Many individuals have asked me this past week, as a portfolio manager, what I think of the current market. I believe investors are scared by what the US Stock Markets may do next. Below I have listed 5 reasons why we should see the markets rally into the new year.
1. The US market is fundamentally undervalued. The recent decline in the markets has left many quality stocks looking very inexpensive.
2. The VIX just hit an all time high. What is the VIX and what does it do? Basically, the VIX measures volatility in the stock market. Many investors refer to it as a fear gauge. The higher the number, the greater the fear. A very high level is used by many contrarian investors as a buying opportunity.
3. The Federal Government is backing the truck up. One of the reasons markets have dropped so much is due to the lack of credit available. This freeze up of credit hurts business's revolving credit, keeps homebuyers from getting a mortgage, and keeps banks from giving loans. We are a nation the lives on credit. (whether this is good or bad is for another time) When the credit market is frozen, the individual consumer has trouble purchasing products and services.
The Federal reserve as been funneling dollars to the credit market to help unfreeze it. As this continues to happen, investors will begin to realize that the consumer will not face a credit crisis in 2009.
4. The sellers are going home. Many of the talking heads in the financial media have been saying the Dow needs to go below 10,000 before the market can go back up. Well the Dow just did that. The markets are starting to, run out of sellers. No one wants to sell stocks at this level as they believe the markets will recover.
5. The changing of the guard. Presidential Elections for the last 60 years have been bullish for stock markets. Typically the sitting President uses the resources at hand to try to put a positive spin on both the economy and stock market. The hope is that good feelings will keep the sitting party in power.
While there are more than a dozen reason as why the markets should rally from here, the above give you an example at what a money manager is looking at. - 15224
1. The US market is fundamentally undervalued. The recent decline in the markets has left many quality stocks looking very inexpensive.
2. The VIX just hit an all time high. What is the VIX and what does it do? Basically, the VIX measures volatility in the stock market. Many investors refer to it as a fear gauge. The higher the number, the greater the fear. A very high level is used by many contrarian investors as a buying opportunity.
3. The Federal Government is backing the truck up. One of the reasons markets have dropped so much is due to the lack of credit available. This freeze up of credit hurts business's revolving credit, keeps homebuyers from getting a mortgage, and keeps banks from giving loans. We are a nation the lives on credit. (whether this is good or bad is for another time) When the credit market is frozen, the individual consumer has trouble purchasing products and services.
The Federal reserve as been funneling dollars to the credit market to help unfreeze it. As this continues to happen, investors will begin to realize that the consumer will not face a credit crisis in 2009.
4. The sellers are going home. Many of the talking heads in the financial media have been saying the Dow needs to go below 10,000 before the market can go back up. Well the Dow just did that. The markets are starting to, run out of sellers. No one wants to sell stocks at this level as they believe the markets will recover.
5. The changing of the guard. Presidential Elections for the last 60 years have been bullish for stock markets. Typically the sitting President uses the resources at hand to try to put a positive spin on both the economy and stock market. The hope is that good feelings will keep the sitting party in power.
While there are more than a dozen reason as why the markets should rally from here, the above give you an example at what a money manager is looking at. - 15224
About the Author:
John Rothe is Chief Investment Officer of the Rothe Financial Group and author of How to Invest in Today's Market. If you are in aretirement planning stage visit www.absolutefolios.com
