Week in Review 30/9/2011

Date of publish: 30/9/2011

For Financial week: 26-30/9/2011

Written by Matthew McCreath

Week in Review 

   

   Stocks jumped and blue chips staged their biggest percentage gain in more than a month, as investors bet that efforts will be taken to stem Europe's sovereign-debt crisis. The Dow climbed 272 points, to 11044, clawing back more than one-third of last week's losses. The S&P 500-stock index gained 27 points, to 1163. The Nasdaq Composite was the laggard, gaining 33 points, to 2517, after spending much of the day in negative territory.  Stocks closed near session highs following reports that a "special purpose vehicle" to help stem Europe's debt contagion was in advanced development. Those reports followed an ECB official's endorsement of a more aggressive bailout plan and another official's remark that the ECB can't rule out an interest-rate cut.

   A sharp afternoon downdraft prompted U.S. stocks to erase more than half of their earlier gains, as investors fretted over a report that highlighted a potential split in the euro zone over the terms of Greece's second bailout. The Dow finished the session up 147 points, to 11191, after surging as much as 325 points. The S&P 500-stock index gained 12 points, to 1175. The Nasdaq Composite closed up 30 points, to 2547.

   U.S. stocks snapped a three-day winning streak, sinking as a drop in commodities prices added to concerns about policymakers' ability to contain Europe's debt crisis. The Dow fell 180 points, to 11011. The S&P 500-stock index lost 24 points, at 1151, while the Nasdaq Composite shed 55 points, to 2492. The moves came on a day when Finland voted to approve changes to the euro-zone bailout fund, after leaders raised concerns earlier this month that they would demand collateral as a precondition for participation. Germany votes on the changes Thursday. The changes need to be approved by all 17 euro-zone members to take effect.

   Stocks erased a strong rally but still finished off their worst levels Thursday in thin, choppy trading as the Dow and S&P rebounded from afternoon lows. Stocks started the session sharply higher following several robust economic news and after Germany's parliament passed a crucial vote which approved the reforms to the EFSF. The Dow gained 143 points, or 1.30 percent, to finish at 11,154, rebounding from its afternoon lows. The S&P 500 rose 9 points, or 0.81 percent, to end at 1,160. The Nasdaq slid 11 points, or 0.43 percent, to close at 2,481.

   Stocks declined, setting the market up to close the worst quarter in years on a down note, with glum overseas economic reports weighing on investor sentiment. The Dow shed 156 points, to 10999, in Friday afternoon trading. The Dow has lost 10% for the quarter as of Thursday's close, the biggest percentage decline since the first quarter of 2009 and the worst point drop since the nadir of the financial crisis in late 2008. The S&P 500-stock index shed 18 points, to 1143, while the Nasdaq Composite slid 44 points, to 2438. Those two indexes also are closing out their worst quarterly performance in years.

Commentary: Getting stuff done 30/9/2011

Date of publish: 30/9/2011

For Financial week: 26-30/9/2011

Written by Matthew McCreath

 Commentary: Getting stuff done

I hear it constantly, “I want to trade but I don’t have the time” or “I want to start investing but I don’t have enough money”. Unless those statements end with ‘yet’ then I think there really isn’t much desire, because truth is there isn’t anything stopping you.

There are 168 hours in a week and you really can’t find 5 hours out of them to look over charts, read a book, website, listen to a conference call or possibly read a newsletter *cough*. I’m sure it would be time better used than watching jersey shore. However, if you’re are finishing up stuff for work or school fine but if you’re mindlessly watching television then possibly your time would be better used taking control of your financial future.

Money is an iffy subject because it has to do a lot with the individual in question. Not many people have thousands of dollars sitting under their mattress that they can through into an investing or trading endeavor. For example to trade commodity futures unleveraged, one would need over a quarter of a million dollars. However, on the complete other side of the spectrum, there are forex brokers like Oanda which offer nano lots, where 1 pip is one cent. This means one could trade unrestricted with only fifty dollars and actually grow.

Fact is if you can’t find fifty dollars you have other problems or other priorities which is perfectly understandable. Using fifty dollars to buy groceries or pay rent is much more important. I’m just saying using fifty dollars to possibly grow your wealth seams worth it if it was going to be otherwise spent on a new pair of shoes or to watch that new movie. One must prioritize if they truly want to succeed.

Priorities go into the depths of what this commentary is about. When you have stuff to do, it’s best to get the most important stuff done first. I can’t tell what is important in anyone’s life because I’m not them. However, simple logic would agree that if you really want something or if something needs to be done, it just simply has to get done. So if you really want to do something, finance related or not, you have to step back, prioritize and make the necessary sacrifices. If not you’ll either never reach your goals or it will just take too long.

Double Dip or Sale? Daily Rant Aug 5, 2011

Baron Rothschild, an 18th century British nobleman, once said "Buy when there's blood in the streets, even if the blood is your own." Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon.  And there is no further shortage of contrarian investing advice out there. One of my investment idols, Warren Buffet once said “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” and his returns show no lack of proof of his financial abilities.

 

So with fear running rampant on Wall Street is this the time to buy? Well that depends on which camp you are in. Double dip or sale, if you believe that we are going in a double dip then I say cash is the way but if you think this is the sale before the next leg of this bull market then take Cramer’s advice and buy on the panic sell offs. However, there is an imminent problem, where is the catalyst? Now I don’t believe we are staring down the barrel of another recession but I just don’t see any catalyst to kick start the next leg of the rally. This puts Wall Street in a sort of financial limbo, where the bears are at their best but the bulls are still kicking and screaming as they go down.

 

Equity bottoms tend not to occur when there is still a glimmer of optimism, in Rothschild’s terms there still isn’t enough blood on the street but the falling knife is only a couple sessions away from hitting the floor.