Has The Market Peaked?

If you are asking yourself if the market has peaked, then you are a very insightful individual. The run up on the market (as I have stated previously) has no logic. Not to imply the market is logical, but you have to take a step back and wonder what the basis is for the extended run up. Obviously, a vast majority of the investors out there sell when stocks tank and buy when stocks are on the rise. I know, you've heard that all before, but the fact of the matter is when the market peaks, it is typically about 20%-30% overvalued at that point. It is relatively safe to begin buying (mutual funds) after the market has pulled back 10%; only if you are using dollar cost averaging. If you plan to shift a bunch of cash at once after a 10% pull back, you may or may not lose money, but you will most likely hinder your future gains. If you are 25, you can pull that off, but if you are 45, it is best to get back in slowly. This way you may sacrifice potential gains in order to mitigate potential losses. You should always look at it this way.....if you put a chunk of money into a stock and it loses 50%, you need to double it from that point in order to break even, so hasty bets and not for the meek. If you have play money that you can afford to lose, by all means, go for it!

As I wrote last time, triple digits movements in the DOW are a rare. As per usual, when I state something like that, the opposite starts to happen. The scary thing about the market is that when we hear good news about a large company, folks start buying. It seems they buy without rational or long sightedness. They buy as if they are day traders looking to capitalize with a huge bet on a stock hoping to sell at the next 1/8 point increase. Granted, the market drivers are the investment firms and hedge funds, which makes me think at this point, they are trying to walk their holdings up and invite the individual suckers to jump in at too high a price and then the biggies will jump ship and leave the individuals with overvalued stock that has no where to go but down (sorry for the run-on sentence). Just remember, if you are able to obtain as little as $5M-$10M dollars, you can manipulate a stock and make a killing the same as the hedge funds do. Also, if you are looking at a stock and you like to see what the analysts think of it; stop doing that. There is a conflict of interest there that cannot be igonored. Finally, please lobby your congressman to impose the Steagall/Glass Act of 1933. This whole process started when the Clinton administration repealed that law. That one caused a snowball effect that we are now getting hit with today. Think about what happened to ING, Bear, Merril.