Stock markets and idexes are at record highs. Last week the DOW closed above 17000 for the first time after the Bureau of Labor Statistics announced a drop in the unemployment rate from 6.3% to 6.1% and an additional 288,000 jobs. All of this is great, but how long will it last. Do you think there is a correction in the near future? Should investors be cautious and restructure their holdings?
What's your overall take on the current state of the economy?
This chart tells me US equity markets are at their least volatile in the last 5 years: http://finance.yahoo.com/echarts?s=^VIX+Interactive#symbol=^VIX;range=5y
so that graph only spikes during shit storms, and it's looking a bit too flat at the end there.
-pro stox analyst
How exactly are you expecting us to answer?
We are likely in the later stages of the market cycle, but that is my opinion.
Einstein dies and goes to heaven, only to be informed, that his room is not yet ready. "I hope you will not mind waiting in a dormitory. We are very sorry, but it's the best we can do, and you will have to share the room with others." he is told by the doorman. Einstein says, "This is no problem at all, and there is no need to make such a great fuss." So the doorman leads him to the dorm. They enter, and Albert is introduced to all of the present inhabitants. "See, here is your first roommate. He has an IQ of 180!" "That's wonderful!" says Albert. "We can discuss mathematics!" "And here is your second roommate. His IQ is 150!" "That's wonderful!" says Albert. "We can discuss physics!" "And here is your third roommate. His IQ is 100!" "That's wonderful! We can discuss the latest plays at the theater!" Just then another man moves out to capture Albert's hand and shake it. "I'm your last roommate, and I'm sorry, but my IQ is only 80." Albert smiles back at him and says, "So, where do you think the stock market is heading?"
source: http://www.jokebuddha.com/joke/Einstein_1#ixzz36kLmpUiX
Obviously no one can say for certain, but the bull market has run a long trail. The volatility is extremely low now, and upside may be limited compared to potential downsides. Many metrics suggest that a correction will occur in the "near" future but that time (weeks, months, to a year) is anyone's guess. It could be longer due to government support propping it up.
You can never be certain, just differentiate your portfolio and don't invest any money that you need.
@"DickFuld" dammit I was going to say something clever like that
Read an interesting report about how market vol is down as leverage is not close to historic levels so not as much use as vol for a hedge. Volumes also have been historically low, it will be interesting to see how much of a spike we will see in the two if any meaningful correction happens (7+%).
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