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SER Street Smart
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Sy Harding
Climbing a wall of worry! December 12, 2008.
The most important sectors of the economy continue to dive into a bottomless hole, apparently, the housing industry (where it all started), the financial sector continues contained in a credit crisis, the giant auto industry, possibly within a few weeks of major bankruptcies, the struggling retailer at its worst season holiday in decades.
Nearly three million jobs have been lost since the recession began last December, over the past six months that throughout the recession of 2001-2002. The loss of 533,000 jobs in November was the biggest monthly decline since December 1974.
Investors have lost several billion $ in savings and investments have the worst market in stocks in 75 years. Income yields on bonds are incredible minimum.
Headline-making scandals are popping up all over the place. Illinois governor touting his influence, including former Senate seat President-elect Obama. Bernard Madoff, former chairman of the Nasdaq Stock Market, and a respected presence on Wall Street for nearly 50 years, arrested and charged with fraud, as The SEC is calling for a 50 billion U.S. dollars Ponzi "system" scam investors, "a spectacular fraud that appears to proportioned epic.
No wonder that the confidence of consumers and investors is also in a deep dark hole?
And it is. Over the past three months has scared investors withdrew a record amount of money from mutual funds, brokerage accounts and even hedge funds, in a panic rush to exit the stock market. Recent polls show a surprising percentage of investors and consumers now do not even believe that the money in savings accounts or government insured money market fund is safe, and have accumulated in the accounts in the short term U.S. Treasury at a rate that has lowered the performance of T-Bills close to zero. They are willing to lend their money to the government for anything other than the risk elsewhere.
What is happening reminds me of a statement attributed to JP Morgan back in the early 1900s that "Bear markets return stocks to their rightful owners." This meant that the smart money "or" rightful owners "sell their shares to public investors temporarily high prices, near market tops, but then buy them back at low prices, as investors bail out in the basement of the post down markets.
What is going on his comment reminded me arrogant because, while public investors have been rescuing such a frenetic pace in the last couple of months, others have quietly been buying so strong that not only all that up for the sale, but it was enough to provoke an increase of 20.8% in the S & P 500 since its meeting November to its low last week.
The volatility has continued, but in the process of the market has been in a bullish pattern of higher highs at rallies and to lower short reversals.
And more importantly, has been rising, despite the economic reports and worries increasingly stark and menacing, including the ugly employment numbers, plunging the reports of retail sales, the threat of bankruptcy in the automotive industry, and foreclosures rates rise.
That is, for three weeks anyway has been the proverbial wall climbing "of concern".
That's a good sign. Since I've been saying for the last couple of months in my Free daily blog, "The market always looks ahead and start its next bull market, while the recession is still ongoing and worsening, while public investors are at an extreme of pessimism. So, obviously, at some point have to start rising, despite continuing bad economic news. Given that public investors are not buying, you have to be institutional and other "Smart Money," beginning to buy in anticipation of improved economic conditions six to nine months ahead. And the market has further to climb a wall of worry for some time until the economy itself begins to recover and public investors become less afraid. "
As regular readers of my column know, every year, this year I have been predicting that the stock market will not bottom until October / November time frame, and the fund would be followed by a significant concentration of market that have worth pursuing. Nothing so far I was disabused of that expectation. With the S & P 500 down 52% in its October low would require an increase of 104% to return to its peak last October. It would take more than a 50% increase to cover half of the decline in a bear market.
Stay Stay tuned!
Sy Smith publishes the financial website http:> "target =" _blank "> www.streetsmartreport.com"> http://www.streetsmartreport.com/ and a free daily Internet blog in "target =" _blank "> www.syhardingblog.com"> target = "_blank" href = "http://www.syhardingblog.com/"> http://www.syhardingblog.com/. In 1999 he authored Riding The Bear – How to thrive in the Coming Bear Market. His latest book Beat the Market is the easy way! – Proven Seasonal Strategies Double Performance market!
About the Author:
Sy Harding is CEO of Asset Management Research Corp., author of 1999’s Riding the Bear and 2007’s Beat the Market the Easy Way, editor of www.StreetSmartReport.com, and www.SyHardingblog.com.
Article Source: ArticlesBase.com – Climbing a Wall of Worry! Dec. 12, 2008
