Global equity stock market suffers loss for the year with the exception of US and a few Asian countries. European stock markets tumble on the sovereign debt crisis which spreads globally to affect the stock markets. There is sell-off in the emerging market stocks as investors are exiting from risky assets. Gold surges to record high but retreats recently. US equity stock market is better than the rest of the world.
Investors remain cautious on equity stock market. On the other hand, overall personal wealth is growing on the global scale. But the distribution is largely biased resulting in concentration of wealth and widening of the gap between rich and poor. The consequence is social instability and the average people cannot benefit from the growth in economy although the number of billionaire sets record high.
Household wealth is growing steadily. But the capital does not go into the financial system to facilitate the operation of small businesses as banks are reluctant to lend to business. Large corporation bonds can attract investors for its relative safety.
Hot capital in the financial market is causing the turbulence in asset prices including equity stocks, commodities, real estate, etc. Investors are finding investment opportunities other than holding cash with mere return. As long as there is tremendous cash on the sideline, equity stock market remains highly speculative until confidence returns with strong evidence of growing economy.
Trade with your brain, not your emotions
Making the right trade isn't always fun. Sometimes it feels viscerally wrong.
Both Sun Tzu and Mohammad said that "war is deception." Well, financial markets are at war with your capital and your head. They bob and weave like a prizefighter, trying to lure and confuse us before delivering a knockout punch. Stocks play head games, sapping our conviction to buy or sell at precisely the moment when it makes sense to do so.
A recent case in point: precious metals. Silver collapsed back in May, and I told some trading friends that I thought it was going back to $30 before it returned to the April highs of $47-$48. So what did I do? I sat on the sidelines for most of the spring and summer, then started to doubt my own chart work and eventually tried to get long in early September.
That was obviously a mistake, because silver would soon crash once again, and this time it found support at what price? That same $30 I had coolly and rationally identified several months earlier. (Which, I should add, I liked because it was a peak from last December and January.)
The lesson: We should all try to determine the areas where we're good and stick with them.
Investor Uncertainty At 6-Year High: Survey
As investors brace for more volatility, their uncertainty about the direction of the stock market is at the highest level in six years.
The latest poll by American Association of Individual Investors shows that 38 percent of respondents expect stock prices to remain flat in the next six months. That's the highest level since April 2005.
European sovereign debt problems, domestic politics and lackluster economic growth are all weighing on the sentiment, according to the survey.
"The sentiment numbers reflect the sense that a short-term solution to the problems here and in Europe do not exist," says Charles Rotblut, vice president at AAII. "There is also a sense of frustration about the inability to get good returns right now".
On a bright side, there is no significant level of fear among investors, and many are looking for modest gains in 2012, says Rotblut.
While volatility is widely expected to continue, respondents predicting an up year for S&P 500 outnumbered those expecting a down year by a margin of three to one.
Expectations were modest, however, with more of than half of those predicting gains saying the S&P 500 will rise by 10 percent or less.
According to the survey, a notable number of AAII members are anticipating another pullback in stock prices in 2012.
Hold Your Nose & Buy Bank Stocks: Bove
After crashing 50% in 2008, and then enduring another brutal 30% decline in 2011, investors could be excused for wanting to seek their fortunes somewhere other than in the KBW Bank Index. But Dick Bove, financial sector analyst at Rochdale Sector, isn't running away from his picks, he's doubling down on them, and predicting (again) that the market's coldest industry is on the cusp of greatness.
Bove is expecting to see continued improvement in trends, including the domestic economy and banking industry earnings that are at a 4 1/2 year high, have risen for 9 consecutive quarters, and "aren't as dirty (or cluttered with charges) as you think."
But for all their profitability and potential market share gains, investors are still not seeing it - or at least buying into it. Bove himself offered up an explanation for his erroneous "buy" calls in the sector this year: "I failed to understand that the fears in the market concerning banking were so great that the fundamental improvements in the economy, the industry, and companies like Bank of America and Citigroup would simply be ignored."
The final piece of his domestic bank thesis is based on evidence of loan and deposit growth, saying "inflow of deposits have been enormous because money is coming out of everything." And with deposit rates next to nothing, few would argue that for all their other issues, banks are definitely sitting on lots of cash.
In a first, gas and other fuels are top US export
For the first time, the top export of the United States, the world's biggest gas guzzler, is — wait for it — fuel.
Just how big of a shift is this? A decade ago, fuel wasn't even among the top 25 exports. And for the last five years, America's top export was aircraft.
The value of U.S. fuel exports has grown steadily over the past decade, coinciding with rising oil prices and increased demand around the globe.
Developing countries in Latin America and Asia have been burning more gasoline and diesel as their people buy more cars and build more roads and factories. Europe also has been buying more U.S. fuel to make up for its lack of refineries.
And there's a simple reason why America's refiners have been eager to export to these markets: gasoline demand in the U.S. has been falling every year since 2007. It dropped by another 2.5 percent in 2011. With the economy struggling, motorists cut back. Also, cars and trucks have become more fuel-efficient and the government mandates the use of more corn-based ethanol fuel.
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