On any given day, two diametrically opposed opinions on the future of the market exist. Always, the folks who espouse these opinions have credentials, such as PhD, President of Investment Fund, Hedge Fund Manager, or Investment Strategist. Here are two for your consideration.
- Once the elections and Fiscal Cliff are in the rearview, Jeff Suat says companies will start to spend again, resetting the economy and getting GDP growth happening again. In other words: “buy the dips.”
- Jim Rogers is less sanguine. “2013, 2014 you should be very worried and you should prepare yourself,” he says.
What does one do when a “legendary investor” (Jim Rogers) says the economy is heading for a severe recession next quarter and an investment strategist for Raymond James (Jeff Saut) suggests the exact opposite? Here’s what I do – I smile.
I smile because I know I am not dependent on either for my strategic approach to the market, number one. Number two, I find it amusing that some folks are so certain about their opinions regarding the economy and the market. Me? I’d rather look to the facts to form my own opinion.
- Groundbreaking on new U.S. homes surged in September to its fastest pace in four years, a sign the housing sector’s budding recovery is gaining traction. Housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units.
The above is just one sign that the economy is more than just slogging along. It is improving in one very key area – housing. This means jobs for lots of folks in construction, manufacturing, and retail. Combine this job growth potential with the rising value of US real estate and you have more money flowing in the economy. To the latter point, folks who feel they are gaining value from their single greatest investment will feel freer to spend, or they will borrow against their equity to remodel their home, buy a car, or take a vacation. By the way, getting loans is easier, another good sign for the economy.
- While lending standards in general have eased, banks are not about to return to the practices they were following in 2005 and 2006 before the housing bubble burst.
The above is both opinion and fact. We hope banks learned their lesson, but the fact is that lending standards have eased, not just for real estate loans but also for all types of loans, and as I pointed out the other day, loan delinquencies are declining and defaults are lessening. It appears consumers have learned their lesson as well.
The economy is improving and as that process continues, the market will respond positively. Until I see “a clear and present danger” to the economy or the market, I will keep making my money work in the market, despite what the really “smart’ people say. Oh, and I will keep answering reader’s questions …
- I’m currently trading SPX. I’m not sure which direction it’s heading. I have read numerous articles suggesting long and numerous articles suggesting short. What’s your opinion?
I think I just gave it.
Trade in the day; Invest in your life …
