Skip to main content

Wall Street Wrap: Is a bear market resuming?

In following up on my article from earlier in the week about the weakness showing in the market, I update market action here in a new chart. While we only have two more days of data, note that a new high may be forming which is lower than the previous high. 

Note that on Friday, the rally in the market came in the last 15 minutes. Futures, which open this evening at 5 pm CST, may indicate which way the market will open on Monday morning. 

 There would be nothing wrong in moving to cash at this point, especially if the market trends lower on Monday, Feb. 11. Or one could wait until the moving averages cross over. This would be the blue line crossing below the purple line. 

 This type of market action going into a bear market has happened twice before: in 1987 and 2007. After the market losses about 20 percent, a short rally ensues, only to be followed by a resumption of the bear market. Note what happened in late 2007 and early 2008. While past market action cannot predict future market action, I would not be surprised if the market resumes a downward trend. (But I would also not be surprised if it went higher, either. Never be surprised, just observant). 

 Note the short rally in early 2008 before the market drops. Look familiar? After the bear market in 2008, it took six years to regain all of its losses. 

Protect yourself. Be observant and ready to change your investments. Ask yourself: Can I wait six years for my portfolio to recover? Moving to cash, if you haven't already, may be the smart move. 

 Don't fall prey to the myth that you can't time the market. While prediction is futile, you can adjust to go with the trends. You won't get the high or low, but you'll protect yourself from major losses. Most advisors and brokers at this point -- and have been for the last several months -- been coming on heavy with advice to stay the course. Diversify they say. Problem is that a market on a down trend will pull most everything with it...

 In full disclosure, I am about 70 percent in cash and money markets. I own AT&T (telecommunications), Caterpillar (industrial), and HollyFontier Corp (energy refining). These three stocks constitute about 15 percent of my portfolio. I also own the following ETFs: AMLP (energy delivery), ERX (leveraged energy), SRET (real estate), and PFF (preferred stocks). These four also constitute about 15 percent of my portfolio. These investments are mostly dividend plays for the income stream. With dividends from my money markets (yield is currently about 2.4%), I collect about $650 per month in dividends on average. 
Labels:

Comments

Post a Comment

Thanks for the comment. Will get back to you as soon as convenient, if necessary.

Popular posts from this blog

Top Five Consumer Cyber Security FAQs

Business, technology, environmental and economic changes are a part of life, and they are coming faster all the time. All of these changes and advancements can be distracting and make us more vulnerable to cyber scams. That's why protecting your credit is a critical part of protecting yourself from cyber security threats. Security researchers have reported that hackers and scammers are using any opportunity or vulnerability to target both individuals and companies. You may have already seen these attempts in the form of fake emails or calls. Here are the top five questions Equifax ®  has received about how individuals can protect themselves from cyber security threats and help to improve your credit protection. 1. How can I better protect my credit? Check your credit reports frequently. You can get free credit reports from the nationwide credit reporting agencies (Equifax, Experian ®  and TransUnion ® ) at annualcreditreport.com. Check your credit reports frequently to closely...
Post a Comment
Read more

School Choice Passed by Texas Senate

The Texas Senate on Thursday approved a $500 million school choice bill mostly along party lines after hours of passionate debate. It will now head for consideration in the House, where members rejected similar proposals during the regular session. Senators passed Senate Bill 1 by a 18-13 vote, with one Republican joining all Democrats in voting against the measure. The bill will likely face steep resistance in the House, where Democratic members and many rural Republicans have vehemently opposed such proposals. School choice programs, also called education savings accounts or vouchers, use public money to help pay for a child’s private schooling. “We must recognize that a one-size-fits-all approach doesn't fit the needs of our diverse student population,” said Sen. Brandon Creighton, R-Conroe, who authored SB 1 and estimated the proposal could serve about 60,000 students. Texas has about 5.5 million children in public schools. Public schools have failed the American people, especi...
Post a Comment
Read more

Diversity Programs Don’t Make Companies More Profitable

A new study by two scholars at the University of North Carolina and a professor at Texas A&M examined the impact of DEI programs in corporate America and found no evidence that these programs lead to higher returns. The study reported: “The business case for diversity” is the dominant rhetorical paradigm for how U.S. corporations debate actions and policies around racial/ethnic diversity. In this paper, we conduct an empirical test of the paradigm by gathering data on the race/ethnicity of the individuals shown on the leadership pages of S&P 500 firms’ websites as of mid-2011, 2014, 2017, 2020 and 2021, and then determining if any of nine measures of the racial/ethnic diversity of these executives reliably predict…their firms’ financial performance over the next fiscal year. We do not find reliable evidence that they do. As such, our results do not support the “business case for diversity” when the claim is assessed using 1-year-ahead financial performance metrics and multiple ...
Post a Comment
Read more