Stocks are the best game in town
The outlook for equities is stronger than for bonds, metals, commodities and currencies.
By Mary Anne and Pamela Aden, The Aden Forecast
The stock market is super strong, hitting new all time record highs. Its bullish momentum keeps gaining strength. The Dow Jones Industrial Average ($INDU) have surged above 15,000 and the market is likely headed much higher.
We all know the Federal Reserve's easy money policies have fueled the boom in stocks. So much money has been created, it had to go somewhere -- and so far it's going into the stock market.
Many investors are doubtful. They're convinced the rise in stocks is just a Fed fueled bubble. But it really doesn't matter. Whether it's the Fed's bubble policies or not, the point is, stocks are bullish and you want to be in the market.
For now, stocks are the best game in town. They're much stronger than bonds, the metals, commodities and currencies.
Think about it. Investors have nowhere to go. With interest rates near record lows and paying next to nothing, a savings account or CD simply doesn't make sense. And while that's not good for savers, it's very good for the stock market, making it more attractive.
Currently, the economy is improving, but it remains sluggish. That pretty much guarantees the Fed will keep interest rates low and the money flowing.
This is a great combo, especially combined with record corporate profits and reasonable valuations. Plus, the stock market looks ahead, so its rise is also a positive sign for an improving economy.
Baby boomers heading into retirement age are not getting any income from their savings or cash retirement accounts. That means they have to increase their risk factor somewhat by going more heavily into stocks to make up for near zero interest rates.
For starters, investors have primarily been buying into the bigger, high quality dividend paying stocks. These are the blue chip stocks that are considered the safest for long-term growth and income via consistent dividends.
But now investors are kicking it up a notch. Tech stocks are picking up steam and so are some of the global stock markets. Here, too, low interest rates and strong earnings are fueling the rises.
Tech stocks, for example, are still very cheap. And the same is true of many of the world stock markets.
Plus, don't forget, there's still a mountain of cash sitting on the sidelines and most money managers are bullish. This alone could drive stocks to sharply higher levels.
There's an old saying in the stock market and it's so true, "Don't fight the Fed." Well, we're not. We're staying with the Fed and we hope you are too.
The bottom line is this -- as long as the Fed keeps buying bonds, providing easy money, and keeps interest rates at super low levels, stocks are going to rise further.
We believe stocks are headed higher. For new buyers it would be ideal to buy on a downward correction, especially if the "sell in May and go away" syndrome comes to pass. But the ideal moment may not come. So we'd go ahead and buy at least some now, and then buy more when stocks do correct. In other words, average in.
Currently, we'd continue to buy positions in Powershares QQQ (QQQ), SPDR Dow Jones Diamonds (DIA), iShares S&P Global 100 (IOO) and iShares Dow Jones US Telecom (IYZ) as well as our newest recommendations, the iShares Dow Jones Transportation (IYT) and Consumer Discretionary Select Sector SPDR (XLY).
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"Stocks are the best game in town"
Of course they are. Especially when the Fed is pumping financial crack to the addicts to the tune of 85 billion a month...
If your in the stock market, your a winner. If you get out, your a looser.
I know many people who got out when the stock market tanked a fiew years ago. They put thier 401K into a much safer pot...so they thought.
They jumped out of the stock marked when it was down.....what's a stupid thing to do. They wil never get to recover all that they lost. I ,as did many other's, stayed in...& doing so purchased more shores at the same time. Now that the stock market has reconered....my 401K...Looks VERY GOOD.
The Fed's easy money policies may be good for Wall Street's false bubble but Main Street is struggling economically and financially. The Fed's spending has not only inflated the market but our dollar along with it.
Someone will have to pay the piper for the $85 billion monthly welfare (QE's) for the past several years.
We all know who gets the bill as usual.
“Think about it. Investors have nowhere to go.”
Gee, that’s the first time I heard this…..IN THE LAST 12 HOURS!! It’s shameful what cargo cult sales BS passes for financial advice these days.
The Fed is playing a nasty game which relies on the selfish egos of market participants. Everyone in the stock market thinks they are getting ahead when the broad market rises. The truth is, when everyone’s wealth rises in price by the same percentage, no one but Wall Street brokers and traders really gets ahead. Ironically, once the Fed pushes yields on both stocks and bonds to zero, the only thing it will have accomplished is to cancel all hopes of meaningful future gains on everything. Then where are ya gonna go? And, how long are you going to wait in hopes of being among what is inevitably only a small percentage who will be able to make the transition successfully before everyone else?
When everyone in the contest gets a gold star, no one really wins anything.
Hey REGAL MAN 500
What else could the explanation be for the booming market??
That the economy is booming???
P. T. Barnum was right; There IS a sucker born every minute.
Who the hell are these people? Buy! Buy! Buy! Sounds like 1929 all over again.
My advice... wait for it... wait for it.... wait for it....
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Fed keeps important 'considerable time' language in reference to short-term interest rates, but dissents and dots leave doubts.
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