This Market Is Terrifying Isn’t It?

By: ispeculatornew
Date posted: 04.29.2013 (3:00 am) | Write a Comment  (0 Comments)

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Is it just me? When I look at the main market indexes such as the S&P500, I see them at or near all time highs. The economy though continues to struggle with sub-par economic growth, high unemployment, record deficits, and no clear way to turn all of this around. It’s the same or worse in most of the Western world and some emerging countries such as China are clearly slowing down.

SPX

Market Performance = Economic Performance?

I do know that these don’t necessarily go together, especially in the short to medium term. That being said, markets are generally driven (at least in the long term) by fundamentals.. by company earnings. A struggling economy would eventually put pressure on those earnings. The only way for the market to keep growing would be:

-higher P/E ratios

That of course is not sustainable, even if a treasury is pumping billions into the system trying to help us believe that everything will be alright…

What I’m Doing To Counter This Feeling

There is only so much I can actually do. Waiting to invest or shorting the market could cost me dearly and has been a difficult position to sustain for many hedge funds & investors. I personally am trying to do the following things:

Not Trying To Time The Market: I will continue to invest money on a regular basis into my retirement accounts no matter how markets react overall which in general works out much better than trying to determine when markets will crash

Looking For High Value Stocks: I do try to look for stocks that have strong brands & fundamentals and that would do well no matter how the economy ends up doing

Being Realistic About Potential Losses: In some cases such as my trade on Apple (AAPL), I do feel like the downside is fairly limited. In other higher reward plays though, such as my purchase of Facebook (FB) stocks, I do make sure I understand the potential risks and would be able to live with large losses.

What are your thoughts? Do you trust the current market?

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