Posted At : March 19, 2010 11:05 AM
For the time being the market looks to go higher, although it is severely overbought and due for a correction. The three things stocks like the most is:
2. Low interest rates
And the fed has assured us that rates will stay low for as long as the eye can see, which will give us both. They are paranoid that a premature easing move on their part would cause the economy to retrench into a “double dip,” and they’re right. That’s the lesson of 1937? (No, not the appeasement of Hitler. That was 1938.) In 37 the fed thought we were out of the woods and started raising rates and paying down the deficit. That caused the second biggest crash of all times, crushing the market almost 50%.
Unfortunately, the main strategy of the fed has been to create bubbles, instead of allowing the economy to readjust normally, and bubbles always burst as painfully as the last. However, it is imperative that you as an investor, or more like an ordinary citizen trying to live a normal life and pay your bills, take what the market gives you. This run could last weeks or months. The last one lasted from 2003 -2006. Unfortunately, investors cannot sit in cash or CDs for long, as they are guaranteed to lose purchasing power. One must find the right strategy that participates in the ups but also protects from the future inevitable catastrophe. It is essential that investors have an active portfolio that gets the very best return with the least amount of risk possible and also one that actively adapts to changing conditions. That’s where we can help.
Regards – Keith Springer
President of Springer Financial Advisors