Comments on: Market Crash Coming?

By: MoneyNing

MoneyNing — Thu, 30 Apr 2009 15:39:44 +0000

The stock market certainly seems like it’s going up in the next few weeks/months so there’s absolutely no reason to fight it. The only reason that it will go down will be some type of surprising news that no one expected to spook everyone. The foreclosure numbers in a couple months could be it, economy could be it, banks needing capital could be it as well but unless that happens, it’s better to stay long than short.

I believe it’s totally misleading to think about the stock market as a leading indicator. At the end of the day, stocks are something that people buy and sell based on how they feel the underlying companies will do in the future. If the stock market go up, it means that more investors/traders believe that the companies will do better (which is tied to the economy). The reason why stocks are going up is because many people now believe we are on our way to recovery and that in a couple months, we will see the bottom in unemployment, economy and housing. This is slightly different than thinking that just because the stock market goes up, the real estate and economy follows.

By: MoneyEnergy

MoneyEnergy — Thu, 30 Apr 2009 01:40:31 +0000

From what I understand, Dividend Growth Investor is right…. but as we heard on BNN today, it’s going to come down to what the next earnings estimates look like. That’s what everyone is waiting on in order to see whether this rally will be sustained. Personally, I think any sustained rally will be just that – an effect of the added inflation and investor psychology. The fundamentals are not back on board yet to provide for real earnings growth anywhere.

By: The Digerati Life

The Digerati Life — Thu, 30 Apr 2009 00:18:19 +0000

I have the same feeling that the market’s going down. But I’m not making any changes to my allocations except perhaps to buy into battered equities once my anticipated slide does happen.

By: Dividend Growth Investor

Dividend Growth Investor — Tue, 28 Apr 2009 18:48:28 +0000

Actually I think that the stock market is the leading indicator and not the economy or real estate market. The market went lower 3 months before the financial crisis started, and if this rally is sustained then the market would have predicted the future economic upturn as well.

By: Frugal Dad

Frugal Dad — Tue, 28 Apr 2009 01:38:55 +0000

Thanks for the link! I agree with you, and definitely don’t think we are out of the woods yet. This might prove to be a temporary upswing leading to an even sharper fall. The swine flu hysteria combined with a summer-time uptick in foreclosure numbers could be a perfect storm for future declines. That said, I’m not making any dramatic shifts in my investing strategy because I’m in for the long, long haul. However, I am making a few minor shifts to avoid some of the short-term risk.

By: UH2L

UH2L — Mon, 27 Apr 2009 20:30:58 +0000

One thing to remember is that the Baby Boomers are beginning to pass away. Their saved money may become inherited money that gets spent. Plus, our population is still growing. That means more demand for everything in the long term.

By: MoneyNing

MoneyNing — Mon, 27 Apr 2009 15:54:58 +0000

Thanks for letting me know that it was a good idea to share. I had to think about whether it was good or not to talk about it since it promotes buying and selling more than most people should. However, I felt like I couldn’t just stay silent and not say anything if I see what’s happening.

By: Jeff@StretchyDollar

Jeff@StretchyDollar — Mon, 27 Apr 2009 14:43:40 +0000

This is an interesting post, good stuff to think about. I think it’s important to share these types of things even if it’s just your gut feeling.

By: Erica Douglass

Erica Douglass — Mon, 27 Apr 2009 07:53:09 +0000

Hi David,

You’re not the only one who feels this way. Mish from Global Economic Trend Analysis (popular financial blog) says the market is overbought. I just put my $5K in my IRA to meet the 4/15 deadline for 2008 contributions. I planned to put it in the market, but am waiting.

As I type this, it is about 1AM PST and the Asian markets are down on “swine flu” fears. It is likely the American markets will follow. I think, at least short term, you will find you made the right decision.

-Erica

By: David Stillwagon

David Stillwagon — Mon, 27 Apr 2009 02:33:14 +0000

I agree with you that the market will continue to go down and the housing market will take along time to recover. Even the old advice about holding stocks long in no longer applicable. Its very depressing to think that there isn’t any place to put your money right now except a bank where the interest is minscule.