Folks, as we all know that stocks today marked the biggest gain of the year, followed by the half point rate cut by Mr Bernie. However, the biggest question which still remains on the table, Are we getting closer to an economic slowdown? Some of things to watch for are the price of commodities such as Gold & Oil. Dollar is declining steadily this year, which would also put pressure on inflation. From my understanding of the market, today's rate cut was much needed by the housing sector, specially it will be a relief for people with ARM mortgages, and whose interest rate payments were just about to be revised. But, given that the rate cuts can only be a short term fix, I am now more skeptical about the growth of the US economy in the coming few years.
So the open question on the table now is whether to:-
1.) Invest in commodities and hedge against inflation
2.) Invest in stocks with less US exposure
3.) Invest in housing and provide liquidity to the gloomy housing market :)
4.) Probably just sit back and relax and enjoy the ride.
I am sure we all have our views and answers, and surely all of you have some insights into the market as well. So please bring your ideas on to the table. Thanks
Sumit
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7 comments:
1.) Invest in commodities and hedge against inflation
No.
2.) Invest in stocks with less US exposure
No
3.) Invest in housing and provide liquidity to the gloomy housing market :)
Yes, the most tangible investment in my opinion as of the day.
4.) Probably just sit back and relax and enjoy the ride.
Best option ! :-).
Keep in mind, i am bearish in nature !!!
I think fed is just trying to put band aid. It won't help. its will be still like a rollar coaster. But definately, today was a good day to sell. I think it will continue to go up tomorow as well.
I think that investing in commodities probably is a good idea, specially in Gold and Natural Gas.
Yes, I agree Feds are just trying to control the situation which was getting away from their hands. Sometimes, which make me think that these big Investment Banks are squeezing in money from the government(Government Money which for sure belongs to the Tax payers like us) after they make mistakes in things such as Hedge Funds and Sub Prime.
even i think 1) and 2) make pretty intuitive sense..atleast investing in commodities...since dollar prices are falling. There are all these big debates everywhere reg. whether its a perfect time to buy or whether one should wait for some more time. I'm sure its a buyer's market out there right now..maybe Vinay can enlighten us more since he did some research on the housing market, right?
Another thing one may ponder is to invest in Bonds because the basic rule of thumb is that Bond prices move inversely to interest rates. When interest rates go up, bond prices go down and when interest rates go down, bond prices go up. I know investing in bonds is not as exciting as investing in other securites, in many ways its a low risk investment that offers stability which in-turn offsets other volatile investment options.
The easy money in the comodities has already been made, but that does not mean to say that Gold prices won't go up or Oil prices won't go up anymore based upon the global demand, its just that for small investors like us its difficult to quantify everything in black and white. I agree with you on investng in Nat Gas ETFs whole heartedly especially ahead of the current winter season because the last two winter seasons have not lived upto their potential :)... Just this past year Amaranth Hedge Fund went belly up because of being on the worng side of the Nat Gas trade...
I agree that investing in Bonds is a good solution to avoid lower interest rates. I have personally never invested in Bonds though.
I am currently looking at United States Natural Gas Fund LP ETF for natural gas investments. Any insights into it are very welcome!!!
UNG is a very good idea... I'm thinking as to getting in myself.
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