This is a good piece of news. Big bazooka being readied, which is why European markets are turning green : IMF to Seek $1 Trillion Boost Amid Euro Crisis
Read this somewhere… Nice writing but take it with a pinch of salt
My Revised Market Forecast
Last week, the S&P downgraded NINE eurozone governments including France (which lost its AAA rating), Italy, Spain and Portugal (which was downgraded all the way to “junk” status).
The market shrugged.
Then yesterday, the hatchet swung again as S&P stripped the European Financial Stability Facility, Europe’s bailout fund, of its AAA rating.
The market barely noticed.
Compare this reaction to what happened just five months ago when the S&P downgraded the U.S. from AAA status—the market plunged 635 points. Or when the market feared France was going to lose its AAA rating--the market plunged 520 points.
Reaction to the most recent downgrades show dramatically different market behavior.
And that’s just one example. You can see the same thing happening in reaction to missed earnings—Citigroup missed earnings yesterday and the market ignored it, choosing to rally on upbeat economic news out of China.
The bottom line is that this market is looking to rally and is no longer overreacting to bad news.
That’s why, after thorough analysis, I’m adjusting my forecast higher and am now telling you that…
…we’re headed to Dow 14,000, and time is running out to get on board.
Think of the market like a spring coil that has been held down by outside pressure—in this case, the toxic combination of the European debt crisis, worries about our own economic recovery and an extreme crisis of confidence.
But as those pressures are removed, that coil will snap back with amazing speed and force. Dow 14,000 Here We Come
The Dow industrials has touched an eight-month high 12,758.85
the Federal Reserve said interest rates would remain low through late 2014.
Apple Inc.’s stellar earnings bolstered the Nasdaq Composite throughout the day.
“I don’t think you’ll see a housing market recovery until 2015 or 2016, which in turn will force the Fed to keep interest rates low, because the American dream is built on home ownership,” said Jeremy Hare, managing director of investments at Gilford Securities.
I see that you're no longer recommending Eratat Lifestyle either?
Boy am I glad to have sold this one back in November. Even at that time it was more than 30% higher than what is is now.
Unlike the likes of much stronger companies like Sino Grandness, China Minzhong and Yangzijiang, Eratat has completely failed to participate in the recent market rally and I would be pretty worried if I was a shareholder. Things could change of course but right now I'm not willing to bet on it.
Sometimes it's just better to let the share price do the talking in the long run instead of getting into endless debates.
Hi, Ethan999,
I have not given up on Eratat but would not recommend anyone to buy Eratat or any other penny stocks, especially S-chips, in a severe bear market like the past many months. The reason being that most blue chips and good second liners are always the first movers and the best performers in any market turnaround following a severe bear market. Penny stocks, unless they are special situation stocks, generally performed poorly until rotational interests spill over to them. The latest New Year Rally again testifies to this fact.
Eratat is expected to report a full year EPS of about 8 cents (S). It is extremely undervalued and mispriced; so are many of the other S-chips. My perception is that the fear of investing in S-chips has now reached a tremendously high level causing the share prices of most of them to sink to an incredibly low level – opportunity for discerning, longer-term investors to accumulate potential great winners as not all S-chips are rotten. Unfortunately, I ended up holding some Eratat shares in the current bear market (which I normally would not do). I am not bothered or perturbed by the endless debates over Eratat’s high receivables I consider this as just part of the nature of its business and should be viewed as a risk factor similar to poor corporate governance, etc. What is of more concern to me is economic recession and deterioration of business environment in China affecting the profitability & survival of S-chips. The risk of penny stocks, especially S-chips, being mismanaged or getting into all sort of trouble, greatly increases in a bear market environment and in an economic recession. Investments entail taking calculated risks. Each of us has different risk appetite and it is for each individual to take risks that he/she is comfortable with. The bottom line is still “High Risks High Gains”.
Stock market moves in cycle. When the current bear market (regardless of its severity) comes to an end, a new bull market is certain to start. To me, the easiest way of profiting from stock investment is to invest at the low end of the market and to divest completely at the high end [NB: “Defensive” stocks also die (in defending position) in a bear market]. Doing homework is a “must”. Good growth stocks, especially out-of-favour stocks, are still among the best choice for superior capital gains.
The Internet has made all the difference, observer2. It's probably less true now that blue chips will lead the market up in a recovery phase. In the past, as institutional investors rushed back into the market, newspaper headlines would report the progress of the market -- and then gradually, retail investors would come in to buy the small + mid-caps.
With the Internet, the retail investors are fast to latch on to a nascent recovery market -- like in the past few weeks. U see in the top vol today are lots of small caps. Anecdotally, we all know many of our favourite small caps which have made double digit % gains.
