Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Nasdaq Stock Market Not Doom & Gloom; Cyclical Investment Opportunity!

Stock-Markets / Cycles Analysis Oct 01, 2010 - 03:31 AM GMT

By: Investmentscore.com

Stock-Markets

Best Financial Markets Analysis ArticleUnfortunately investors as a group are slow to adapt to change, which can be a harsh and costly lesson to learn.  But where there is turmoil there is also opportunity for those who can recognize change and make that adaptation.

From 1980 to 2000 the world enjoyed expanding credit and a seemingly forever growing stock market.  By the end of the twenty year run in stocks the predictable investment environment led advisors and investors to believe in an apathetic strategy of ‘buy and hold’ and ‘forget about your investments’.


The above chart illustrates the relentless rise of a US stock market from 1980 to 2000.  For the average investor the above market conditions turned out to be a trap.  The majority of the investing public will usually enter a bull market when it is the most exciting and nearing an end.  The result of not recognizing the change in the market environment is buying high, and suffering through the inevitable bear market.

From an investment standpoint a lot has changed from the relatively cool 80’s and 90’s.  The above chart shows us the current decade long bear market in stocks.

The warning signs of instability are everywhere and this is devastating for stock prices.

  1. Trillion dollar currency markets that are thrashing up and down like small cap equities.
  2. A soaring bond market with near zero interest rates. (investors seeking safety)
  3. A skyrocketing gold price. (investors seeking safety)
  4. An increase in the number of corporate scandals.
  5. More corporate bankruptcies.
  6. More unemployment.
  7. Less available credit for consumers.
  8. A devastated real-estate market in some nations and wounded markets in others.
  9. Entire nations imploding and falling into bankruptcy.
  10. An aging population wanting to retire, consequently there will be less of the population producing wealth.
  11. An aging population requiring more medical attention, resulting in higher economic costs.
  12. More government intervention in markets in the form of bailouts and regulations.
  13. More government social programs.
  14. More open frank and open discussion of market intervention by policy makers.
  15. Wars.
  16. A public that is more heavily dependent on the government to “fix” these problems, transfer wealth and intervene.

The warning signs are there.  The bells are ringing for those who are paying attention.  None of these things are evidence of an environment that supports an expanding stock market.  

The world’s largest, trillion dollar currency markets bouncing around is not a sign of stability.  In the above chart the US dollar, as represented by the black line, clearly trends sharply higher as the first green arrow illustrates, then down as the red arrow points out, and then again up. 

Investors are fleeing stocks and putting money into bonds no matter what the return is.  We believe this is clearly defensive and out of fear of the current market environment.

People are looking for work at a time when it is harder to get credit.  Clearly this makes it harder for the public to invest in stocks.

Investors are looking for the safety of hard assets such as gold.

The important message in this article is that one needs to recognize:

  1. Markets are cyclical and not linear.  Change is inevitable.
  2. Investors must learn to recognize change in market conditions.
  3. Investors must learn to adapt to change to protect their wealth and possibly profit from it.

From 1980 to 2000 market conditions made gold a terrible investment.  For 20 years capital fled from gold, oil, silver and other hard assets as it rushed into stocks.  A look back in history shows us that from 1970 to 1980 market conditions pushed funds from stocks and into hard assets.   The current market conditions have created opportunities in hard assets as capital flows out of stocks and into “things”.

The warning signs and opportunities are there for those who are watching and adapting to changes in the market environment.  Investors who stubbornly hold onto outdated strategies will continue to suffer the consequences.  All markets will have their ups and downs, but in our opinion being aware of long term trends is the key to success.

At investmentscore.com we look at investments relative to various markets in order to gain a unique perspective to their “Value” instead of their “Price”.  We believe it is a common mistake for investors to be misguided by “price movement” instead of by true value.  At the end of the day understanding “Value” is where wealth can be created and stored as “Price” can be greatly distorted by the constant fluctuations of currencies.  To learn more about our strategies and to sign up for our free newsletter please visit us at www.investmentscore.com.

By Michael Kilback
Investmentscore.com

Investmentscore.com is the home of the Investment Scoring & Timing Newsletter. Through our custom built, Scoring and Timing Charts , we offer a one of a kind perspective on the markets.

Our newsletter service was founded on revolutionary insight yet simple principles. Our contrarian views help us remain focused on locating undervalued assets based on major macro market moves. Instead of comparing a single market to a continuously moving currency, we directly compare multiple major markets to one another. We expect this direct market to market comparison will help us locate the beginning and end of major bull markets and thereby capitalize on the largest, most profitable trades. We pride ourselves on cutting through the "noise" of popular opinion, media hype, investing myths, standard over used analysis tools and other distractions and try to offer a unique, clear perspective for investing.

Disclaimer: No content provided as part of the Investment Score Inc. information constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers, including the staff of Investment Score Inc. or their affiliates will advise you personally concerning the nature, potential, value or suitability or any particular security, portfolio of securities, transaction, investment strategy or other matter.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents may or may not own precious metals investments at any given time. To the extent any of the content published as part of the Investment Score Inc. information may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Investment Score Inc. does not claim any of the information provided is complete, absolute and/or exact.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents are not qualified investment advisers.   It is recommended investors conduct their own due diligence on any investment including seeking professional advice from a certified investment adviser before entering into any transaction. The performance data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete.   From time to time, reference may be made in our information materials to prior articles and opinions we have provided.   These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current.  As markets change continuously, previously provided information and data may not be current and should not be relied upon.

Investmentscore.com Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in