Equity stock market is setting 52-week high continuously. Market participants are in a mood for rising market trend. As mentioned in the last several posts, investors do not have much intention to sell in this market.
Individual investors who give strong support for the market in the last three months are now beginning to stop further buying but still hold on to the positions for market appreciation. Some individual investors have realized part or all of the profit in the recent rally and are waiting on the sideline for market correction to reenter. Institutional investors finish restructuring of the portfolio and will wait and see the result. Hedge funds replace the role of individual investors to drive the market up. However unlike institutional and individual investors who mostly make profit on a rising market, hedge funds speculate on both market direction. Therefore there is certain risk in the continuation of the rally without significant buying from institutional and individual investors.
Market may exhibit volatility in the coming days. The speculative trading portfolio will minimize overnight holding with adequate hedging while a violent market provides opportunities.
Booming Commodities and an Anemic Economic Recovery: What It Means for Investors At a recent institutional investor conference one of the speakers was the economist and chief investment officer of a major institutional investment consulting firm. He recounted that in late 2008 his firm recommended that institutions overweight commodities. This was based on all of the liquidity provided to the financial system around the world by governments seeking to combat the deflationary affects of the deep recession.
He went on to say that his firm was staying with that over-weighted position as of December of 2010 despite how successful the strategy has been. From there he described how anemic this economic recovery in the US is compared to past recovery periods following deep recessions. Slow GDP growth, persistently high unemployment rates and virtually no contribution from home building led him to believe the economic recovery would remain anemic.
Brace Yourself: Our Society Is Going To The Dogs Fortunately, says Celente, civilization itself will not collapse. But it's going to get really bad for a while.
Fed survey: US economy ends 2010 on strong note Fed Chairman Ben Bernanke says he is optimistic that the economy will strengthen this year. But he warned last week that it will take up to five years for unemployment to drop to a historically normal level of around 6 percent.
If You Can't Join 'Em, Beat 'Em Of course, many people opt not to invest on their own and, instead, turn to mutual funds for professional money management. The average equity fund, according to Lipper Inc., has 88% turnover, meaning it doesn't quite swap out everything it holds once every year; that means the fund managers aren't playing with a 22-second clock.
But when funds don't do well, they test investor patience. When the market tanked in 2008 and many funds went with it, many investors bailed out, missing out on the subsequent recovery. It's hard to stay focused on the long-term when the short-term numbers are bad, and when you know that someone is out there trading three times a minute trying to best both you and your fund manager.
That's not to say that investors should recklessly move to buy-and-forget-about it,"but rather that the more short-term thinking pervades the market, the easier it might be to get past the idea that the big institutions have it in for you. Rather than follow their trend to shorter and shorter time frames — where they have the advantage — keep the longer view; instead of playing their game, play your own.
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