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. Q2 2008 5-23-08:- "So what do we do now?" Home Page
Update 06.15.08: Read the following article before continuing---> Regarding current sentiment: Deflation with Inflation: No Recession, but Depression?9/11/2008 Update: I am avoiding stocks and real estate investments at this time; more attractive prices may be down the road. Possible continued dollar strength and deflationary trend. However, hyperinflation is still expected with all the bailouts and debt our country has; and this is the long term outlook. Additionally, when the fed finally takes action, they may overcompensate its reaction to adverse dollar resilience. The markets today are not in any way logical or make sense; no one can predict what will happen, no matter what their credentials. In this type on environment, it seems wise to stay uncommitted and readily liquid until the hyperinflation makes itself apparent. Consult your financial professional; not investment advice (see disclaimer below).
The pinch is on. Not just on the consumer, or the working class American living paycheck to paycheck....but the American investor as well.
What are we supposed to do?
The fed has lowered rates to levels that are roughly 2% below annual inflation. Is running 'even' and paying taxes on that 1.9% CD the wise move now? Or should you invest in gold, silver, or other commodities that are now at all time highs? Should we Invest in real estate, like housing, when the prices are dropping amid record foreclosures, increasing inventories, and possible bank failures? Should you finance, then lose more money on financing fees and possibly your down payment as the market bleeds lower? Should you invest in commercial property, where the economy is slated to grow below 1% annually this year, and businesses are cutting back, not expanding? What about the stock market and its intense volatility?
I say, the lower the stock market goes, the more attractive it becomes when compared to other investment ideas. The most difficult time to determine where to put your money is when the stock market is up, not down. Flexibility and liquidity are the most important things now. Stocks have been running up or down by overall market sentiment: and the sentiment now is overly bearish. This means: time to go shopping.
After a brief run up past DOW 13,000, we are now apparently returning to the bearish sentiments of Feb march: the era surrounding the Bear Stearns debacle. If we see the stock market return to the 12,300 or lower, it is an opportunity to enter the market. No other investment vehicles are attractive. IMHO housing and commercial properties are an easy pass now; so is CD investment and commodities.
All roads lead to the stock market for investing in today's difficult environment: provided the market continues to drop and sentiment remains bearish in the short term. Risky? Most definitely. But it may be more risky to leave more than $100,000 in a bank CD, or buy a home that is not liquid and its value intangible.Sitting on cash is the second most attractive option to the stock market; short term readiness. Ironic when you consider the dollar itself is weaker than ever. Deflation in assets, like real estate and stocks, is the buffer for cash hoarding. However, recovery in assets means a decline in the comfort level of holding cash. The key is knowing you can enter the real estate or stock market instantly, and buy in at their deflated prices. The stock market could appreciate suddenly, and the market would be priced at fair value. The only area of investment where a sudden appreciation could occur is the stock market. So it will be important to make entries when on dips: the next entry levels being 12,300 then 11,900.
Good luck out there.
Written by: The Sniper
. © 2008 Realtech Partners, Inc. All Rights Reserved. Email.
Click here for quick California bank earnings and foreclosure rate updates ---> Analysis of California Bank Earnings
**ARTICLES** Most recent listed last
. Q1-Feb 10 '08: - The Perfect Storm of Economic Downfall Q2- '08: So what do we do now? . .. Q1-Feb 21 '08:- The Counter Intuitive Market Force: But Housing is the Exception Q2- '08: Analysis of CA Bank Earnings . ... Q1-Feb 21 '08:- The 5% Income Rule Q2- '08: Riverside-San Bernardino tops the list... . ... Q1-Feb 21 '08:- A Compelling Argument for Alternative Investments Q2 '08: - Oil and war speculation . ... Q1-Feb 26 '08: True Market Analysis, or Self Interest? Q2 '08:- Bank of America & Countrywide: A signal of a housing bottom? . ... Q1- '08: No Recession, but Deflation? Q2 2008: Deflation with Inflation: No Recession, but Depression? . 3.17.08: Next for the Economy: The Greatest Bull Run in History? Q2- '08: The Schizophrenic FED Gambit .. Q2- '08: Bearish on Housing, Bullish on Stocks
Realtech Partners, Inc. - © 2008. All Rights Reserved. Email
DISCLAIMER: Not associated with any city, county, civil entity, or government body. No warranties are stated or implied. Use at own risk. External web sites are not endorsed. Users agree to all terms. These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy contained within. These articles are provided for information purposes only and are not meant to provide investment advice to anyone. Please consult with your professional financial planner for investment advice.
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