Do you think we will see a drop in this short term rally we are having in the stock market?

Question

I'm 100% in cash right now. What should I do, should I wait for a drop? If not or if so, what should I buy?

Answer 1

Be very skeptical of any suggestions for specific stocks here. The response indicating you should invest in Microsoft and Google is ridiculous, particularly the Google "tip." As Google stock price fluctations have shown, that is not a stable ship to be investing in right now.

I recommend looking up Ben Stein's article (in Yahoo Finance columns) of several weeks ago, in which he talks about weakness of the US economy. Our country is likely in serious trouble thanks to people less intelligent than ourselves that have been doing things like reverse mortgages to keep up their nasty spending habits. Consumer debt is at horrendous levels. Somebody else is going to have to assume this debt (in typical American refusal to take responsibility), and our economy may very well stagnate or recede as this occurs.

Because of this fact, I personally have moved my S&P 500 index-following investments (index funds as well as ETFs) into foreign vehicles like EEM and EFA. By doing this, I hope to avoid American weakness and at the same time capitalize on what I believe to be the gross over-sell of Asian markets in the past three months.

Good luck.

Answer 2

My personal opinion is that this is a bull trap. However, being 100% cash is probably not the wisest course either. The future is quite uncertain.

Look at some of the overseas markets perhaps. Consider moving some of your money into some oil stocks. They are currently trading at very favorable prices. Consider Euro based companies to hedge against the falling dollar. Especially consider India and China and even perhaps Brazil.

However, 50% cash equivalents would not be too much. T-bills especially. T-bill are currently outperforming the S&P 500, which brings up a good point. The large cap stocks have been doing absolutely terrible. Maybe it is time to nibble at them a little. A little HD, a little MSFT, a little INTC for example. But the charts on all of these look dreadful.

Answer 3

Yes, this rally is temporarily.The inflation is still there. Your best opportunity is Oct for going back to equity. Watch out for Crude Oil price. If it is contiue to go down, the market should be keep rally. But Iran atomic/uranium matter still not resolve. Watch out for 08/28 that is the date Iran will say something stupid

Or you could buy the short EFT to hedge your bet like PSQ,SH,MYY,DOG.

You are wise to move the money sideline in the bad period of the stock market

Check out the book Trader Almanac by Jeff Hirsch

Answer 4

I would suggest a "total stock fund" from a bigger investment firm. The younger you are, the higher percentage of your money should be in stocks/bonds. Go for a total fund in the market because your money is safer than if you would invest in a particular stock. Invest w/ a big firm because your costs are MUCH lower. I've had wonderful luck dealing with Vanguard - you can do everything online and they are excellent in customer service. Good luck.

Answer 5

Invest long term.Buy when the market plunges which it will surely do i.e.wait for another week till u think its the lowest.Put the money.Invest in heavyweights like Microsoft,Google,etc. only.Wait for 5 years whatever happens to the market.Remove the money.Simple

Answer 6

hellas yeah
(i dont know, i just want 2 points)