Friday, October 7, 2011

It has been a number of weeks since I updated last.
The dynamics of the market has not changed and the intra-day market volatility has been extremely news driven with little progress. The pattern that has developed is daunting and will cause great confusionover the net 12 to 18 months. This environment will not be for the faint of heart however these are times where going against the majority consensus at the right TIME will pay off in the long term. Picking a bottom in this environment is a risky game so averaging in quality dividend paying investments is a sound long term strategy. However not every sector and industry will recover as it didin the previous cycle. Understanding the global economic landscape and future catalysts will be key to get expected returns. 
We are not quiet there yet , however there will be time where the stock market indexes rise as the economy gets worse and this confusion will cause many to miss out on this profitable wave. It will be important to remember during this phase that "The Stock Market is Not the Economy". For instance the worst part of the Great Depression was between 1932 and 1937, however the DOW Jones Industrial Index rose from 41.22 to 194.40 by the end of 1936 (a gain of 373%). I am not saying we are at the bottom but to always be aware of this contrarian dynamic that may face us.
February 2012 looks like a interesting TIME for this down leg to stabilize. We are at a point of recognition therefore if governments step up here we may see a TEMPORARY bottom in the next few weeks.However the TIME cycle is telling us that this down leg may have further to go with dramatic rallies and drops over the next 6 to 9 months.

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