Here we are, we have made it to Presidential Inauguration Day. People are excited, the President Obama merchandising is in full swing and there are parties,parties, parties. How is this going to affect your investments? For the immediate short term, my guess is that there will be a pop, probably a small one. I am talking 1-3 percent change in the markets. It may not last till Friday, depending on how fast the parties end and the President and Congress start enacting their programs. Look for a tax incentive rebate of about $1000 to come back to each tax paying citizen. I believe something like that is on the books.
The stock market will continue to react to earnings news in a sideways motion. I don’t see any super dips in anything because as I harp on all the time to all my regular readers, the downside is already factored in along with supply destruction. You remember supply destruction, don’t you? It is where companies stop making goods, shutter factories, shut down pumps and lay off employees because the demand won’t be there for their products or goods in the upcoming months.
But there is profit going on. Make no mistake about it. Oil is about $30-35 a barrel and California prices have already jumped to $1.99 from $1.62 in about a month. An oil refinery has been shuttered in the desert so there is less pumping going on out there. As an investor, it pays to keep track of things like that so you can filter the noise from the news and decide if there really is a problem in a particular business or industry or are they just going with the flow?
I would caution any investing in stocks – or anything – for the long term unless you are doing your due diligence. Pundits don’t know what will happen but you can if you take the time to “read the tea leaves” in how companies are actually planning for the future. The firms with cash and that are solvent will survive. No matter how people try to short a company, if it is making money, the stock will go up. Banks and countries will invest in it.
The flipside is true as well. Beware too much hype. If everybody is jumping on the boat for a particular stock be aware that the boat might get heavy and sink. Somebody who got in early when shares were lower will start to sell, take a profit and then the others will start. You don’t want to be on the end of a sell-off daisy chain.
Best of luck to you, dear readers, our President, Vice President and Congress. Have a great time celebrating. Just don’t forget once the celebrations are done, the White House and the country still need to get the cake and ice cream cleaned off of the rug along with the depression stains.
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Kim Isaac Greenblatt
Inauguration Day Investment Thoughts and Comments