Written by Keith Springer
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The stock and bond markets are breathing easier after the European debt crisis has eased (again). The European financial crisis seems like a problem that just won’t go away, (which it won’t in the long term) and every time the world gets nervous, our markets shake. To the world’s surprise, Japan agreed to buy Europe’s financial aid bonds.
This is clearly a sigh of relief, especially since Spain and Portugal are next in line to issue debt. For the time being, this crises will be more of a nuisance, as the Europeans, particularly the Germans, simply won’t let the Euro die and will take whatever steps are necessary to keep it afloat. After all, just print more money, right! Ugggh, it sure does seem like the world has lost its way in regards to responsible financial management. At some point the bond vigilantes are going to step in and put a screeching halt to it, but not for the immediate future.
Next in line for the markets are earnings, which I believe will be stellar, much better than expected. This, coupled with low interest rates for the foreseeable future and with the continuation of Ben Bernanke and his Federal Reserve’s Puppeteer troupes’ quantitative easing program, is good news for stocks….for now. We are in a Goldilocks environment. There is no doubt a bubble is being formed, and we all know what happens to bubbles, so be sure you know how to play with bubbles. In the short term, the market is over-bought and in need of a correction. However, it could be working it off with its sideways movement. As earnings are announced, and if they are better than expected, I expect stocks to rise in response until earnings season is over. At that point, we should expect the long overdue correction.
This somewhat rosy outlook should not be over-shadowed by the fact that serious problems continue to exist in our economy and at some point there will be a hell to pay. We are in the Great Viagra Market. However, when it turns, it will turn fast and it is critical that investors have the right tactically managed portfolio, that gets the very best returns with the least risk possible, and have a personal exit strategy at the ready.
You guessed it, that’s just where we can help. Our active hands-on approach to managing portfolios can help you manage risk and deliver returns.
P.S. Now that we’re in a new year, you owe it to yourself to make sure your finances are in order. Call me for a free consultation today at (916) 925-8900.