Liquidity Buoys Equity Stock Market

Equity stock market oscillates on hot money speculation. Liquidity easily moves market in either direction as market participants run in a herd with pile of cash. When market retreats, there are plenty of money waiting to pick up shares on bargain. Market participants are no longer fear of panic selling and market manipulators cannot exploit panic selling strategy. However, their holding in commodities still contributes to profit in this year despite lack of opportunity to profit from panic selling. Individual investors are cautiously replenishing the already thin portfolio which has been trimmed down on panic selling last year. As personal income grows, stock buying from household will continue to rise and give support to the market which have appreciated significantly since bottoming last year. Institutional investors are also relieved of redemption pressure from panic clients. Also, there is inflow of capital from investors looking for better return than money market. Although trading volume remains at low level, cash on the sideline is tremendous. But fear of market panic still looms large in investors mind. On the other hand, investors are not going to dump shares when market falls. The majority of households have recovered significant portion of the wealth since the financial meltdown. The richest people even surpass the peak in 2007/2008. However, investors exposure in equity stock remains constrained. But interest in acquiring stocks is increasing because the low interest rate environment creates speculation in wealth assets. Market speculation constitutes large portion of daily trading activities. Market manipulators and traders are manipulating the market to their advantage. Institutional and individual investors are finding opportunities in this turbulent market. Long term investors have realized part of the profit and is waiting for another opportunity to make long term investment. Capital liquidity is plentiful but selective. As business continues as usual, wealth accumulated from economic activities will be allocated among diverse kind of assets including equity stocks and real estates despite current bias in fixed income and money market.

Bullion's Bulls Are Pulling Back Gold has long sparked similar debates, not least because it is difficult to value and generates no income. Lately, the metal has been used as a haven against currencies being debased by stimulus, and by those predicting the monetary injections will lead to inflation down the road. In recent years, investors have delivered, buying coins and bars and pumping billions of dollars into funds that hold physical gold. Investors comprised 35% of overall gold demand in 2011, compared with an average of 31% from 2006 to 2010, according to the World Gold Council, which is affiliated with the largest such fund, SPDR Gold Shares. But attitudes are shifting as investors conclude that the world may see years of slow growth but "not a collapse," said Jeffrey Christian, managing director at CPM Group, who advises gold investors. Mr. Klapwijk said that while gold could top $1,900 this year, the pace of gains will slow. "Downside risks, perhaps particularly in the short term, are quite significant," he said. Gold Heading to $700: Author Sees “Impending Collapse” For the past decade, gold has been an incredible investment, rising from under $300 per ounce to as high as $1,900 per ounce before retreating to around $1,650 in recent trading. But all good things must come to an end and Yoni Jacobs, chief investment strategist at Chart Prophet, believes gold's best days are behind it. While tipping his hat to the bullish arguments and sympathetic to reasons why people own gold, Jacobs says the metal's inability to rally despite Europe's ongoing crisis and renewed tensions in the Middle East are negative signs. "The froth is coming off," he says. Finally, Jacobs cites "over-speculation" in gold, its "parabolic increase" in recent years, the "mass publicity" the metal has received, and the extreme emotions of its advocates as signs of it being in bubble territory. Jacobs is clearly out on a limb on this prediction and there's a good chance he'll be proven wrong. But hedging your positions and managing downside risks is always a good idea, especially with an investment that's appreciated as much as gold. Spanish debt heading toward crisis levels Spain's debt yields broke above 6 percent on Monday as investors worried about its budget, knocking the euro and sending safe-haven German bonds to a record last set at the height of the euro zone crisis. Contagion fears also pushed Italian 10-year bonds higher. "The market in general is feeling a bit risk-averse and we can see commodities weaker across the board," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. For bond investors, holding tight is best option Investors looking to the bond market to diversify are struggling against unusually low interest rates — and that’s tempting some to take on more risk than they should. Junk bonds may give a better yield but don’t offer much diversification from stocks, while with longer-term bonds, higher yields come with the risk of rising rates triggering losses. And in plain old short-term Treasury notes or T-bills, you may fall behind inflation. “It forces the individual investor, all the way up to institutional and pensions and all the market participants, to do dumb things like have to seek out risk that they might not have wanted to seek out,” he said. “The biggest problem that I see is that while I don’t think we’re at a critical juncture now we have this huge amount of money that’s going into the junk-bond markets,” said Munson, who is also the author of “Rigged Money: Beating Wall Street at its Own Game.” With risk on every front, some bondholders may be tempted to take profits on holdings that have done fairly well but haven’t matured yet. Panelists suggested holding the bonds if there doesn’t appear to be anything better to invest the money in. “Why do you want to sell it?” Munson asked. “The real issue is if you were to sell it, what would you buy?” World's Richest Worth $1 Trillion on Billionaires Index The 40 richest individuals on Earth lost a combined $6.2 billion yesterday as stocks dropped amid disappointing U.S. earnings, according to the Bloomberg Billionaires Index, a daily ranking of the wealthiest people.