A Suspicious Rally in the Stock Market
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A suspect power rally in the financial markets
Stocks vs. Bonds: The bond market is being artificially manipulated by the Federal Reserve, as they sell short-term bonds and buy long-term bonds. Rates on CDs are ridiculously low, and is forcing people to make other financial decisions, which often ends badly. When people think they need to be getting a return on their investment at all times, they often move their money from a safe place into a risky one. It’s a good idea to be educated about your investment options, but remember that we are advising low-risk investments right now. Don’t be too eager to move your money in such turbulent times.
The stock market rallied this week, but we are still suspicious of this change, because, as you all remember from 2008, we have seen these kinds of bubbles before. We think that the problems in Europe will seriously effect the stock market (check back on the blog tomorrow for more details on the European crisis). For this reason we advise keeping a high volume of cash in your portfolio.
Despite a good jobs report this week here in the U.S., the situation in Europe has not changed for the better. We predict that economic growth will slow in response to these fiscal problems in the rest of the world, particularly in Europe. It’s crucial to understand the risks and continue to face these problems with a defensive posture.
For more information on the economic situation in Europe, please listen to the podcast and check back tomorrow for more info on the blog.
