It has indeed been a very interesting week, watching the market continued to rise, even on the day before possible bond tapering by the FED will be announced. May be it is indeed true that like everybody said that FED's bond tapering has already been factored into the stock prices. Many have started predicted the DOW will continue to rise closer to 1996 in 2015 or 2016. Are they correct?
Today, the DOW is very close to its 12-mo high of 15,658.43 (8/2/13) and the BULLs are very very happy and nobody appears to be worry. I guess because everybody already expect Bernake will announce a tape-like move such as the reduction of 10B on the buying of Treasury only and not on mortgage backed securities, therefore keep the party going on. Or will it?
I guess the market has reasons to be jubilant, the crisis with Syria seems to be abated and Summers withdrew from being considered to be the next FED chairman. Therefore, ALL is WELL and yes according to many, stocks are still CHEAP and the financials are the next BEST buys. Or is it?
I no longer know how the market will behave because nothing is based on fundamentals any more. REITs have been going up and up. Just look at NLY, MTGE and PMT. Went up a bunch. Gold and silver continued to tank and according to many the announcement of FED tapering will result in Gold's dropping below $1000 a troy ounce. Therefore, they said SELL, SELL, SELL. They also told us there is no INFLATION and many of us actually believed it.
Right now it would be indeed risky to touch either gold or silver because they are just too volatile. I do not trust all these gold and silver ETFs because I have no ideas what they are really investing in any more. I would rather continue to accumulate both gold and silver coins, something I can touch and enjoy.
I did notice that my OIL stocks continued to creep up. CVX, COP and OXY all went up. I did buy back some RDS-B today and very tempted to get some APA but it went up today due to upgrade.
My thought is this, yes, prices of gold and silver may tank more after the announcement of FED's bond tapering and nobody can eat Gold or Silver. Now industry does need silver, especially the solar energy sector and if silver drops to or below $20 an ounce, I will grab some SLV or buy some silver eagles. But OIL is needed by everybody and I just cannot see its price continues to tank and most of these oil companies pay a pretty enticing dividend. RDS-B pays close to a 5% yield with no withholding, unlike its twin, RDS-A, therefore good for an IRA account. I also do not believe the Russia can really solve the Syria mess, adding IRAN and Egypt to the midst, the middle east is just a total mess. Therefore, OIL.
As usual your judgement is clouded. Imagine shorting a bull market with double short etfs, now you think oil can not tank.. Do you not realize that America will be completely energy self supporting in a couple of years due to the shale oil deposits. What do you think will happen to oil prices then?