stock market posts
With several major developments occurring around the world, many investors may wonder how they could affect their portfolios or their lives. Here are two of the current, newsworthy events and how investors may interpret them.
The oil from Libya totaled about 2 million barrels a day before the revolution, half of which was exported. About 1 million barrels a day are no longer available to the world. That isn't enough to really affect the price of oil for a long period of time. Plenty of other countries can supply that amount without straining their capacity. But they're unlikely to step in to fill the gap when oil prices are above $100 a barrel. That price should recede once the conflict finishes and a more stable government is in place.
Continue reading Comfort Zone Investing: Libya and Japan -- What They Mean for Investors
Economies go in cycles. They push to their breaking points, then move in the opposite direction. We saw it clearly in the '90s when there was no end to up (except there was and we abruptly hit it in 2000). In 2008, it felt like there was no end to down. But we now know there is. Things are picking up, and there are numbers to prove it.
Don't be the last to figure out we're in an economic recovery. Sitting on the sidelines, waiting for one more chance to buy a stock at the bargain price you saw in March of 2009 isn't going to happen. Times have changed. The U.S. economy is on the mend.
Continue reading Comfort Zone Investing: Can You Feel the Pendulum Swinging?
Investors and economists received a rather nasty surprise this morning when the Labor Department released its weekly data on initial claims for jobless benefits. According to the Labor Department, new claims for unemployment insurance rose by 19,000 last week to a seasonally adjusted 479,000.
The government did note that some of the surprise increase (a small decrease was expected) may be attributed to difficulties the government has in adjusting for seasonal factors. The four-week average of initial claims increased by 5,250 to 452,250.
Continue reading Jobless Claims Data Cast a Bearish Tone
Technical analysts look for chart patterns that may predict further price changes. One such analyst is Daryl Guppy, who in a CNBC article has analyzed similarities between the chart patterns
following the 1929 stock market crash and the crash of 2008.
Here is his analysis:
- In 1929, the market fell 49% from its high. In 2008, the drop was 52%
- Following the 1929 crash, the market recovered 46%. After the 2008 crash the market rose 69%
- Following the 1930 recovery, the next leg down following the rebound exceeded targets by 28%
- If this is the next leg down in the current market, he is looking for Dow 8,400. However, if it exceeds his target, he then projects Dow 7,500 in 2010.
Continue reading Dow Could Fall to 7,500 if 10,600 Is Not Breached, Analyst Says
1. Can I afford to lose money I put into stocks?
The number one question to ask because in these troubled times (see GM) any company can go out of business at any moment. And there is no comfort in bigness (see GM). Investing in stocks is risky (see GM). If you can't afford to lose money you invest, then don't invest. It's better to save that money until you have enough to be able to invest with some of it so that the loss of the funds, or a partial loss, won't affect your lifestyle.
2. Have I done enough research on a stock to buy it?
Most investors will research a stock by looking at a few data points, then pull the trigger. Or they'll hear a recommendation from a screaming head on television and decide, because of the emphasis of the recommendation, that it must be the right stock to own, regardless of its risk profile. One time, at least once, but this one is well documented, a talking head on a financial show was recommending a stock at the same time his fund was selling it. He lost his job.
Continue reading Comfort Zone Investing: Five Questions to Ask Yourself About Investing
Friday could prove to be a day when the U.S. stock market's bears reasserted themselves, if two data points line-up in their favor.
The first? The outcome of the European Union/International Monetary Fund meetings aimed at putting together an aid package
that will assist Greece's transition to fiscal solvency.
There's no more lee-way left -- or investor patience -- for European officials to continue their game of financial chicken -- first Greece calling budget cuts to severe, then Germany requesting more time to verify Greece's budget cuts before releasing aid, etc. Hence, any additional 'kicking the can down the road,' financially will probably rattle equity, bond, and currency markets, including U.S. stock markets, and provide ammunition for the stock market's bears.
Continue reading U.S. Stock Market's Bears Eyeing Greece, Q1 U.S. GDP
This is getting a little too easy! Friday's positive close marked the forty-fifth calendar day that has elapsed since the Standard & Poor's 500 stock index pulled back even a measly 1%. The Dow even briefly reclaimed 11,000
before rolling back a hair away from the milestone figure at the close.
If you were a visitor from another planet, you would be forgiven for concluding that the stock market always goes up. It certainly has seemed that way since February 23, when the market posted its last significant one-day drop.
Continue reading 45 Days Without a 1% Slide Equals a Coming Correction
Last Friday, we learned the economy added 123,000 jobs, the most in three years. Investors everywhere are now waiting for the Dow to cross the 11,000 mark and hoping that the 6% added to the major indexes in March will happen once again in April as we enter earnings season.
Personally, I don't think Dow 11,000 really means anything. But I'll admit I'm pretty fired up about the upcoming first-quarter earnings season. Since the first quarter of 2009 was arguably the worst part of the recession, favorable year-over-year comparisons will lead to blowout results for most companies. In fact, I expect the S&P 500's operating earnings to be up almost 70% during the first quarter on average. With numbers like that, it's easy to imagine the market will post significant gains.
Continue reading Investors Beware -- The Stock Market Is About to Hit a Wall
Americans just don't know what to believe any more. The Europeans have it easy: as investors, they believe in Americans. We don't have as much confidence, though. A recent survey by AXA Equitable Life Insurance Company (AXA) found that less than 20% of Americans are confident in their abilities to invest in the stock market, despite the fact that 60% believe they need to throw some equities in their portfolios.
In recent years, equities have made people nervous. Following the global financial crisis, the S&P 500 Index lost 37% of its value. It's a tune we've all heard before, though. Similar sentiments followed the 1987 market crash and the collapse of the dot-com economy. True to form, investors reacted, pulling a whopping $242.7 billion out of equity funds in 200 and 2009 and allocating $401.7 billion into bond funds, according to the Investment Company Institute.
Continue reading Americans Have Trouble Trusting Equities
We have been hovering around 10% unemployment nationally for a while now. That's about double what we experienced prior to the housing bubble burst and banking nightmare. In many places, unemployment is more severe, such as Detroit, where unemployment is more than twice the national average. Yet the stock market has been rising as if this doesn't matter at all.
Perhaps on some level it actually doesn't matter. What if it actually makes things better?
Continue reading High Unemployment Is Good for Stocks?
Europe is hot, if you don't look too far over your shoulder. The Dow Jones Stoxx 600 Index played well through the stock market recovery of 2009, ticking up 28% (60% from its March 2009 low). This was the index's best annual performance in a decade.
Basic resources and banks gained 100% and 46%, respectively, this year, after having turned in dismal performances the year before. China helped, as well, with its elevated economic growth forecast good for another 0.5% gain during the shortened week of Christmas.
Continue reading Good Year, Bad Decade for Europe
One of the easiest stock picks for me to make this year is also one I made last year and for many of the same reasons. In a time of economic turmoil, high unemployment and tight liquidity, what could be more practical than pawn shops and cash advance outlets? EZCORP (EZPW
) made me money last year and I expect more
of the same as it continues to expand.
Most investors wish they could have gotten in on the ground floor of the hugely successful The Home Depot Corporation (HD
), McDonald's Corporation (MCD
), or Starbucks Corporation (SBUX
) franchises while they only had a few hundred outlets. In the case of EZCORP that is still possible.
Continue reading Chasing Value: 2010 -- #3 EZCORP
Notice the headline is a question, not a statement. If I knew exactly what would happen in 2010, I wouldn't write anymore -- I'd just invest accordingly. But I don't know (nor does anyone) what will happen exactly in the next 12 months. However, there are economic signals that can give all of us some good guesses. Here are mine.
Continue reading Comfort Zone Investing: What's Ahead in 2010?
We've watched stock market numbers bounce around for two years. Unemployment stats have served as unpleasant reminders that, for some, leading indicators haven't translated to reality. We look for so many ways to understand the brutal economic environment with which we've had to contend, and all the choices can make your head spin. So, let's make it simple. Here are eight ways to tack a label onto the financial world in which we live.
1. Lost market value
Total stock market losses from October 2007's top to March 2009's bottom: $11.2 trillion
Total gains in the stock market since the bottom: $4.6 trillion
Lost ground: $6.6 trillion
2. Bad days
Percentage of the 10 worst days in history for the Dow Jones Industrial Average that happened in 2008, by point drops: 60%
Percentage of the 10 worst days in history for the DJIA that happened in 2008, by percentage drops: 30%
3. Mutual funds
Value of mutual fund assets at the end of 2007: $6.5 trillion
... and a year later: $3.7 million
Lost value: $2.8 trillion
But, it got a little better at the end of August 2009: $4.5 trillion (value of assets)
Continue reading Eight ways to define the recession
With about a 50% run up since January, the stock market is poised for a dip. That is the conventional wisdom being touted by the analysts.
The idea is a good one, but what do you mean by a dip? This is where it experts disagree as usual. Let's take a sampling of some leading pundits:
Sam Stovall, chief economist at Standard & Poor's, said: "But now (referring to continued high unemployment) that economic waters appear more choppy and third quarter earnings session is about to begin, are investors less inclined than they were a few weeks back to buy stocks on market dips?"
Continue reading When to buy the dips in the stock market?
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