To Invest Or Not To Invest

Since the markets hit twelve-year Lows on March 6th/9th, a dramatic upturn has been in effect; the Dow is up 30% and the S&P 500 is up 34%, and it indeed seems at first glance that Happy Days Are Here Again!

Is a new Bull Market under way, as many are shouting from the rooftops? If so, perhaps any investable funds you salvaged from the preceding fifteen-month market-meltdown should be re-invested, in order to profitably participate.

Or is this a huge Bear Market Bounce, prior to a significant move back to the downside, as many of our most esteemed pundits and economists are warning? Is this just a temporary broad-market Short-Squeeze, combined with sustained Mutual Fund Window-Dressing, which will soon be ruthlessly smacked down by the Invisible Hand of inescapable and merciless Market Forces? If so, perhaps it might be more profitably prudent to DayTrade or SwingTrade, rather than to Invest.

THE BULLISH CASE:

(1)All remaining potential bad economic news was priced in to the market between November and March; and bad news is currently shrugged off, while good news is met with thunderous applause and rallies in the stock markets;

(2)The financial and economic stimuli carried out by the U.S. and other governments are beginning to work their ways through the world’s economies, bringing about a gradual healing and revitalization;

(3)Unemployment has begun to level off;

(4)Economic indicators have bottomed and are becoming more positive;

(5)In their quarterly earnings-reports, more-and-more companies are beating their lowered analyst-expectations and issuing more upbeat forward-guidance;

(6)The Obama Administration and many economists are predicting a U.S. economic recovery in late 2009 or early 2010; and since the markets look forward 6 – 9 months, an anticipatory new Bull Market is now in effect;

(7)For the first time in 50 years, stock dividend yields are now greater than Treasury yields, which makes stocks more attractive than bonds;

(8)The Fear-Factor peaked early in March, and has been falling ever since; and

(9)A huge pool of cash is waiting on the sidelines, eager to jump into the Market, which will result in a huge rally.

THE BEARISH CASE:

(1)Western economies are still floundering. The European Commission now expects the European Union economy to shrink 4% this year, which is worse than the 1.8% contraction it had previously forecast; and the U.S. economy is expected to fair even worse;

(2)More bad economic news is coming; there yet remain more “shoes to drop” — more severe economic dislocations involving banks, credit-default swaps, waning productivity, shipping and distribution, unemployment, corporate and personal bankruptcies, deflation, inflation, stagflation, international trade, political destabilization and upheavals, etc…;

(3)When the Stock-Market Bubble popped in 2000/2001, the combined effects of various governmental policies replaced that bubble with the Housing Bubble and the Exotic Derivatives Bubble. Now that those two bubbles are popping with a greater fury and more severe consequences than the Stock-Market Bubble, governments have reacted by implementing panicky and ill-conceived economic stimuli which will result in new short-lived bubbles and ultimately in economy-wrecking hyperinflation;

(4)The current stock-market rally is being fueled by huge Mutual Funds which are engaging in aggressive Window-Dressing-type Buy-Programs, which are in turn activating the stop-losses of many Bears, creating in recent weeks a domino-effect which is temporarily sending stock-prices consistently upward; and

(5)The consistent 35-year drop in real U.S. productivity continues unabated; an no sustained economic recovery can set in until that unwise trend is reversed — and reversed significantly;

(6)Intelligent and successful long-term investing absolutely require an environment of stable economic structures; a stable, reasonable and understandable infrastructure of financial laws; and a stable, reasonable and understandable framework of tax laws — none of which we currently enjoy, by any stretch of the imagination.

When we look at each of the two cases presented above, individual, each appears to be eminently reasonable and unarguably correct — yet they are in diametric opposition to one another.

So what’s a poor boy to do?

Because the markets can still go either way, professional DayTraders and SwingTraders have persisted and abided in the highly lucrative strategies they have employed for years: enjoying the market when it goes up, enjoying the market when it goes down, and enjoying the market when it goes sideways.

If you are uncommitted regarding which way you believe the market will move, yet are seriously interested in consistently earning significant profits, starting immediately, there are a number of organizations and associations comprised of professional traders who are earning very handsome profits in this market, and who would welcome you into their ranks, providing you with the education, tools and assistance which will enable you to share in those windfall profits.

C-Squared Trading is one such organization; and with almost any level of participation which you might choose to enjoy.