Online Stock Trading | Stocks Are Showing Their True Colors

Stocks Are Showing Their True Colors


Filed Under Market Commentary |

Cash continues to be King

I can not imagine what it would be like if I bought after Monday’s market session.  However, I know stock market history and during bear markets you will see the largest percentage gains.  January 3, 2001 the NASDAQ gained 14.17% and 3 months later the market was down more than 30%.  This illustrates the point that although the market had a huge one day gain it is not the time to jump in.   The market today showed it is continuing the process of working out the deleveraging and pricing in an Obama presidency.

At the moment the Earnings on the S&P500 is at $52, Earnings Estimates for next year $60.  Historically, the price to earnings ratio on the S&P500 is around 12.00.  This pins the S&P500 at roughtly 720, almost 200 points from where we are now.  I am not one to be a foundamentalist but this argues the point that the leverage that was in the system has propped up equity prices for far too long.

My positions remains the same, cash is king.

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Comments

One Response to “Stocks Are Showing Their True Colors”

  1. Stocks Are Showing Their True Colors : Monster Stock Trader on October 16th, 2008 2:00 am

    […] Stocks Are Showing Their True Colors Share and Enjoy: […]

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