Federal Reserve monetary policy is responsible for the stock market action since the financial crisis and recession of 2008/2009. Corporations and the economy have been responsible for the slow growth in revenues and earnings since then, and the stock market is appropriately valued. Therefore, the near-term fundamentals haven’t really changed.

We have seen continued recovery in the U.S. housing market and even in employment (especially employment in the private sector). The industrial economy reported continued strength in the fourth quarter of 2012, and the technology sector is holding its own. All in all, the stock market is where it should be, and economic growth will be low and slow for the near future.

It’s going to be another wacky year for stocks, thanks to the Federal Reserve. Anything is possible these days, which is why it pays to be conservative with your holdings. For me, dividend paying blue chips continue to be the only stocks to own. Everything else really is a gamble.

Premium Content

Secret "New Swiss Bank Account" Safest Way to 44% Returns

Secret

It's the safest—but, until now, completely ignored—place for your money. Because these elite "bank accounts" pay guaranteed 5% cash payments per annum on top of returns on capital exceeding 44%... Learn all about them here.

About the Author, Browse Mitchell Clark's Articles

Mitchell Clark is a senior editor at Lombardi Financial, specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, including Micro-Cap Reporter, Income for Life, Biotech Breakthrough Stock Report, and 100% Letter. Mitchell has been with Lombardi Financial for 17 years. He won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was a stockbroker for a large investment bank. In the... Read Full Bio »

Exclusive profit Confidential Presentation

Secret Retirement Plan Pays Up to $12,160 a Month?

Secret Retirement Plan Pays Up to $12,160 a Month?

A select group of Americans are retiring with a little-known retirement plan whose advertisement by its issuers is censored by Congress... Yet this plan enables Americans to potentially collect up to $12,160 in monthly income that's sponsored entirely by large-cap American companies. These secret Sponsored Retirement Plans are trumping social security by up to 10 times. And unlike mainstream retirement plans like 401(k)s or IRAs, SRPs are ideal for people who want to start with very little money. You could begin your SRP with as little as $10, $50, $100 or $400. To see real-life stories of folks who've built hundred-thousand-dollar portfolios thanks to SRPs and how to get your own plan started today, click here now!

×