Big Warning for Stock Investors

1. 67

   TimTurnerposted 14 years ago

   The stock market has risen about 15% in the last 3 months and about 80% in the last 8 months.  Seriously?
   
   We are still losing close to 200,000 jobs a month and small businesses are hurting.  The economic data is very mixed.  The ONLY reason why the last quarter looked so good was because of the "Cash for Clunkers" program and the housing credits people received (which I think you can still get).
   
   But people are saving more and are still very skiddish with spending.
   
   There is NO reason for these stocks to keep climbing.
   
   Look for a major correction soon.  Stocks are climbing when the economic data doesn't back it up.  We should be over 10% unemployment until 2011 (some are estimating) so there won't be any crazy retail spending in 2010.
   
   I bet this holiday season will be depressing for retailers and look for the stock market to react in early 2010.
   
   It seems wall street hasn't learned anything and it will be the small investors that will suffer again.

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      Jawa Lunkposted 14 years agoin reply to this

      You're right in a way, but you have to remember the entire market isn't controlled by unemployment, cash for clunkers or the holiday season.
      
      There are a LOT of companies that are making BIG profits off the new helthcare package mr. Obama is spending 1.3 trillion of our tax paying dollars on.  And where will the bulk of that money go?
      
      There are a lot of medical/healthcare companies in the stock market, and a lot of people investing in them knowing that big bucks are coming their way with the package (that was just approved yesterday).
      
      This will balloon the market up, but as far as putting that money back into the economy, probably not.
      
      The cash for clunkers (although many participated), did absolutely NOTHING for our economy.
      
      All it was for was to give the impression something was being done to ease the worries of the people.
      
      Millions of dollars for a program we can't afford right now, and now we have to find something to do with all of the cars (clunkers) people traded in for the cash.
      
      Hello debris and refuse...more garbage that will have to be stripped, chopped down and disposed of.
      
      But I am betting, even though the unemployment rate is up, you will be surprised this holiday season.
      
      Spending will be high, and a lot of those unemployed are getting extensions, up to 20 weeks in some areas.
      
      This year will close with a bang, and the up season will create confidence in the market and you will see a strong start next year...IMO
      
      

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   2. 61

      glide21posted 14 years agoin reply to this

      That may well be case, but gives us little in the way of knowing what to do. When the bulls get going, they can become unstoppable, that is their nature.
      However, there are islands of opportunity which require flexibilty and agility to take advantage of.
      For myself, I look for those short term opportunities, get in and get out. I am not concerned with the direction, we all know that this mini boom is all about government spending.
      Wishing you success in your strategy.
      
      

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   3. 61

      avromposted 13 years agoin reply to this

      Hi Tim,
      
      Well I saw your post today and LOL a year later and your post still reads the same as it did a year ago. Just goes to show you predicting the stock markets is futile, and if you second guess yourself you make bad decisions with investments. I guess you missed out on some big gains then ^^
      
      A better strategy is to go ahead and invest in stocks (percentage is your age i.e. 60% for me) and then jsut put trailing stop losses on your investments. Index investing also works well (i.e. Couch Potato Investing). This way you don't have to second gues yourself and you stay invested in the market

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      1. 48

         sfgmailposted 13 years agoin reply to this

         An even better method thatn Trailing stops which require you to either do you own extensive technical analysis to put in a price, or guess at a % to use, is to use SmartStops.

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2. 71

   Hauntyposted 14 years ago

   Keep on your toes and be ready to sell any time...

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3. 66

   Midasfxposted 14 years ago

   Perhaps you should look for other investment vehicles that are not based upon the ups/downs of U.S. Consumer spending, or even the U.S. government. There are plenty of opportunities out there to invest in. I for one, have been loving the metals, specifically gold bullion and the EUR/USD. Trading stuff like these can still give you great results regardless of what our crappy economy looks like.
   
   Good Luck!

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4. 61

   A.J. Frankposted 14 years ago

   I see a wealth of great information and advice given as a result of your article. I believe that the Christmas season will be so-so, and we'll see a few more bankruptcies of well known corporations along the way.
   
   I look for an end of year downward correction after the initial numbers come out, but nothing major.
   
   IMHO, one of the best opportunities will be to get some of your stock profits off the table and into bonds a month or two before it is obvious that the Fed will raise interest rates. This will be sometime next year.

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5. 62

   Kidgasposted 14 years ago

   Rising interest rates will cause the value of those bonds to go down, and you will lose huge amounts of capital.  I would not invest in bonds in an environment of rising rates.

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6. 69

   akihanposted 14 years ago

   the companies that are listed do not solely make money in the US but have worldwide operations. Hence, even when the reality in the US is economic gloom and doom, these firms are still laughing all the way as the rest of the world, primarily asia recovers.

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   1. 62

      Kidgasposted 14 years agoin reply to this

      Very true.  Asia seems to be recovering if you believe the stats.  Either way, you need to be able to profit whether stocks are going up or down.  Don't try to reason with the market, just go with it.

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      1. 69

         akihanposted 14 years agoin reply to this

         personally i think china has some really dubious stats. provincial officials are hard pressed to fake some numbers as their promotions depend on it. so incredulously, everyone has growth rates higher than the national average. but you can't deny they are an up and rising power. can't simply discount the brain and brawn power of a billion people.

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7. 69

   MikeNVposted 14 years ago

   There is a ton of risk in the market right now.
   
   Berkshire Hathaway is investing in food and energy.  It's not like Warren Buffet hasn't caught on.
   
   Watch what he does and gauge your own portfolio risk accordingly.
   
   The stock market condition is a reflection of interest rates and the money supply.
   
   Until the Federal Reserve is abolished and the ridiculous inflationary debt practices are eliminated there will be plenty of artificial risk to make the chances of earning pretty dismal.
   
   There is not going to be a rosy recovery because the debt model has collapsed.  You can not pay debt with debt.  This is why smart investors are getting into gold and tangible goods.

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8. 60

   jmysuitsposted 14 years ago

   I definately agree with you. The market is going up on a combo of speculation and yes some profitable companies. As a whole the market needs a correction or else we will be setting ourselves up for a major pullback. I think the biggest cause for concern right now is inflation. People need to wake up and realize that if our government keeps on printing money they way there are were doomed. Say hello to $10 gallon of milk and $20 Loaf of bread. Just my thoughts

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9. 60

   areyoukiddingmeposted 14 years ago

   I agree with you totally.  I have posted a new hub on my thoughts on some investing that is going on.  Could you tell me what you think?

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10. 77

    cheaptrickposted 14 years ago

    The stock market is for very Brave people.
    National debt is around 13 trillion.
    GNP at ruffly 2.6 trillion.
    Interest payments total over half a trillion.
    Seven Countries hold over 1 trillion each and are considering switching to the Euro or Yen.
    Cauliflower is 4 bucks a head.
    I'm switching to silver and land.

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11. 61

    mel22posted 14 years ago

    I think all small investors should get out now and let the fat cats on wall st take the hit on their portfolio. cash out and wait to buy gold again just after the "bad" christmas numbers rock the market. but wait to buy until just the day before the numbers arrive or whichever day has the lowest price the week before the numbers in beginning of jan. A second commodity boom will hit. gold will hit 1400 soon after. and have a good exit strategy in case the fed actually does increase rates which I don't think will happen.

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12. 37

    efeguyposted 14 years ago

    is true.the forex market has been falling,the eur-usd pair,gdp-usd pair and the aud-usd pair has been falling since december
    
    though as  a forex trader it has help me a lot cause i have been selling.that is the beauty of forex trade.you can  buy and sell.
    
    but for stock i cant tell

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    1. 60

       chamiljposted 13 years agoin reply to this

       Yep up or down you can make money with Forex it is the deference between forex and stocks.

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13. 60

    traderxposted 14 years ago

    Months later and the market keeps going. Now it goes on ever decreasing volume and the yelps on CNBC and elsewhere just love it. 
    
    If you want someone to blame for the markets just continuing to go up, blame the US government.  As soon as they bailed out all these companies, guaranteed loans, took over failing car companies there is almost NO FEAR for fund managers of a company blowing up - no fear = no sell.  Will it end - yes eventually.  They are already reaching for earnings estimates further out, but it has not gotten out of hand yet.  The general rule goes the more it goes without even a 5-10% correction the bigger it will be when it actually comes.  For a while there we set new records for longest time without even a 3% correction from highs.

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14. 58

    pennystocktobuyposted 14 years ago

    Hey guys,
    There's always good stocks/equities to invest in the market today, the key is extensive market research & analysis (of individual public companies). That's why in this inconsistent market most long-term holds are "iffy" , in my opinion better to get in and out as quickly as possible with a combination of good publicly traded companies (good pr's, good technicals, uptrend)..
    
    have a great day :-)

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15. 60

    hankoreaposted 14 years ago

    There is a huge misconception and fear that people still hold onto when they hear things on the news. Remember, not everything that the news/media tell you are truth. Most of the time, and I do mean most of the time, a good portion of the picture is taken out and left unheard. The same bias indulges itself in stocks. Simply, we are fearful of the "risks" involved with dealing in stocks. Despite the failure of our public education system, we are not limited to being spoon fed information from old school textbook teachers since we are now in a new age of computers and the internet. With the unlimited and vast data bank of knowledge that search engines such as Google and Yahoo, has accumulated over the past 13 years now, the public is able to freely access informative websites. And as we all know, not all websites are credible or should be taken seriously. To check credibility and the accuracy of a website or an information that is circulation, you can type in a variety of specifically structured sentences. For instant, if you were to key in the phrase, "How to make money with stocks" you will get a considerably different search result compared to the phrase, "How to gain capital with stocks." Through this system of researching, you can check websites back to back and check for errors and factual distortions. Remember, even .gov or .org sites are not always 100% truthful. Always view both sides of opinions! For more information about the "risks" that are involved and how to minimize your "risks" and to choose the right stocks, check out my hub,
    http://hubpages.com/hub/Choosing-Stocks.
    
    Hope it helps.
    Take care and thanks for reading.

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16. 48

    sabrinathomasposted 13 years ago

    This may be very harmful for all of us and we must be ready for that situation. If we will be prepared then we can face the problems otherwise we have to face a big problems.

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17. 59

    investor27posted 13 years ago

    Well everyone has to understand that there are apperant risks in investing, you can make a little bit of money or loose big. as everything falls at one time or another it has to go up. its now 2010, almost 2011 I have had a great year where I work sales are way up compaired to 2009 when I started working there so I guess that now might be a time for people who have 20-30 years or so before retirement to start building up there equity a little bit at a time and take some risks. Especially for the kids that just got out of highschool.

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18. 48

    parklandgroupoh1posted 13 years ago

    Yes, I am sure that a lot of people will agree with me that there are quite a few risks with the stock market. Of course you have to remember that this is a gamble that you are getting yourself into. An educated gamble but a gamble nonetheless. Someone once taught me a valuable lesson in investing, she is a Columbus real estate agent from http://ohioprettyhomes.com/ that seems to really know her stuff. With how much she has helped me with over the years, I only thought it fair to give here a little credit.

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    1. 66

       JustMikeposted 13 years agoin reply to this

       Over this last year with all these layoffs and plant closures companies have become leaner operations. The quarterly earnings reports are going nowhere but up. This is what's leading this stock market higher. Believe me there were a few days the last year i wish i could have sat out in the market but this has been a good year.

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