This is not a good investor’s market. It is a great trader’s market. If you are prepared to buy short term and have a sale discipline it is time to buy.
Just when I thought regulators and governments were out of arrows, overnight developments should shoot stocks higher. Witness: IMF makes $100 billion (about half their assets) available to countries that have resisted IMF money because of harsh IMF restrictions on loans. Bank of Japan and Japan government puts billions into guarantees, stimulus, and tomorrow’s anticipated rate cut. Rate cuts in China and Norway. Billions into Hungary. There is a rumored action by our FDIC to guarantee mortgages for as many as three million homeowners and hedge funds. Outrageous as this sounds it helps equities. All this and more suggest a short term move in equities. Watch S&P 985; if we go through we go higher.
Underlying all this is a brutal economy. Corporate earnings will stink. Consumers have stopped spending abruptly. (I know we have) Unemployment will surge to a painful level. Hedge funds are loosing billions and investors are pulling their money. This creates wild daily swings in stocks as hedgies hit the sell button. Plus, some are suggesting the recession may last into 2010. We hear that government bailout money is being used for corporate bonuses and or buying other banks. None of this is neat. Hence, a traders, not investors mentality is needed to succeed now.
The easy way to participate: Lazy Portfolios. Like mutual funds, Exchange Traded Funds own shares of companies. There are hundreds of ETFs, many that specialize is sectors such as REITs, banks, solar, agriculture, general market, etc. The nice thing about ETFs as opposed to mutual funds is ETFs can be sold, right away, on an exchange.
Thanks to Kirk here is an example of a Lazy Portfolio
Three ETF Fund Portfolio: Bill Schultheis (The Coffeehouse Investor)
– 33.3% in Vanguard Total Stock Market (VTI)
– 33.3% in iShares International MSCI EAFE Value Index (EFV)
– 33.3% in iShares Lehman Aggregate Bond (AGG)
