Like a See-Saw
Thursday, August 9th, 2007
By Michael Lombardi, MBA for Profit Confidential
The market is down 300 points one day, and up 300 points the next day. Is it the end of the bull market or a quick correction? Maybe it’s just a see-saw.
Investors need nerves of steel to avidly invest in this stock market. Valuations are high, but the alternative low T-bills are too harrowing for most. Hence, there’s a lot of money chasing precious few quality stocks. Sometimes investors get nervous and pull their money out, sending stocks sharply lower. Other times investors see the market as the place to be, and their buying pushes stock prices higher.
Here’s what we do know:
The Fed left interest rates unchanged yesterday while interest rates around the world continue to move higher.
Our greenback is in a free fall. Gold’s getting mighty close to $700.00 U.S. per ounce as investors seek a safe alternative to the U.S. dollar. Inflation is definitely present everywhere except in the housing market, where prices are deflating.
The subprime fiasco turned out to be more of a problem than Wall Street told us it would. Yesterday, American Home Mortgage filed for bankruptcy protection. Say goodbye to 7,000 American jobs with this latest casualty.
I continue to be quite wary of investing in big-cap stocks. Valuations are high, and I believe the risks outweigh the rewards in this market. While many of my contemporaries have recently turned bullish, I continue to be a bear.
And while the stock market may see-saw back and forth, causing confusion for many that study it, I believe stock prices will be lower in the near future rather than higher as the U.S. gets closer to a recessionary period.
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Tags: bull market, gold, housing market, interest rates, U.S. dollar
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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
