Stock Market Crash! Blog

Are we heading for the bear market? Read The Coming Crash! Take a look at the evidence and decide for yourself.

Just a thought: If Yahoo wants to gain dominance in the Search Engine realm, they will have to update their index much quicker. Some pages on my site haven't been updated in a month and a half! These are all pages with my recently written articles. Why are they so slow! Google updates a page in day or two.

This week has been very uneventful as far a financial and world news goes. Of course the news media will always try to make it seem as if there is action going on. They will never admit that "nothing is really happening". Even if true, it will never sell ad time.

One way I can tell if nothing eventful is occurring is to go to Yahoo! and check the news headlines. If there is a sports score, then nothing earth moving is occurring. This is because there are games ALL the time, and those scores not usually displayed on the headlines.

Another news media trick is to rehash the same story with a slightly different headline and slightly different wording.

These are all examples of why I don't follow the news for my trading and investing.

Even though slightly bullish, it seems stocks are entering the summer doldrums. The summer doldrums are a time of very light trading volume and little trending. Much of this is caused by traders taking vacation for the summer-probably going to the Hamptons!

This is the reason why they say- "Sell in May, and Go Away". Not because the market is going to be bearish, but because it will be flat! Additionally, most European currency traders take 6 weeks vacations in the summer! In 2003, the stock market was completely flat and nontrending.

So, you probably shouldn't expect mega moves in the near future.

Fears of a new banking crisis gripped Russia's financial markets last week due to a credit crunch and a list of banks soon to be closed. Many of Russia's small boutique banks may find themselves insolvent when the smoke clears.

The mini crisis is due largely to the recent investigation of money laundering and corruption by Sodbusinessbank. The Russian government proceeded to remove Sodbusinessbank's business license.

The Russian economy further looks like it is heading in for turmoil. As crude oil prices and other commodity prices have been plummeting, Russia's commodity driven corporations are making less profit. The overheated Moscow Times Index has been falling steadily, erasing its over 2,000 point gain for the year.

One of the next big investment trends is going to be dividend investing. Boring, I know. But as Baby Boomers start retiring, they are going to need to invest for income.

Dividends have been out of style for much of the late 1980's and 1990's as Nasdaq tech companies focused on growth and not paying dividends. Not that I blame anyone for being more fascinated by technology stocks! Dividend stocks are most often staid, mature utility companies and other stalwart firms.

Investment trends move in cycles, and I feel dividends will come back into vogue.

As I've said before, I feel its a high likelihood that stocks are bullish on the short term. Crude oil is down sharply and today's CPI reading was relatively tame, signaling weak inflation. This help assuage the fears of investors who felt we would be having a 50 basis point Fed Fund rate rise in June.

I feel that the Fed may raise rates 25 basis points, after which, the stock market will rally in relief. Currently, the stock and bond markets are factoring in much higher interest rate rises. Rising rates signal a strong economy. The economic situation will only get risky when rates have risen for a while and the stock market is experiencing euphoria. Usually in election years the stock market performs well. Then after the election, the market tends to decrease. I expect the market will follow some variation on this theme.

Just checking some stock indexes and I found one index that I wouldn't be caught dead owning at this point.

It is the Dow Jones US. Home Construction Index (Symbol:$DJUSHB), which performed remarkably in the past 3 years. From September 2001 to June 2004, this index has tripled, from 200 to 600.

The Home Construction Index performed so well because of the massive real estate bull market and extremely low interest rates. The index consists of stocks of homebuilders such as Lennar, Beazer Homes, and Toll Brothers, to name a few.

These stocks will be worthy candidates to short, when home sales head down and interest rates rise. These stocks will be the first to fail when the housing bubble pops.

I am astonished by the lack of overall technological progress that has occurred in the last 6 years.

1)The internet hasn't changed much, although broadband is now available. Unfortunately, according to surveys most US citizens are still using dial up modems! Here, I'm surprised that wireless broadband hasn't even been pursued.

2)As far as transportation, we are still using the same internal combustion engine for the last 100 years. Yes, we now have computer controlled engines, but they are still internal combustion, nonetheless! We are still using the same fossil fuels as well.

3)US railway transportation is virtually unchanged from the 1950's. Japan and Europe have had high speed trains for over 35 years now. Even China is pursuing a MagLev high speed train. Isn't it about time we update our railways?

4)It seems as if biotechnology is at least 30 years away. Much of the "progress" seems to be all talk and no action. Of course our political environment isn't exactly accomodating towards stem cell research. I don't understand the concern with stem cell ethics. You should worry more about killing a spider than using a stem cells to heal millions of people. What ever happened to caring about "the greater good"?

It is our complacency that will cause our downfall. There are absolutely NO new advancements driving economic and social progress. If we don't advance we will fall backwards or stagnate.

I just happened to think of something wonderful that was created in the last 6 years: Reality TV! Now that shows where our culture's priorities are at.

Most people do not know that the Russian stock market, the Moscow Times Index, has soared from 2,000 to about 9,200 points. This bull market has vastly improved the lives of many Russians.

The run away bull market has been fueled by the exporting of Russian commodities, such as oil, gas and metals. The fact that commodities have been in a 3 year bull market didn't hurt, either. As commodities gain in price, companies selling them receive more profit.

Unfortunately, this works in reverse, as well. Now that soaring crude oil prices have slowed down, other commodities have been plummeting as well. This will erode Russia's previously high profits. The Russian economy is entirely dependent upon commodity prices.

To make matters worse, Russia still hasn't stopped its iron fisted ways. Recently, Russia's wealthiest person, Mikhail Khodovorsky, was jailed for "supposed" fraud and taxt evasion. Khodovorsky is the head of Yukos, the largest oil and gas conglomerate in Russia.

In short, I feel that the Russian stock boom is really a bubble about to burst. The Moscow Times Index has already plummeted from 9,200 to 7,000 is less than one month! If Russia enters a bear market, it will have negative reverberations around the world.

If you are a growth investor, look forward to investing in hybrid cars, especially when they start to run on 15% gasoline and 85% ethanol. This fuel is called E85.

Ethanol, or grain alcohol, is the world's only renewable fuel. It is renewable because it is distilled from fermented sugar, which is derived from corn and sugar beets. Oil is nonrenewable, as once its used up, its permanently gone. To sweeten the deal, ethanol has an octane rating of 120!

Currently, the Chevrolet Silverado and the GMC Sierra are E85 fuel compatible, from 2002. Once the ball gets rolling, this technology will grow, creating investment opportunities.

The coming energy crisis can only be averted through reducing our dependence on foreign oil and by accepting new technologies to help the economy grow.