Hedge funds appear to be finished with selling. Individual investors still have lots of cash for any buying opportunity. Some individual investors still remain fully in the money and bond market after the financial crisis. The fear/hope of another bottom does not materialize and their confidence and desire to invest in equity stock market remains low. The group is locking up a significant portion of household capital from the equity stock market. Thus current trading volume is less than during the early stage of the rally when active investors are buying aggressively while active investors are only buying cautiously now.
Black Swans Now a Regular Part of Market Landscape
For global financial markets, once-in-a-lifetime events are happening with such regularity that black swans may as well be white swans.
The problem is, when these events happen, investors often can't get out of their own way, zigging when they should zag and zagging when they should zig.
Protests and government overthrows in the Middle East first upset the market's rally off the March 2009 lows back in February, and the earthquake and tsunami in Japan-both "highly improbable events"-have caused havoc with investor psychology in recent days. Reaction, though, has been predictable. Investors have shed risk assets like stocks and have flocked toward the safety of US Treasurys.
That could be a precisely the wrong reaction.
"It's a buying opportunity here, actually," says Michael Cohn, chief investment strategist at Global Arena Investment Management in New York. "This is an opportunity to kind of shuffle things around and buy things that are going down."
Stock Market Is Only Halfway Through Bull Run: Birinyi
As many other market pros await a pullback, Birinyi, head of Birinyi Associates, anticipates that the market will continue the rally that began off the March 2009 lows.
The surge paused last summer but has run full steam until the violence in Libya and the crisis in Japan interrupted it over the past month.
"There's always been arguments-it's too quick, there's not enough breadth, there's not enough volume, we're due for a correction," Birinyi said. "The problem with so much of this is it's opinion and commentary."
There also is worry that the rally is propelled solely by cash injections provided from the Federal Reserve that will run out in June.
"The good news is nobody's all in, because everybody's worried about all these tail risks, so that could fuel your rally," said Barry Sternlicht, CEO of Starwood Capital. "But when I look at the state of this country's balance sheet we're on this morphine of spending that we cannot keep doing. So the patient feels real good, but it's not sustainable."
"The Two-Tier Recovery": Why Most People Are Not Feeling It, Gary Shilling Explains
The U.S. has been in official recovery mode since June 2009. But, with millions of Americans still without work and a housing market that continues to take a beating, you may not know that things are looking up.
There’s a reason for that disconnect, says economist Gary Shilling of A. Gary Shilling & Co: The U.S. is experiencing a “two-tiered recovery” that consists of the haves and have-nots.
Lessons learned from 4 years of 401(k) volatility
Americans who were afraid to open their 401(k) statements during the recession are finding good news inside the envelope now: For the most part, their accounts have come all the way back and then some.
One lesson of the past four years for retirement investors is the importance of sticking with a strategy instead of trying to anticipate the direction of the market, says Brian Wagenbach, branch manager for the Charles Schwab offices in Minneapolis.
"Not letting your investment strategy be driven by fear and greed, but opportunity and fundamentals clearly is a winning strategy," he says.
Japan a "buying opportunity," will recover: Buffett
Billionaire investor Warren Buffett believes Japan's devastating earthquake is the kind of extraordinary event that creates a buying opportunity for shares in Japanese companies.
Investors flock to Japanese stocks after quake
Investors are flocking to Japanese stocks in the wake of the costliest natural disaster in history.
Exchange-traded funds that hold Japanese stocks brought in a record $1.2 billion the week after a devastating earthquake and tsunami hit Japan and caused the worst nuclear crisis since the Chernobyl disaster, according to TrimTabs Investment Research. The inflow to Japanese funds represented a jump of nearly a fifth of total assets.
The rash of buying of Japanese stocks came after the country's benchmark Nikkei 225 index, the equivalent to the Dow Jones industrial average, fell 16 percent over two days in panic-driven selling, reaching its lowest level since the 2008 financial crisis. The index bounced back nearly as quickly, jumping 5.6 percent on March 16 and 4.3 percent on March 22.
For real estate, a giant spring clearance sale
Existing home sales plunged nearly 10 percent in February to their lowest level in nine years. It was the largest drop since July. Forty percent of those sales were on distressed properties. And new home sales are on track to come in at just 250,000 this year, the fewest since the Kennedy administration, when there were 120 million fewer people in the United States.
The buying that is happening isn't coming from first-time home buyers. A recent study by Capital Economics found that 60 percent of sales are to foreigners and investors, most of them paying cash. In fact, in international real estate circles, the U.S. is viewed as the "new emerging market," says Thomas M. Shapiro, president of global real estate investment firm GTIS Partners.
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