The "fiscal cliff" deadline came and went without even a bearish whimper from the stock market. Now, the so-called "budget sequester" -- a set of laws that limit federal spending -- was put into effect on March 1. Absolutely nothing negative has happened to the economy -- so far.
The bullish reactions to these events, which may result in long-term, negative overhang on the thriving stock market, have lulled many investors into a false sense of security. These satisfied investors point to the stock market roaring higher, steadily improving economic numbers and to bad news being dismissed as irrelevant as sure signs that the market's surge won't end any time soon.
But investors should be concerned... Continue reading "How to Protect Your Portfolio From the Sequester"
The drama of the Fiscal Cliff and the recent sequestration circus, plus the trials and tribulations of these four countries (which have run up huge deficits) have been well documented and known for quite some time. What is more important, in my opinion, is not the size of the debt which is staggering, but rather what is happening in the market and the market's perception of current events.
Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.
So what is market perception? Well, have you ever noticed that when some big world event happens, or a new "hot" IPO hits the markets (remember FaceBook, Zynga and Groupon?), traders expect that market to go in the talked about direction and typically it does. What doesn't get talked about is how the market then corrects itself and the technicals really come into play.
Continue reading "It's more important to the market than the Fiscal Cliff, the sequester and all the debts of Italy, Greece, Portugal and Spain combined"