Dead Cat Bounce?

The market had a monumental upswing today. It had several key factors mostly though oil was back up and rising sharply the past two days. Some good earning number, possible Greece debt deal, and okay economic data all contributed. This follows of course a couple of weeks of bad news and falling stock prices. So which way is the market really going to go? Is this just a dead cat bounce where a major fall has started hit the first floor, bounces a little and then just goes right back down and even farther. I do not think it is a dead cat bounce. It might go down some more but in the end this year I think it will be up and reach great heights. We should always keep an eye on the market and be careful about the direction it is headed. 

Let's consider that it is not a dead cat bounce then the people who bought at this level will have larger gains than those who waited until someone else told them it was time to go into the market. If it is a dead cat bounce than the people who buy now will lose money at first. They can always recover it but it is difficult to recover losses. So it is always as previously stated a risk to buy into the market but one that consistently pays off with a well diversified stock picking. 

So I'm going to say that this current uptick is not a fake bounce. It is a strong uptrend that will continue. 

The Market Is Down Again

The market has had several days of losses. It has started high and then nosedived or just started down and never goes positive. This will scare many people from the market and could get people to stop investing or pul money out. This is the wrong strategy. Money should be going into stocks. They are still a great buy and certainly have room to go up even higher. Not only do third year terms for presidents always outperform the average but companies are still profitable.

Companies have changed their outlooks and some companies earnings have missed. Many companies are still strong though and will do really well once the oil is more stabilized and consumers have money to spend from saving at the fuel pump.

At this time I am still strongly a bull and believe the market will shake off these early year jitters. In full disclosure, the Christmas season was not as strong as I expected. It did not have the increase in December spending but a decrease. I cannot always be right but it does seem that consumers had money. The consumers did not spend their extra cash. I think they will spend it and some were probably waiting for the deals after Christmas.

Happy Investing in 2015 may it be profitable.

Fed is Ending the Dreaded QE

YEAH!!!! I'm very happy the Fed is ending QE. It's great news for the long-term economy. It might hurt some in the short-term with decreased stock prices but I feel that in the long-run it will be so much better. We will no longer have fake growth in the stock market and it will now be more realistic growth. The stock market is currently lower but in the long run it will go right back up. Might be a time to buy as stock prices take a little downside. The Fed was very happy with the overall economy and this is also good news.

Now if only they raise interest rates to a more reasonable level. Go out there and make wise investment choices. If I get time I will post more about this change in policy.

Reverting to the Average

The wheel of fortune is always spinning on Wall Street and some days it is in your favor and others it is not. With good research and strong companies hopefully you come out ahead and the wheel is in your favor more times than against it. I don't think you should be constantly trading stocks based on news and sentiment on the street. Many times it is based off fear and causes money in the hands of brokers and you losing money. However a way to play with stocks is the idea that all stocks will revert to the average gain at some point. In this case it would be the S&P 500. 

A stock that has shot up recently will probably come down some in the next few months off it lows. Not always the case and this is why it is a bad idea to gamble here. But it probably will go down, once it misses its earnings or just because people have moved on to the next hottest stock.

The beaten up stocks unless they are truly fundamentally flawed (where good research will help you out) will probably go up in the next couple of months and maybe even outperform the market. This is the same theory as the Dogs of the DOW but slightly updated and now can be used al the time. 

Those that are depressed will go up quickly and make a quick buck for the investor and others will quickly fall which if shorted would make money. Again though it does not always work and every investment is a risk because of uncertainty. Anything can happen but probably in the end everything will revert to the mean. 

IBM and Apple Reported Today

And the two reports were vastly different in reactions and profitability. IBM lost about seven percent today and never recovered from their tumble this morning. Apple had a strong day and after their earnings report had a strong after hours movement up in price.

Investors did not like the report that IBM had an earnings miss and selling its chip business. It was probably good that IBM sold the chip business and can use those resources more efficiently. Any investor of IBM is hurting today. Although, I still think IBM is an okay investment, it will be steady and maybe they can reinvent themselves to be leaner. They are more attractive now at the lower price.

Apple had a very good earnings report with high margins as expected, huge numbers of iPhone sales, and less than stellar iPad sales. Apple has mountains of cash and will use the cash horde to buy other companies to increase revenue streams and continue to make great new products. Not everyone will work but some will become household staples.

Apple is more revolutionary than IBM and that is partly from the fact that Apple is a newer company and has created a culture of trying new things and pushing the boundaries. Now they make different products and only operate as competitors in a few places. It really depends if you as the investor think that Apple can continue to reinvent the wheel or if IBM can turnaround to become more nimble.

I would look at other tech firms than these two. Both are consistent and large. I'm searching for the next Apple.

Bad February…Not yet

Does the Dow dropping 2% and the S&P dropping 2.5% mean that we will have a terrible year? It could definitely mean that the market will not do as well as its fantastic last year. I believe that this market is just showing people being cautious in a new year with Fed tapering and skeptical of the market return from last year. The market's return last year was Dow gained 26.5% and the S&P returned 29.5%. Way above historical averages so it makes many investors hesitant about the next year and many think a bubble has formed. The market has several factors pushing it down, people taking profits, a new Fed Chairman, and a possible idea for a bubble. This year though is not 2008 or 1929.

So many companies had such a great fourth quarter/Christmas season. They beat expectations in earnings and returned high profits. A few big names with high bars on earnings fell flat but this was not due to poor economic conditions. It was mostly changing tastes, weather related, or poor execution. Companies sometimes do not do well in a quarter it does not mean that a bubble has formed in stock assets and everybody needs to convert to cash.

You can try and beat the market but I know I cannot beat the market so I remain in my positions and trust that the economy is strong. The economy collapses in a manner that all companies go under it won't really matter that much that you have cash because it would be worthless. Take head and do not get too caught up in the wildness and scare tactics of the market. Remain strong and stick to your investment plan that you know works.

The market I think will still be up this year or just slightly down. Companies are doing great and the economy is doing better. Although with stocks being down this week it would be a good time to get in to investments that might have been expensive last year or rearrange your portfolio to a new balance. Continue making wise investments, studying and choosing.