My View of the Stock Market | Yakezie Reader Insights | Yakezie Forums

Here's my medium view of the stock market. 

So how do we explain yesterday's crash? Since talk of QE3 has began, investors are waiting for it to happen. As I've mentioned before, all the insiders and big successful hedgefunds (like Barry Ritholtz) have sold out and gone short. Why? Because instead of waiting, they plan on forcing the Fed to initiate QE3 sooner than later. So they're going to batter the market until Bernake decides to initiate QE3. In other words, they're going to make money when they force the market to go down, and make money when Bernake announces QE3.

So what would Bernake do? Let's apply a little bit of logic here. I don't believe that Bernake would actually initiate QE3 until at least October. Why? The Fed chairman wants to save some bullets for the time when he'll really need them. If he initiates QE3 right now, he'll be virtually out of bullets. But then again, I pushed out that conclusion based on logic. Judging my Bernake's past actions (he's only been a professor, he's never had any real experience in finance), he might not conduct his actions based on logic.

But what I certainly see is that the economy is getting worse. You can see that from the quarterly reports of company's like Wal-Mart and Home Depot. So what does this mean? I don't really know. Sometimes, just because the economy worsens, doesn't mean the stock market will decline (the Fed purposely props up the market with QE). But one thing's for sure. Liquidity is going to dry up. So if your mortgage is due right now, I suggest you lock in your mortgage payment. We got ours at 0.9% off the prime rate.

So what am I doing? I've mentioned before on my blog that I never short the stock market. This is because shorts require immaculate timing, and I'm more of a good investor than a great trader. So right now, I'm all cash. I'll wait for the market to dip another 5% or so, and then I'll start buying into the market with 10% of my portfolio every time the market goes down by 10%.

So what do you guys think?

The problem, as I see it, is that we're fairly valued at current prices.  To lose 5% in a day is to shave off a some serious NPV of future (unrealized) growth.

The irony is that both QE3 or no QE3 will drives rates down considerably.

Long-term: I'm betting on low rates.  Two companies that make up a majority of my portfolio are health care HMOs.  Low rates mean low earnings for seniors.  Low earnings for seniors mean that they skip on medical treatments/checkups.  Skipping check-ups/treatments means my HMO companies receive the same revenue while paying less to fulfill their obligations to patients.  My favorite in this space is MDF.

Nice recap Tony.

I read an interesting article this morning saying market bottoms don't look like yesterday.  We might have more downside to go.

http://finance.yahoo.com/banki…..#038;ccode=

Like JT, I'm betting on low rates for in the short and medium term.  I personally dont think there will be a QE3 (needed or not), because of the politics – we are gearing up for election season, and thats a tough pill to swallow, esp when the economy is on bad footing and it would just be more spending.  I doubt the president wants to own that, or even be associated with it.

At any rate, I'm hoping the rates stay low because I took A LOT of flack for passing on the governments 8k homebuyers credit when it was still going.  It looks like me waiting was for the best anyway, which is what I had suspected anyway.