Tuesday, July 13, 2010

State of the economy, where to put your money now...

It has been awhile since I blogged, I know. I didn't sit still though, I have been reading a lot of financial books during my absence from the website. One philosophy I have been studying also is Robert Kyosaki's 'Rich Dad, Poor Dad' view of money. Very interesting, although I do have my own opinion regarding his way of making money, but I will elaborate on that later. Like I said before, I have been studying mainly different markets, other then forex. In these past couple of weeks I have mainly focused on stock options and how this fascinating trading vehicle works. There will be a lot more information and trade recommendations regarding 'options' in the near future of the website.

Now to the actual topic of the post;

There has been a lot going on in the markets lately. Very volatile situations, and just for a second I even thought the double dip was closer then I thought when I saw the DOW skid below 10k. I hope for the best, but this might still happen. The state of the economy seems to be rebounding, although still for many I may not seem that way.
From what I've seen throughout the years of the recession up until now is that the economy is indeed recovering although very slowly. This recession has been so deep, it will take years for it to get to the level where we were, if we will ever get there again. What I mean by that is that the economy on a global scale has changed significantly. Economic blocks have shifted, and we have a new player in the field; China. The US economy has taken a serious beating during the recession, and although most countries suffered from it, the US suffered the most, due to the lack of social services that are present in most other civilized societies. When un-employment money runs out, too bad, you are on your own. Same goes for health care coverage. The lifestyle has changed for many, instead of spending, the focus is now more on saving. Still, many people are losing their homes, defaulting on their credit cards, filing for bankruptcy and are struggling to get by. Some people have given up looking for jobs after so many months of trying. I read these stories in the news everyday. This is now, 'after the recession'. For many, the recession is still in full force. The disconnect between Wall Street and Main Street still is very much alive.

At the time of this writing, the DOW trades at 10,373.08 +156.81 (1.53%), and the EUR/USD is trading at a 2 month high; in my opinion, nearing another completion of an Elliot Wave. Which wave is difficult to tell, due to such volatility in the markets and the recent talk of a double dip doom scenario, which distorts actual investor confidence. The best way to approach this is to watch the markets closely. What happens next is clear. What goes up must come down. But which stocks should you be bearish about? Is is time to buy the US Dollar back? I say not yet. I am looking for bargains to short, mainly still in the forex markets and put options in the financial sector. For one, the EUR/USD and put options that track funds, like the SPX. I will post a list of shorts in the near future, a slice of my portfolio.

Stay tuned!

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