First and foremost I would like to admit that I am an amateur investor as I see now as the perfect opportunity to begin investing as I’m only 21. I haven’t bought any stocks just yet as I’m thoroughly investing companies as I hope to find undervalued stocks, ETF’s and mutual funds. I’ve seem to notice that many many investors have become quite interested with investing in stocks such as Citi, AIG, and Bank of America, Freddie Mac and Fannie Mac. In my opinion the only thing that is enticing about these companies is the low stock price. I think the recent surge is due to speculation by foolish idiots that think that since the government won’t let these companies fail. Of course with an increase in the demand an increase in the stock value follows which explains the certain spike.
However whatever happened to purchasing stock based on a company’s financial standing and potential. All of these major financial institutions are still in very bad shape yet investors want to keep pouring money into their stock as if they will fully cover. Are these stocks rising because things are actually getting better, or will people sell, sell, sell, once they realize that these companies have a looooong way to go before they actually become profitable. Hell will these companies even pay dividends? Aside from possible short term gain I’d see no other reason to invest in these companies.
Especially with major banking centers like Britain, in real danger of financial collapse, it is a BAD idea to invest in the banking center and likely will remain so for the rest of our lives. Likely, nationalization of the entire banking center in every country of the world will happen in the coming years.
In the US, the issue of the stock market depends on if it’s hit a bottom or not. For several weeks, the DOW held steady at the 8,000 mark….a likely bottom. That’s important because a stock market bottom typically marks the halfway point of a recession and an ideal time to invest in healthy corporations in the market.
Then, Obama got his stimu-waste boondoggle passed. IMMEDIATELY, the market went into freefall. A sharper drop has never been seen in the history of the market. That’s bad. REAL bad. It pierced the important support line of 7,000 points like it was nothing, deep into the mid 6,000′s. However, it seems to have bounced off that and may find new support at 7,000 now. It would have to hold that level for at least two to three months before I would be feel comfortable calling a bottom now. Better, if it climbed back up over 8,000 and re-established support there. A good sign is that Obama flushed another half a trillion dollars of our money down the toilet passing a budget in a closed door session of Congress…..and the market DIDN’T immediately crash. I expected to see the market drop into the low 5,000′s after that bit of insanity. Since it didn’t happen, well, there is some hope.
I would not consider buying stocks just yet. Not until that bottom is firmly established. And I’d forget about the banking sector completely. It is simply too high risk due to illegal activity going on.
If you are looking to invest in something, consider silver. Many people with ALOT of money are putting a portion into precious metals as a way to guard against hyper-inflation. For this purpose, gold and silver are basically equivalent. However, gold demand is very high right now, making it overvalued. Silver is being overlooked so you can buy it for about its true value, still. The true value of both gold and silver is probably going to rise, perhaps dramatically, over the coming months and years….but silver is, by far, a better bargain right now.