The stock market, the gold market. Both of these have a way of moving well before major economic events are evident. Research suggests the stock market is ahead of the economy by about six months. It moves in anticipation of events rather than actual events. The gold market has its own drummer and moves for its own reasons, in its own time. Stocks and gold are moving now, and they suggest a change in the economy.

First, the stock market continues to gain ground, climbing what is commonly referred to as the "wall of worry." In other words, there's lots to be worried about, but stocks go up anyway. That's because investors are beginning to see some light at the end of the tunnel. And it isn't a train. This week, the official keepers of recession data, the National Bureau of Economic Research, announced the recession ended in June of 2009. Aren't you sorry you missed it?

Continue reading Comfort Zone Investing: What I Think the Markets Are Saying

Comfort Zone Investing: What I Think the Markets Are Saying originally appeared on BloggingStocks on Sat, 25 Sep 2010 10:30:00 EST. Please see our terms for use of feeds.

If the market had gone up today, so-called analysts would have been available to explain that the market rose because weak job market results meant that the Fed was more likely to lower interest rates than it otherwise might have been.

After all, some analyst could have argued, the risks of not cutting interest rates -- in the form of a weaker economy -- far outweigh the inflationary risks. In fact, those analysts might argue, a decelerating job market means that there is a bigger risk of deflation. And what better way to counter that risk than to cut rates?

So why didn't the market rally today? Nobody who knows the answer is talking to the media. It's safe to say that the wisdom of those who comment to the press on market movements is worth exactly what you paid for it -- nothing.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Why the market should have risen today originally appeared on BloggingStocks on Fri, 07 Sep 2007 17:13:00 EST. Please see our terms for use of feeds.

Continue reading Market correction nearing a bottom

Market correction nearing a bottom originally appeared on BloggingStocks on Mon, 13 Aug 2007 12:20:00 EST. Please see our terms for use of feeds.

Today the stock market is getting slammed, with the Dow down over 360 points. In my view, that's because many of the bad things that investors have been worrying about for years are all happening at the same time:

• Spiking oil prices -- a barrel of crude oil was up $1.12 at $77.
• Tanking housing market. Disappointing results from home builders including Pulte Homes Inc. (NYSE: PHM) and D.R. Horton Inc. (NYSE: DHI) -- squeezed by a sluggish environment from home sales and continued defaults in subprime loans -- weighed heavily on the market.
• Drying up of private equity financing -- as I posted earlier today.

Over the last few weeks, these worries have been masked by an onslaught of big mergers. But the mergers aren't happening today. Moreover, if the credit markets decide to turn their back on future deals, the only thing to stop the market from freefalling would be big companies exceeding earnings expectations.

What should you do? Probably nothing if you're in it for the long term, eventually all the bad news will come out and there will be a buying opportunity. But not yet.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

Market tanks: Oil, housing, and credit crunch to blame originally appeared on BloggingStocks on Thu, 26 Jul 2007 14:50:00 EST. Please see our terms for use of feeds.