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. Q1 2.26. 2008 Analysis: True Market Analysis, or Self Interest? Home Page
Many times when you read a financial website, like Yahoo finance, WSJ or MSN, you see a lot of 'spin' on the stock market moves. Dramatic moves up or down are 'because of this' or 'because of that'. The stock market is a reactive beast, but there can't be any explanation attributed to its actions. Major events that happen in the world being the exception, day to day moves cannot be labeled with causation.
I think this comes from the need to show a degree of 'control'. A need by asset managers to provide assurance that the market doesn't move randomly and without purpose. But it is exactly that, judged in terms of red or green numbers: it is without rhyme or reason.
When conducting your own analysis of the markets, you really must 'read between the lines', and try to see the motivations behind the article or person. Many realtors will say that we are at the bottom, and housing is a great investment. But reading between the lines, you can determine that with experts predicting more pressure on housing, this is not time to buy. So you must conclude that the leaning of any one man or entity is that of their (or it's) own self interests.
There is no evidence to suggest housing will recover anytime soon. On 2.25.08, yahoo finance announced that existing home sales are at a 9 year low. The stock market was up strongly: and soon after that the headline read "Stock Market up on Potential Housing Bottom."The very next morning, 2.26.08, 3 headlines hit the wires just before the open:
"Homes prices drop 8.9% in 3 months" "US Home Foreclosures Soar in January" along with the headline: "Wholesale Inflation Rate Soars" and "Markets headed for lower open".
This should lead you to 2 thoughts:
1. The order and timing of the headlines suggest that the source of them is in a 'short position'; and actually wants the markets to go lower.
2. More foreclosures means more housing glut, means lower prices and more inventory, i.e. no bottom.
This illustrates the point that news on these sites is timed for specific release times to achieve a desired result in the markets.
There is an inverse sentiment approach, and a long and short of it as well. These bearish headlines prompt selling, yet the sources of the headlines may be setting up buying positions, a bullish indicator. Ever notice when a stock is down on good news? Must be when insiders are selling in the upward swing, on the good news; a seemingly bearish indicator. Brings to mind the old saying "buy on rumor, sell on news".
Imagine a rider on a horse, reins in hand, leading the beast where it wills. The markets are a beast, and there are powerful motives behind what news is released, and when. These attempts at manipulation can be seen, once you read behind the actual data and see the true motives of the information. It's also important to understand these forces profit when the markets go up or down.And of course, sometimes the beast breaks free of its rider. The forces that be lose control themselves, usually resulting in a 'system break' that was never projected or intended. This is when the beast is loose, and results in halted midday trading on Wall Street. -comment-
UPDATE- 2.26.08: Housing may be dead money for the next year, probably more. Sellers won't reduce prices (denial), so forget any recovery there. Deflation? Possibly a temporary trend. with such political uncertainty: Who knows what the economic policy of the country will be in 10 months? Democrats and republicans are apples and oranges: They are mutually exclusive ideologies. All this in a sputtering economy? We may not see a crash, but a bear market is very likely; unless the recession fears dissipate on facts. It could be a slow bleed down to 10,500 or it could set a real bull market in the event the economy can distance itself from dependence on a political outcome. Not much to like in asset classes; have to think deflation is a real threat.
The spin will come from brokers and realtors to buy buy buy because they depend on home "investors". Read between the lines when you read articles and such saying the market moves for whatever reason. Look at the motives behind the article or analysis. Deflation of assets, inflation of commodities, and the housing implosion due to mismanaged loan portfolios: to result in a cessation of credit., i.e. no more 'no doc' loans. So dead markets mean more savers: mean cash out of the markets means opportunities in asset again, unless of course we see a depression: then..who knows? The times are ripe for disaster scenarios..
Financial brokers in the stock market profit in an up OR down market. That's the scary part. That's why when you read into an economic analysis, you can tell what direction these guys want the market to go. Their money is on it: up or down. Don't be surprised if we have some kind of terror attack or crisis that drives down the stock markets soon after the new president takes office. Conspiracy theorists love this type of scenario. If The New World Order decides to short the American economy, then things will get ugly. Brings to mind horse trainers. They train the preferred steed with another that is taught to lose by a small margin to build confidence. Like a 'bear market rally'. Like today 3.5.08 is a bear market rally. If markets can be manipulated, then believe me, they are. If they want you confident and buying, they will let you know. Trust me, go the opposite way, brother.
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**ARTICLES**
. Q1-Feb 10 '08: - The Perfect Storm of American Economic Downfall . Q1-Feb 21 '08:- The Counter Intuitive Market Force: But Housing is the Exception . Q1-Feb 21 '08:- The 5% Income Rule . Q1-Feb 21 '08:- A Compelling Argument for Alternative Investments Q1-Feb 26 '08: True Market Analysis, or Self Interest? . Q1- '08: No Recession, but Deflation? . 3.17.08: Next for the Economy: The Greatest Bull Run in History?
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