August 5th Overview and Incite Into August's Trading: Double Dip Recession in Progress
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Big business is quite literally pumping the market news with positives, taglines like "Volatility Pumps up the Volume in August" while the intelligent investor sees a bleak outlook in almost every sector. If you were to scan the stocks trading below their 52 week lows you would see that at least one stock in each sector is doing so, even Reuters, a company which is one of the strongest in its sector, saw itself hit a 52 week low this week. In fact, at the close of Fridays session there are 878 public companies trading below 52 week lows, on average, you're looking at 25-50 maybe 100 on a bad day, but these stocks are all from different sectors showing the only volatility is adverse volatility.
That being said, we're looking at a 10% glooming unemployment rate and U.S. parliament did not even solve the Debt Ceiling Crisis, they just padded the fences. The only accurate "tagline" in these investors comments is the word volatility. We are experiencing the most volatile market of the 21st century, even more volitle than the major recession (which I view as more of a depression, only tagged a recession to keep the untaught investor from pulling their shares). Wallace Witkowski of Marketwatch claims that "Domestically, the Labor Department said the economy added 117,000 job in July and that the unemployment rate fell slightly to 9.1% (Marketwatch's article "Volatility Pumps into the Stock Market) while we are actually looking at numbers closer to 9.5%. In laymans terms 9.5% sounds fair, but in reality that is more like a 25% unemployment rate, any economist will tell you that the 9.5% excludes people searching for work for over a period of weeks, people not actively searching for work, and people who are on programs like unemployment and disability.
We have hit the double dip recession already, stocks dropped 500 points one day this week and the DOW is trading at 11,444 points, when in 2007 it was trading around 14,000, and in 2000, during the dot com boom, the market was trading at 10,000 points. Investors over the past ten years have either experienced dissaving or little to no growth in commodity prices.
Obama said we have reached our limit, and for the better we have cut our losses. Big Tech Stocks like Google and Apple held over the past week and we are only seeing a changing of the tide in the markets. You must remember, never give into the words of a market "guru," the market changes every 4-5 years, they may have figured out the market short term, but there logic will soon be deemed useless.
That being said, there is still money to make in the markets, you could buy short and wait it out and find your place to invest on stocks you think will drop and rebound, or there are a few sectors which are trading below their par value. Look into low par value Energy Holdings, Chinese Communication Companies, and big tech stocks which have experienced losses since July 27th, those will rebound and you will make money off of them.
You must remember the principle of long run economic growth. The market only crashes once every 75 years (See the Book "Long Run Cycles of Economic Growth), and in my opinion the market crashed in 2008, we hit 6,700 points from 14,000 points, over a 100% drop. We have hit our double dip recession, it is time to buy short and wait until the right time to buy, you will surely see capital gains through that investment strategy.
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