May 14 2009
Is The Stock Market Done Falling?
Wednesday’s drop shattered many investor’s hopes that the bull market had come back to the U.S. market. While the last few months have seen an overall climb, days like today give investors the jitters. And it should The last ten months have given the American Investor the worst bull market of this generation. Investors who have been investing for only twenty years or fewer have seen a drop in the Dow that almost defied reason. It was a legendary drop, and not only was it unsuspected, it was purely frightening.
Having said that, many investors have been optimistic that this is now the end of such tumultuous stock declines. And the Dow seemed to have forgotten its recent spookiness, climbing from the low of of 7,000. Wednesday’s drop was an aftershock after a catastrophic earthquake.
Is th stock market done falling? Martin Weiss of Weiss Research points to historical precedence in his belief that the market is not done bleeding. He points out that in times of U.S. irresponsible spending, inflation came back to haunt our very existence. Only the intervention of some very clever leaders at the Federal Reserve have kept us from going through another Great Depression.
Weiss’ sole goal for his subscribers is that they should not lose money. It is his belief that in order to retain wealth, losing that money can set a person back for his entire life. Look at the retirees who suffered at the hands of Bernie Madoff for proof of that.
There’s nothing wrong with that kind of thinking. But many advanced investors are in the market to make money. They aren’t interested in over caution as much as to make money. Having said that, what can be done about a falling market and investors who want to win?
Strategy and great care when stock picking. Never pick one that is over 20 P/E. Do the proper research. Are insiders buying? That is a good sign. Does it have a proprietary service or product?
Not only that, but think ahead. What sectors are undervalued. Which stand to gain in case of a rash of inflation? If the market is going to fall more, then these bargains will probably not be as affected.
In the end, smart investments will win out, especially if the buyers concentrate on undervalued stocks. In another twenty years, these days will just be a blip on the screen.
