March 26, 2014

Invest Now? Or Wait?

I've been doing some market research and came across this chart for the S&P 500 (I added some graphics to highlight certain points):

If history is any indication of the future, based on this chart, we're due for a market correction between 2014 and 2015.  The green arrows represent the market at it's highest point (with the exception of the last "high" arrow), and the red arrows represent the market at its lowest.  The yellow circles at the bottom represent the time period of a typical 6-7 year cycle of the market.

Sometimes you have to know where you've come in order to know where you're going.  

Additionally, the economy seems to be slowly gaining traction thanks to the central banks pumping liquidity into the system and interest rates remaining low.  Corporate earnings are excellent including several M&A activity (mergers and acquisitions), stock buy back programs, and today's CEO annual salary resembling that of professional athlete contracts.  

Historically, it looks like the market needs to correct itself.  But with the Feds and every other central bank keeping it afloat...the market may just keep climbing - unless:
  • there's some type of war
  • or civil unrest
  • or perhaps a looming "bubble" pops
  • or a systemic credit default occurs
If you think something will happen - be ready with cash on hand to jump in and pick up some great bargains on stocks (as there will plenty!).  If you're more optimistic - there are plenty of deals to be had now in the market as American manufacturing, durable goods, consumer confidence, etc. ticks up higher.  

But as for me, I'm cautiously optimistic...for now.  Therefore, I'm looking to go long with a little protection in case there's a downside.  


March 22, 2014

The Big Taper

There are a ton of signals saying the market will go higher...and on the contrary, just as many signals
saying the market will go lower.  Chairwoman Yellen gave an interesting press conference earlier this week (for those of us geeks who listened!) and mentioned that the Fed will be tapering off completely sometime this fall which temporarily sent markets low.  This should also be the signal/premise that interest rates will creep higher (which could also signal a decline in the bond market).

Nevertheless, the market is flush with cash (thanks to the Feds) and decent corporate earnings which is sending the stock market to record highs.  Plus, an unemployment rate that is slowly declining isn't a bad thing as well when it comes to helping investors find good investments on the cheap.

Investors are searching for answers in all the right places, but can't find a solid answer.   The talking heads on TV (CNBC, Bloomberg, WSJ, etc). are arguing back and forth about the direction and outlook of the economy.   And this is normal, because when it comes to investing...or even the outlook of the economy...nothing is an exact science.  Nothing one can make an exact or totally accurate prediction of the future.

What do you do???  Where do you invest?  How do you invest?

The best strategy would be to research and consume tons of market & economic data, map out a plan for successful trading, and make a few tweaks here and there along they way.  We don't have to necessarily get our information from the reporters on TV (they're usually better at reporting on what's in hindsight).  Do your own research & attend learning events (webinars, conferences, talk to industry leaders, etc.).  This way you avoid the short term "noise" that could throw you off course when it comes to your investing.

PS - It feels good to be back in the blog-o-sphere!  I've been away on other projects.  Thanks to the readers who contacted me and asked about the blog.  It was great feedback that I needed to hear.  I've been doing a lot of research and ready to deliver some new and potent content.