Archive for July, 2009
Friday, July 31st, 2009
On Wednesday I wrote about the bottom of the stock market and speculated that we hit ‘the’ bottom in stock prices last March.
Today, I am speculating about reaching ‘the’ bottom for the economy. I think we have. There is no doubt that data released by the various government bodies have shown that we are not shrinking as we were, but they also have not shown us that we are growing and there is always the possibility of an unknown event that would sink us further. However, I don’t think so. This morning’s GDP number for the second quarter was better than expected with a shrinkage of 1%. That is better than the 1.5% expected and far better than the 5 and 6% shrinkage in the previous two quarters.
Note however, that it is still a fall. Our economy is still contracting, not expanding; therefore there is not much to feel good about. Yet, I am telling you that the recession is over. The turn is in. Before an economy can return to growth it needs to stop falling. It appears we are in that phase of change. The reason I am expressing confidence is because housing is improving, and not just because the new housing report showed a 10% growth number and a reduction in inventory. I have been involved in Southern California real estate for most of my adult life and I have many contacts in that industry. Lower priced homes for sale are getting scarce. There are multiple offers for these homes and supply on the open market is tight. That seems to be at odds with the foreclosure rate. But again a turn in housing always starts in the low priced homes. That has already started. So goes housing so will go the rest of the economy.
Good Trading
Steve Peasley
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Thursday, July 30th, 2009
Today’s Stocks & Topics: (UNG) United States Natural Gas ETF,IRAs, Junk Bonds, ETFs vs. Mutual Funds, Types of stock shares, Finacial book review.
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Wednesday, July 29th, 2009
Today’s Stocks & Topics: (RBA) Ritchie Bros. Auctioneers Incorporated, Real Estate, (GD) General Dynamics Corp., Roth IRA, (SBR) Sabine Royalty Trust, (NLY) Annaly Capital Management Inc.
Steve has put together a “must read” list of recommended books in the Investtalk Bookshelf. Click here to see the list.
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Wednesday, July 29th, 2009
While earnings season has and is continuing to show us that companies are generally beating expectations the economic news this week is mixed. A great housing report has been followed by a weak consumer confidence report and a poor durable goods report.
While housing is very important and will eventually give us a chance to move the economy forward the worry about when this might happen is still very pervasive. Investors are just not ready to believe that improvement is under way or that it is sustainable if it is underway.
This is a classic response at this stage of an economic downturn. How bad is bad? Will we every get out of this deep recession? Is there more bad news coming? It seems everyone is expecting it.
As investors you can’t guess at the bottom. Watch your stocks and watch the indexes. They have been moving up and they are your best leading economic indicators. Of course that does not mean the economy or the stock market will continue to improve. It means that investors believe that we have hit the bottom. Or at least ‘A’ bottom. I think investors will be proven correct. It will just take time.
Good Trading
Steve Peasley
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Tuesday, July 28th, 2009
Today’s Stocks & Topics: Metal Commodities, CDs, New Investor, Mutual Funds, 401(k), (MIR) Mirant Corp
Steve’s new book: “Above Average Investing” is now available from the Investtalk Bookshelf. Click here to buy your copy today.
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