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Warren Buffet once said “be greedy when others are
fearful, and fearful when others are greedy“. (The
markets are high right now, even with the horrendous
financial news).
Here are a two more sayings that are common to successful
stock market trading:
Sell on the stall before the fall (ditto on the above)
The faster a stock has climbed the quicker it will fall
(ditto on the above)
Back in 1987, I noticed a pattern in the stock market,
that looked as though the market was being propped up.
Each day before the crash, as prices tried to ease
downward, there were fits and jerks to the upside. I see
the exact same pattern emerging as I write, September 27,
2007.
The big difference between then and now, is that in 1987,
banking and real estate were much stronger than today,
nor did we have healthcare growing at 4 times the rate of
inflation. In addition, the U. S. Dollar was near
it’s high. Today it continues to plummet, hitting
another all time low, losing somewhere in the area of
35-40% of it’s value since 1987.
There are numerous events that could adversely affect the
value of a stock:
- Loss of
confidence in that particular stock
- Loss of
confidence in the overall market
- Loss of
confidence in the economy
- The
unraveling of the real estate market
- Inflation
- Recession
- A Slowing
Job Market
- 7 Years of
Hidden Inflation
- Record
National Debt
- Record
Personal Debt
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Meanwhile,
mortgage companies are still getting creative!
Apparently, they could use a wakeup call. Reverse
mortgages continue to be offered, even though prices are
dropping like a rock, leaving homeowners with less home
equity. Before long, there will be more mortgage
companies than homeowners left holding the bag!
Sales of new homes plunged 8.3 percent in August, the
lowest level in seven years and will continue to suffer
through next year. Purchases were down 21 percent. Prices
also plunged by the most since 1970. The median price
dropped 7.5 percent from last year. Price declines raise
concerns that consumer spending will slow as fewer
Americans apply for home equity loans.
Most stocks that are related to Real Estate, Building,
Building Supplies and Financials, are way over exposed.
Yet, the drum beat of BUY, BUY, BUY, from the guru’s
and most brokers has ramped up.
Granted, the Stock Market is a LONG TERM investment, but
recent events are signaling a return to logic and sanity.
PS
And so it begins. I listened to MSNBC all day Friday,
Sept. 28 and didn't hear a peep about this:
Regulators Close NetBank
By Michael Scoglietti
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