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Consumer confidence is often used as a barometer of stock market performance, as consumers make up 2/3 of the American economy.. Recent figures show confidence at very high levels. However, a more careful look is telling. High end earners confidence is very high, but low end earners confidence is at a very low level. The rich are feeling good, the restof us, not so much.
Consumer confidence is often used as a barometer of stock market performance, as consumers make up 2/3 of the American economy.. Recent figures show confidence at very high levels. However, a more careful look is telling. High end earners confidence is very high, but low end earners confidence is at a very low level. The rich are feeling good, the restof us, not so much.
The unemployment figures are deceptive as well. Optimists are saying that the 4000 decline in August figure to 570,000 jobs lost is a positive sign, because it is down from the previous average of 600,000. However, the initial figures have been adjusted upwards in each of the last twenty three weeks. The unemployment rate has increased from 9.4 to 9.7% Based on historical patterns, the unemployment rate could increase to 11-12% in coming months. The majority of large employers are still in a layoff mode, no general increase in hiring is taking place yet.
From every indication, we are in a bear market rally - meaning that we can expect to see a "correction" soon. It may be small and temporary or it may feel like a kick in the stomach. In any case, it is wise to think about taking some gains that have been realized since the first of 2009. Don't sell off holdings entirely, but reduce holdings by the amount of the gains you have realized to date.
After the correction, when there are definite signs of improvement, gradually move back to a fully invested position. This should produce better results than merely holding all assets as is and riding out any reductions. There is no question that the best holdings are stocks that pay consistent dividends, and bonds issued by financially stable corporations. For a list of the most dependable dividend payers and bond issuers, contact us at anadolna@associatesgroupinc.com