The Consumers and Investors are Not at the Gates:Sunday Morning Thoughts 18 July 2010

The DOW, NASDAQ, and the S & P all ended the week in the red.  Friday’s down turn of the stock market hinged on a few factors, one being the banks such as Bank of America, Wells Fargo, JP Morgan Chase all reported less than anticipated second quarter revenues.  This falling short of expectations for the banks coupled with sub par consumerism mixed with the New Reform bill to soon take place has made many investors nervous.

The new rumor, we may slip back into another recession, but at this point even with the skepticism we are poised to maintain a slow and steady recovery.  The strides we are making now are small little hops, which when we look back a year from now, when all totaled will equal a big leap.

For some investors, government securities have become the new safe haven, but with so much interest in the government bonds the prices rose as the yield went down, paying more to earn less is not a great strategy.

America is not the only country at this point feeling the struggle of growth out of a bad economy.  United Kingdom announced it is the equivalent to 5 billion dollars in debt.  The Nikkei this Friday was much like the DOWJIA closing down by over two hundred and fifty points.

When we look at all the factors for our recovery, the stalling is mostly due to the reaction banks had to the outcome of the sub prime lending.  They tightened the reigns of credit with only a 30 day notice of severely increasing consumer’s interest rates.  Some consumers became bad credit risks due to the banks drastically cutting their credit limit to just above the amount owed.

Basically, if a person had a credit card for $12,000 and owed $3,000 towards the balance, this would only be 25% usage of the credit.  In our current economic times, the banks have been cutting those higher limits down to just above what is owed.  So what was once a $12,000 credit limit with $3,000 owing, it becomes $4,000 credit limit still with $3,000 owing.  This radical decrease causes the credit usage to shoot up overnight to 75%, this would make the person appear as though they were irresponsible with credit.

There should not be a wondering why consumers have fallen off of purchasing.  With credit dwindling and interest rates sky rocketing, buying anything above the necessities would be a frivolity.  Many consumers have moved towards making purchases with cash or debt cards instead of with credit cards.  People feel more in control with keeping themselves and their transactions liquid.  All things tangible are driving the stock market while all things cash will help keep consumers from sinking into deeper debt.

Was That The Recovery You Asked: Sunday Morning Thoughts 11 July 2010

Answer, NO.  Not all of it, there’s more to come.

We are in the midst of the recovery.  Currently the stock market is correcting itself from our past transgressions.  The stock market ending on an up for Friday is good but don’t be surprised on Monday when the market opens down but closes moderate.

This type of activity is normal in a stable recovery.  We are going to see many ups and downs, peaks and valleys in the stock market, the overall will be a slow movement up for the stock market.

At this time foreign Investors being squeamish towards the American stock market is with good cause because we are in an unstable time of the recovery.  One good push in the wrong direction, and we will be looking down the barrel of a long Depression much worse the one from the late 1920’s.  Many of our own American Investors are showing indecisiveness with jumping from stock to stock just for a moderate fluctuation in the price of the stock.

The investments showing growth from week to week are tangible assets such as gold and silver.  The current market prices have not been this high for a very long time.

Suffice it to say, a tangible asset is a good investment.  Real estate is also a tangible asset which has a lot of influence on the global economy.  Now is the time to make sound investments in real estate.  When this tangible asset starts showing strong signs of improvement it may be a long time before it will be this affordable again.

Market Watch: Sunday Morning Thoughts 23 May 2010

With the stock market semi rebounding on Friday one would wonder what the coming week has in store for investors.  Wall Street, the gambling hall of the elite, has seen a very rough ride this past week.  Most would be optimistic to say that it s turning around due to Friday’s DOW closing up by 125.38 points for a DOW of 10,193.39  the NASDAQ and the SNP also had a gain at closing.  But conversely, Thursday’s DOW close had a loss of 376 points.  The NASDAQ and the SNP were also off by a significant amount.

But what will happen in the weeks to come?  There aren’t any accurate predictions until we come to that particular bridge.  Could the stock market fall below 10,000 some time next week?  Don’t start dusting off the crystal and magic 8 ball just yet.

The ten percent correction to our current bull market is normal, but this may become a twenty percent down turn in the weeks to come, which puts us in a bear market.  Consumerism during a bull market tends to be spend a lot save a little, during a bear market we all become more frugal with our expenditures, opting for Target’s best bargains and the racks of Marshall’s than the new arrivals of Macy’s, Nordstrom’s, and Bloomingdales.

The influencers of the stock market are all around us.  The global economy is seeing a lot of suffering, such as the issues with Greece, China, and the European Union.  There seems to be a lot of “market corrections” going on of late, with more on the horizon.

These tough economic times we are currently experiencing does not make this a time to run and hide.  Don’t bury your head in the sand thinking it will all pass.  This is time to make sound plans for the future.  The present may look bleak but the future will only improve.  Times of Great Depression are always followed by times of milk and honey.  Ford did not listen to people when he tried to make the first horseless carriage.  With persistence, innovation, and a positive attitude about the future, Ford went on to make the horseless carriage which gave rise to the assembly line, employing many people.  Well we all know how the story continues.

Yes the American dollar and the euro aren’t what they use to be.  Yes the housing market is due for another landslide of foreclosures in the commercial sector.  But we can look forward to the future holding a lot more stability due to current actions by our government with the new financial reform bill.   Although it is now unclear how bumpy the transition will be in this bold new reform, it is a step in fixing the problem of those who find the little holes in the system to get rich at the expense of rendering others broke.

Believe in persistence, innovation, and a positive attitude to facilitate growth, prosperity, and achievement.