Avoid the Herd Mentality
We revisit these past descriptions of the state of the U.S. economy because investors’ outlook today is just as pessimistic…which may be too extreme. The quotes above have a consistent theme with today’s environment where the country is going down the tubes. The demise has been averted in the past, will this be the time?
Even though the U.S. economy continues its tug-of-war as it gains footing out of the most recent recession, an opportunity is presenting itself to many current homeowners. Almost two years ago the Federal Reserve began an effort to help keep home mortgage rates down to aid the struggling housing market. This sparked increased home purchases and a wave of refinancing at the time. Mortgage rates eventually climbed back up, but have recently declined back down to historically low levels. This is providing a second opportunity for current homeowners who did not take advantage of the refinancing last time around.
Normally the summer months provide lethargic trading in the financial markets. Vacations are taken by many traders worldwide and volumes slow considerably. The past few weeks have pretty much followed suit. The result often is wide fluctuations in market prices since a one day or one week concentration on the buy or sell side is met with little resistance.
State of the Markets
Well, it’s official…this past decade has been dubbed “The Lost Decade.” As measured by the S & P 500’s anemic negative .95% average annual return, the past ten years have performed the worst since at least the early 1800’s.
High quality active managed funds outperformed the indexes by a wide margin over the same period. Asset allocation that included bonds since 2000 performed even better yet.
Too Bearish on Equities? (Part II)
The last email blast in July was titled “Too Bearish on Equities?” Our analysis was suggesting at that time that the overall sentiment of novice and professional investors alike was that we were due for a second leg down in the markets. Since then the S&P 500 and the Dow are both up 15%.
Too Bearish on Equities?
This mini bull market we have been riding for the past three months has continued to surprise many with its longevity. For a couple of months now market experts have been warning about a second wave of financial problems and economic weakening. Just maybe they are being too bearish.