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Dow Breaks 10,000 Now What.?
- Thread starter whitedust
- Start date
http://finance.yahoo.com/tech-ticker/article/368866/Charlie-Gasparino-Job-Losses -Could-Trigger-Round-2-of-Banking-Crisis?tickers=bac,wfc,jpm,c,gs,ms,xlf&sec=top Stories&pos=9&asset=&ccode=
Here it is from an expert. You can not ingnor unemployment of 11%+ without an economic crash. More foreclosuers would sink the banks caused by unemploymed mortgage defaults. Stock Market a house of cards for sure.
Here it is from an expert. You can not ingnor unemployment of 11%+ without an economic crash. More foreclosuers would sink the banks caused by unemploymed mortgage defaults. Stock Market a house of cards for sure.
Lots of different takes out there,heres another one NEW YORK (AP) - Somebody on a bus asks a friend, "How about that stock market?" The response: "Unbelievable." Caribbean vacationers lounging poolside check their Blackberries for stock prices. Suburban gym members chat about the latest market gains during their morning workouts.
Welcome to the 2009 bull market - or so many people think. They're buying up shares of everything from Google Inc. to Bank of America Corp. at a pace not seen since the 1930s. Since March, the Dow Jones industrial average has jumped 57 percent and the Standard & Poor's 500 index has gained 62 percent.
Investors are betting on a strong economic recovery. But here's the problem: Good news ahead could be bad news for the bull.
To understand why, consider the very thing that has boosted the market. The U.S. government has spent nearly $1 trillion to stimulate the economy and the Federal Reserve has maintained a policy of keeping interest rates near zero.
Those will disappear as the economy's health improves, potentially halting the bull market by taking away what has been its crutch - sources of cheap and plentiful money.
"Pretty soon the easy money phase could be behind us," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, an investment firm in Albany, N.Y.
The government has plunged big money into the marketplace, through tax cuts, construction projects and other measures. At the same time, low interest rates have invigorated stocks by reducing borrowing costs and bolstering corporate profits.
The low rates have also knocked down the returns of other short-term investments, like government bonds and money-market funds. Since people aren't getting high returns on those investments, they're buying stocks.
Stocks are risky because they don't guarantee a return, and the recent bear market shows how deeply share prices can drop. From October 2007 through March, the Dow industrials lost 53 percent.
"The Fed is forcing everyone to take risk by buying stocks because if you don't take risk, you will be earning nothing on your money," said Ed Yardeni, president and chief investment strategist at Yardeni Research.
Yardeni said his clients, which include pension funds and institutional investors, feel like they don't have a choice but to buy stocks right now. He sees lots of "fully invested bears" - investors who don't believe that investing in stocks makes sense right now because of the state of the economy, but they are buying anyway because they worry they might miss out on a bull run.
The Dow is trading above 10,000 for the first time since October 2008, though it is still 27 percent below its peak two years ago. The S&P 500 has gone up almost 7 percent just this month.
Plenty of investors and analysts don't see an end to those gains, especially if the economy picks up in the coming months. But a strong economy is just what Yardeni and some others on Wall Street say could thwart the rally should it lead to higher interest rates and waning government stimulus.
The Fed isn't expected to act soon. The U.S. central bank has kept the target range for its bank lending rate at zero to 0.25 percent since December. It pledged this month to keep that rate at a record low for an "extended period." How long that really means is anyone's guess.
The Fed said in a statement after its November meeting that economic activity has "continued to pick up" and that the housing market has strengthened - a key ingredient for a sustained recovery. But a 10.2 percent unemployment rate and weak consumer spending is still plenty worrisome to the economy's overall health.
Yardeni thinks once the Fed even begins to hint of looming changes in its interest-rate policy it will "take the steam out of this rally," he said. "It won't take much to push this market back down."
In the past, higher rates didn't knock down stocks immediately. The Fed cut its benchmark rate from 2001 through 2003 to stimulate growth, taking it down to a low of 1 percent, where it stayed for a year. The low rates reduced mortgage costs, feeding the housing boom, and sparked a bull market in stocks.
The Fed started to slowly raise rates in July 2004 to slow the economy and keep inflation in check. The housing market peaked in 2006 and the stock market followed in 2007. After that, both headed into a free fall.
Back in 1982, a sustained bull market began amid a deep recession, and the gains lasted even though the Fed began to boost rates. There was more to lure investors back to stocks then, notes David Rosenberg, chief economist and strategist at Canadian wealth management Gluskin Sheff.
Stock dividend yields were 6 percent then; today they are below 2 percent. That means investors had a greater potential to generate income off their stock investments, regardless of whether prices rose or fell. Bond yields were at double-digits and were expected to fall in 1982; today short-term bonds pay nearing nothing and yields will likely head higher. That could make fixed-income investments more attractive.
Investors still should heed the potential danger signs of today's market, before their exuberance gets the better of them.
---
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org
Welcome to the 2009 bull market - or so many people think. They're buying up shares of everything from Google Inc. to Bank of America Corp. at a pace not seen since the 1930s. Since March, the Dow Jones industrial average has jumped 57 percent and the Standard & Poor's 500 index has gained 62 percent.
Investors are betting on a strong economic recovery. But here's the problem: Good news ahead could be bad news for the bull.
To understand why, consider the very thing that has boosted the market. The U.S. government has spent nearly $1 trillion to stimulate the economy and the Federal Reserve has maintained a policy of keeping interest rates near zero.
Those will disappear as the economy's health improves, potentially halting the bull market by taking away what has been its crutch - sources of cheap and plentiful money.
"Pretty soon the easy money phase could be behind us," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, an investment firm in Albany, N.Y.
The government has plunged big money into the marketplace, through tax cuts, construction projects and other measures. At the same time, low interest rates have invigorated stocks by reducing borrowing costs and bolstering corporate profits.
The low rates have also knocked down the returns of other short-term investments, like government bonds and money-market funds. Since people aren't getting high returns on those investments, they're buying stocks.
Stocks are risky because they don't guarantee a return, and the recent bear market shows how deeply share prices can drop. From October 2007 through March, the Dow industrials lost 53 percent.
"The Fed is forcing everyone to take risk by buying stocks because if you don't take risk, you will be earning nothing on your money," said Ed Yardeni, president and chief investment strategist at Yardeni Research.
Yardeni said his clients, which include pension funds and institutional investors, feel like they don't have a choice but to buy stocks right now. He sees lots of "fully invested bears" - investors who don't believe that investing in stocks makes sense right now because of the state of the economy, but they are buying anyway because they worry they might miss out on a bull run.
The Dow is trading above 10,000 for the first time since October 2008, though it is still 27 percent below its peak two years ago. The S&P 500 has gone up almost 7 percent just this month.
Plenty of investors and analysts don't see an end to those gains, especially if the economy picks up in the coming months. But a strong economy is just what Yardeni and some others on Wall Street say could thwart the rally should it lead to higher interest rates and waning government stimulus.
The Fed isn't expected to act soon. The U.S. central bank has kept the target range for its bank lending rate at zero to 0.25 percent since December. It pledged this month to keep that rate at a record low for an "extended period." How long that really means is anyone's guess.
The Fed said in a statement after its November meeting that economic activity has "continued to pick up" and that the housing market has strengthened - a key ingredient for a sustained recovery. But a 10.2 percent unemployment rate and weak consumer spending is still plenty worrisome to the economy's overall health.
Yardeni thinks once the Fed even begins to hint of looming changes in its interest-rate policy it will "take the steam out of this rally," he said. "It won't take much to push this market back down."
In the past, higher rates didn't knock down stocks immediately. The Fed cut its benchmark rate from 2001 through 2003 to stimulate growth, taking it down to a low of 1 percent, where it stayed for a year. The low rates reduced mortgage costs, feeding the housing boom, and sparked a bull market in stocks.
The Fed started to slowly raise rates in July 2004 to slow the economy and keep inflation in check. The housing market peaked in 2006 and the stock market followed in 2007. After that, both headed into a free fall.
Back in 1982, a sustained bull market began amid a deep recession, and the gains lasted even though the Fed began to boost rates. There was more to lure investors back to stocks then, notes David Rosenberg, chief economist and strategist at Canadian wealth management Gluskin Sheff.
Stock dividend yields were 6 percent then; today they are below 2 percent. That means investors had a greater potential to generate income off their stock investments, regardless of whether prices rose or fell. Bond yields were at double-digits and were expected to fall in 1982; today short-term bonds pay nearing nothing and yields will likely head higher. That could make fixed-income investments more attractive.
Investors still should heed the potential danger signs of today's market, before their exuberance gets the better of them.
---
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org
All the Retailers Hmm/Haw yada/ yada/ yada just have no idea if the consumer will spend big bucks for Xmas. Recovery 70% driven by the consumer.If Q4 Retail goes flat or very weak I think there will be a rush to cash again away from stocks. If Xmas Retail does well then stock buying will pick up steam as profits should be good & we are starting to self sustain. I was at Kohls Friday & they kept calling up cashiers to check out very heavy buying traffic. Kohls has a very agressive maketing effort that is working. Shopko, Walmart, Menards not much buying going on & small crowd. Thanksgiving & December Retail will define where we are going in 2010.
Mostly Sunny Or Partly Cloudy...seems to be a thin line between the 2.
http://finance.yahoo.com/news/Retail-sales-rise-14-percent-apf-1851539352.html?x =0&sec=topStories&pos=9&asset=&ccode=
http://finance.yahoo.com/news/Retail-sales-rise-14-percent-apf-1851539352.html?x =0&sec=topStories&pos=9&asset=&ccode=
Sammy you are micro managing the market on a daily bases. That is ok if that is how you invest. The entire post was regarding Q4 & beyond. I'm looking to the end of Q4 2009 to have a better understanding of where to go long in 2010. As I said before if you invested in March & DOW over 10,000 it would be very wise to cash in some profits & re-enter later. Don't get too greedy & lose an opp.to make some dough. Above artical I called Mostly Sunny Or Partly Cloudy sums it up.... the good, the bad & the risks. Bond fund investments are doing very well income + growth so stay there as will never see these conditions again and this is a long term income investment of at least a year. You don't expand on anything so I have no idea what you are doing or referring to. Time to do what? .... with what?
whitedust,
I love reading about this stuff all the time.. I am interested in how you said on Sat Nov 7th at 9am ish that it has to turn around in 6 months or less, were you referring to interest rates or the economy or both?? I find it hard to believe bonds will hold their value if rates trend up! maybe on 1 yr or less paper but that's about it.. Credit spreads have tightened significantly in the last 6 months thus pushing bond values higher even investment grade corp's have had a great run.. Rates are at 70 yr lows with bond prices at "Near" 70 yr highes..I think most bond funds would be the worst place to be as they have no final maturity date, even if internal investments do.. This has been one of the few times where investors have made principal gains as well as income on bond funds...I find the best place to invest is on bonds with a 3-5 yr maturity. If you interpolate the yield curve to treasury spreads the value is in this approx area.. I am selling bond funds for our clients due to anticiapted rates rising in Q3 or Q4 or 2010..Some Bonds are conservative and some bond funds could be also, but most have the go for it attitude and your at the whims of other people when they select your holdings in a fund.. In a rising rate environment the last thing I would want is a bond fund that has a duration that keeps lengthening and risk that keeps growing.. So make sure if you buy a fund that it has short term bonds... You can also buy things called Exchange traded funds (ETF's) such as the ishares Barclay's 1-3 yr, ticker (SHY), and have interday liquidity where compared to a fund you have end of the day liquidity...If an individual has over $10K to invest there is no need for bond funds or Mutual funds... In today's world people should use ETF's as they are more liquid and more cost effective.. You are also less likely to have long and short term capital gain distributions at the end of the year...btw I couldn't agree with you more on going to cash if you bought in March, April area.. The one rule I use is if your return is above the market take the gain and go from "paper to pocket".. I did buy a bunch of Coach (coh) stock in April as the only thing I could notice while I was sitting in a bar in Appleton, WI while my wife was spending major bucks in the coach store was how many of them suckers (coach bags) I now noticed.. So I bought the stock somewhere around 15-18 or so and I sold it today at about 36 per share.. There are a few other winners but I have some "unmentionables" also...If you have a nice profit or any profit there is never a problem taking it in my book...Stocks or bonds.
Just some thoughts and sorry about the rambling.. My job is to do Economic forecasting and manage about $300 million in bonds for the largest independent bank/trust company in the U.P.
I normally just read these posts and stay away but I thought I'd chime in as I'm bored tonight...Hope all is well and happy sleddin.
m8man
I love reading about this stuff all the time.. I am interested in how you said on Sat Nov 7th at 9am ish that it has to turn around in 6 months or less, were you referring to interest rates or the economy or both?? I find it hard to believe bonds will hold their value if rates trend up! maybe on 1 yr or less paper but that's about it.. Credit spreads have tightened significantly in the last 6 months thus pushing bond values higher even investment grade corp's have had a great run.. Rates are at 70 yr lows with bond prices at "Near" 70 yr highes..I think most bond funds would be the worst place to be as they have no final maturity date, even if internal investments do.. This has been one of the few times where investors have made principal gains as well as income on bond funds...I find the best place to invest is on bonds with a 3-5 yr maturity. If you interpolate the yield curve to treasury spreads the value is in this approx area.. I am selling bond funds for our clients due to anticiapted rates rising in Q3 or Q4 or 2010..Some Bonds are conservative and some bond funds could be also, but most have the go for it attitude and your at the whims of other people when they select your holdings in a fund.. In a rising rate environment the last thing I would want is a bond fund that has a duration that keeps lengthening and risk that keeps growing.. So make sure if you buy a fund that it has short term bonds... You can also buy things called Exchange traded funds (ETF's) such as the ishares Barclay's 1-3 yr, ticker (SHY), and have interday liquidity where compared to a fund you have end of the day liquidity...If an individual has over $10K to invest there is no need for bond funds or Mutual funds... In today's world people should use ETF's as they are more liquid and more cost effective.. You are also less likely to have long and short term capital gain distributions at the end of the year...btw I couldn't agree with you more on going to cash if you bought in March, April area.. The one rule I use is if your return is above the market take the gain and go from "paper to pocket".. I did buy a bunch of Coach (coh) stock in April as the only thing I could notice while I was sitting in a bar in Appleton, WI while my wife was spending major bucks in the coach store was how many of them suckers (coach bags) I now noticed.. So I bought the stock somewhere around 15-18 or so and I sold it today at about 36 per share.. There are a few other winners but I have some "unmentionables" also...If you have a nice profit or any profit there is never a problem taking it in my book...Stocks or bonds.
Just some thoughts and sorry about the rambling.. My job is to do Economic forecasting and manage about $300 million in bonds for the largest independent bank/trust company in the U.P.
I normally just read these posts and stay away but I thought I'd chime in as I'm bored tonight...Hope all is well and happy sleddin.
m8man
This ones kicking butt http://research.scottrade.com/public/stocks/snapshot/snapshot.asp?symbol=hog
m8man: You mean this? (Unemployment could be as high as 17.5% with people timing out & off rolls. They don't know how to estimate the real stats. When considering part timers,side jobs, new biz star ups the US Gov really does not know but 10.2% they do know about & planning on over 11% by Q2 2010 is NOT a consumer driven recovery. The Market Friday was stunned by large gain in unemployment numbers but did not want to give up the weeks gains. The Feds same old same old on 0% interest made traders happy but we know that has to turn up in 6 months or less. Next we will see how happy the market is next week & the week after that & if no correction this is the real deal for a weird but real recovery.)
I agree with everything you said about bonds but check charts on American Bond Funds from March to date. I won't say which ones but if you sell them you will know. You could have your cake & eat it too but we will never see that again bond income yield & growth. Long for me since October of 08 is about a year then option to hold or sell. I only buy income investments at this stage of life. Since I bought in March I keep selling so I stay even at starting investement point & yields rolling in as well. If principal gains go away either sell or stay with yield but always the game with bonds.
I agree with everything you said about bonds but check charts on American Bond Funds from March to date. I won't say which ones but if you sell them you will know. You could have your cake & eat it too but we will never see that again bond income yield & growth. Long for me since October of 08 is about a year then option to hold or sell. I only buy income investments at this stage of life. Since I bought in March I keep selling so I stay even at starting investement point & yields rolling in as well. If principal gains go away either sell or stay with yield but always the game with bonds.
snow_monkey
New member
Anytime is a good time to invest provided you are well diversified. If you are young now is the time to invest. I like kevisip's 8 ball idea. Make educated choices than leave it alone!! I check my portfolio every quarter just to peek. Sometimes it can be ugly. last quarter rocked!!!
snow monkey: old rules to new game only works if you have lots of time. HFT is the new norm to make the most of it but I understand where you are comimg from. No way I will be sitting on investments. Ride them up then sell look for next opp. Short on most things even bonds until Q1 2010 has direction.
rocketman356
New member
Carbon Fiber royal chips is where to be ,,,,,buy all yaa can now.