Presently, market is near year high from where traders are dumping shares to take profit. Hedge funds also speculate market to fall on various concerns. However, without short selling from market manipulators and panic selling from institutional and individual investors, market gets support from bargain hunting.
As it is observed that market manipulators are no longer selling to accelerate market fall, any market pullback will quickly attract bargain hunters and rebound strongly. As a result, market is back to near year high because market participants are reluctant to sell.
Global capital is growing fast on economic activities. Personal wealth is also expanding but distribution is uneven among the rich and poor. Concentration of wealth not only causes social instability, but also dampens economic growth.
It is maintained a buy on stock market at attractive valuation but market participants confidence decreases when market climbs to higher level. As a result smart investors execute quick trades on market cycles. Individual investors see that the strategy works and allocate some of the cash in the portfolio on speculative trades. Also the threat of market collapse diminishes as market manipulators have not created market panic with short selling in this year even though there are several sell-off events from traders. There are plenty of surplus capital swirling in the market. Wealth asset price will appreciate with increase in money supply and productivity.
Cult of Equity Is Clearly Over: Rosenberg
David Rosenberg, a long-time Wall Street strategist, declared that this generation's obsession with stocks is officially over after equity funds suffered their biggest outflow in two years.
Volume for the equity market has been below-average this year as retail investors failed to embrace stocks as an asset class. Electronic trading by computer programs may account for up to 70 percent of the NYSE daily volume, according to some analysts.
Despite his declaration, Rosenberg doesn't totally discount an investment in funds that put some money in equities.
"For those who are willing to dip some toes into the equity risk pool and get paid a rent while they await the next bull run, hybrids (income equity) took in a solid $586 million of fresh inflow last week," wrote Rosenberg, who made his name for his unusually contrarian positions while economist at Merrill Lynch.
Still, the strategist believes corporate bonds are a much better bet right now from a risk-reward standpoint.
'Paralyzed Plutocrats' Keep Economy Locked Up, Too
"Today our clients are paralyzed by their fear of losing their wealth in these volatile markets," Ermotti told investors and reporters this morning. "As a result they continue to increase their allocation to cash and other safe assets."
One of the hottest corners of the wealth-management business today is gold vaults - hardly an encouraging sign.
The paralyzed plutocracy also threatens consumer spending. The top 5 percent of earners account for more than a third of consumer outlays and their spending is highly discretionary and volatile.
What would it take to lift the wealthy from their paralysis? Basically, a robust stock rally. And for that to happen we need a grand solution in Europe, a decline in unemployment, removal of the fiscal cliff and decrease in government debt.
In other words, don't count on it. The wealthy, rather than leading the recovery, may be dragging it down.
Hedge Fund Titan Plans to Return $2 Billion to Investors
A hedge fund titan has decided to return a large sum of money to investors, a revealing illustration of how dried-up markets, vicious volatility and a paralysis of ideas all borne of the crisis in Europe have been particularly hard on the traders who swing for the fences on currencies, stocks and bonds all over the world.
Louis M. Bacon, who together with Paul Tudor Jones and George Soros has come to define this style of high-stakes macro investing for more than 20 years, said in a letter to his investors on Wednesday that he would be giving back $2 billion, about one quarter of the size his benchmark Moore Global Investment fund.
Name-brand hedge fund investors will from time to time return money during fallow performance stretches, and Mr. Bacon is no different in this regard. But most do it with reluctance. For starters, such a step is costly.
Latest Market Glitch Shows 'Trading Out of Control'
Wednesday morning's stock snafu had a familiar ring to it - mysterious volume in trades that simply could not have been made by a human comes surging out of nowhere, causing brief but acute market mayhem.
By now, many players on trading floors have gotten used to the disruptions that can come from the highly automated new world of high-frequency trading.
Traders, though, have grown weary of the problems and say the high-speed environment has changed the market in a bad way.
While proponents say the rapid trading helps create liquidity and price discovery, regular investors have been fleeing the market, in part due to macro worries and in part because they don't feel they can compete in the automated trading world.
Knight Capital’s Punishment: Free Market Justice at Its Best
Shares of Knight Capital Group are down sharply Thursday morning after the firm announced realized losses of approximately $440 million dollars as the result of erroneous trades entered Wednesday morning. Prior to the announcement analysts had estimated Knight's losses would be as much as $170 million. Knight blames a faulty software installation for the mistake which they claim has been corrected.
The immediate reaction is to fret over yet another blow to the confidence of retail investors. The glitch, which impacted fewer than 150 stocks on the New York Stock Exchange for about 30 minutes is being cited as a reason for would-be market participants to leave equities and the wild west exchanges on which they trade.
Don't trust markets and fear corruption. Knight's mistake and the fallout is, if anything, evidence of what's right about the free market; not a reason to be even more afraid.
Romney’s Economic Plan Would Cut Taxes On The Rich And Raise Them On The Poor
The Tax Policy Center took a close look at Republican nominee Mitt Romney's proposed tax and economic plan and concluded that it would cut taxes for the richest Americans and actually raise them on the poor.
Romney has proposed cutting all tax rates by 20% and eliminating tax deductions, while also capping federal government spending at 20% of GDP.
Romney's plan is designed around the premise that, if only rich investors and corporations had more cash available, they would make investments that would soon produce jobs for the rest of the country.
The flaw in this theory is the belief that the country is suffering from a lack of investment capital. It isn't.
The country's richest investors and companies are awash in capital.
The reason they're not spending and investing more of it, meanwhile, is that they don't think they can invest it productively--because their end customers, average US consumers, are hurting.
Romney's plan seems designed to address one key problem in the U.S. economy--the long-term structural budget deficit--and this certainly does need to be addressed. But the more pressing concern for most Americans is fixing the unemployment problem. And giving the richest Americans more money to spend and invest isn't going to do that. These Americans already have plenty to spend and invest.
TrimTabs CEO Turns 100% Bearish, Warns of ‘Dark, Nasty’ Outlook
Just one week ago, European stocks had their best 1-day advance in over 8 months, celebrating the fact that ECB President Mario Draghi said he'd do "whatever it takes" to keep the Eurozone and its common currency intact. Whether it was a statement of the obvious, a calculated ploy, or a watershed moment of resolve is still being debated, but what is certain is that traders everywhere got a sudden case of the munchies when their appetite for risk came back with a vengeance.
As wonderful as this rally was to most investors, reliance like this on central bankers to solve our problems is just one of the reasons why Charles Biderman, founder & CEO of TrimTabs Investment Research, says he's "100% bearish" right now.
"Basically what I am saying is that the black swan is aloft and ready to pounce and kill the Bernanke put," Biderman says in the attached video. "We could be 200% bearish if I really thought the world would come to an end tomorrow."
Biderman is hardly a perma-bear but has come to the realization that rampant money printing, enormous government debt and deficits, and artificially inflated asset prices have fostered a system that's destined to implode.
History & Technicals Pave the Way for Stocks to Go Higher: Stovall
Mark Twain famously wrote that "history doesn't repeat itself, but it does rhyme." And right now, a glance in the rear-view mirror has given strategists like Sam Stovall, Chief Investment Strategist at S&P Capital IQ, reason to buy.
"History as well as technicals were telling us that stocks were likely to work their way higher towards the end of the year," Stovall says in the attached video. "We weren't so sure regarding the economic and fundamental data, but now maybe the overall economic picture is a little bit better too," he adds in light of today's better than expected jobs report.
Whether the Fed offers more stimulus or not, Stovall says "the biggest worry on Chairman Bernanke's plate right now is the fiscal cliff." The looming threat of tax increases and automatic budget cuts that are slated to take effect next year could douse any spark of economic growth.
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