Wednesday, April 4, 2012

A LOT OF BULL

I have posted 180 times on my blog but never about investing. Today, I will give you some free investment advice. It is worth every penny of my fee. The stock market just had its best first quarter in 14 years. The Standard & Poor's index is up 100% since the market hit bottom on March 9, 2009. The bull market is starting its third year, and many investors are just now getting back into stocks. Are they too late? Yes, it is too late! (IMO). The bull may continue to run for awhile but history says that the big gain has already happened. Any remaining gain is likely to be small and not worth the risk. The average bull market usually lasts about 4 years. The average gain in the third year of a bull market is only 4%. I am not willing to risk losing the 100% gain I have had in the last 2 years for a possible gain of 4%. The risk reward ratio is lousy! I have sold all my stocks and put the proceeds into a safe money market fund that pays 2.6% interest.


I do not claim to be able to accurately call the exact highs and lows of the market. No one can do that. But it is possible to use historical data to determine which way the market is likely to go in the near future. It is a gamble but rational common sense can help improve your odds. My friend Patrick Fero is a cynical pessimist about most subjects and concerning the present condition of the stock market, I totally agree with his philosophy. A spring pullback seems very likely and there are many, many potential events that could trigger another serious bear market. China seems to be heading for a recession, Europe teeters on the brink of bankruptcy, the price of gas is headed for $5.00 per gallon, our presidential election is fraught with uncertainty, and it has been a long time since the last successful terrorist's attack on American soil. I hope none of that bad stuff happens but one does not know, do one?  

Last:
13,264.49
Change:
arrow +52.45
Open:
13,211.36
High:
13,297.11
Low:
13,153.69
Volume:
108,785,713
Percent Change:
+0.40%
Yield:
n/a
P/E Ratio:
n/a
52 Week Range:
10,404.49 to 13,297.11
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1 comment:

  1. Patrick FeroApril 4, 2012 at 11:06 AM

    And the Tsar agrees with his friend, Freelance. In fact, the Tsar pulled out last year with the exception of some eponymous Canadian stock and the stock of a company he is suing (but continues to have doubled his money in).
    The stock market is in fact skewed heavily against the average American. Without the inside knowledge of a Congressman or billionaire (but I repeat myself), the rest of us stand little chance (despite occasional victories).
    Hiring professional managers can sometimes pump up earnings a bit, but these guys always come back to earth . . . so that you are in a position of trying to time both the market and your investor.
    All this makes the sinister proposals to privatize social security all the more irrational.
    Invest in junk: baseball cards, Mad magazines, and modern art. Items like these always have suckers ready to buy.
    TsarPat

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