Monday, 28 December 2009

Closing Out the Year

There are about 3 days left in the trading year. It is safe to say that 2009 was an unprecedented year. I think unprecedented was one of the most used words in 2009. Markets worldwide have moved straight up since March. The S&P 500 has closed up the last 9 out of 10 months. The NASDAQ has closed up 9 out of 10 months. The FTSE finished up 8 out of 10. The Dow 8. The DAX 8. The CAC 8. The SENSEX 7. The Straits 7. The Bovespa 9. The RTSI 9. The Hang Seng 7. And the weakest performer the Nikkei which was up 7. (I left out some, for expediency) Although for the Nikkei, most of that move was made in the last 19 trading days. So you can see that 2009 was definitely a year to be long. So, what's in store for 2010? I, honestly, have no clue because my expectations for 2009 were greatly exceeded. So it begs the question, how can 2010 outdo 2009. The mainstream media wants to talk up the fact that the S&P 500 is up 24.71% as of Thursdays close last week. But really the S&P 500 is up 66.51% from the March 9th close in just 209 trading days. So are we to expect another 66.51% rise straight up for 2010? Well, some inflationists, such as Marc Faber, think that as long as Ben Bernanke keeps printing more (phantom; I will explain the phantom part in later blog posts) money the US stock market can continue to rise unabated. But he thinks the downfall will be the US dollar and Treasury bonds in the long run, which he probably right about anyway. The question is when will it come. Do we need to know or predict what is going to happen next year to make money? The answer is, No. I believe that the future can be predicted in current stock prices by simple technical analysis. So, right now, I believe the trend is up, but my problem is how long can the markets go up without some kind of fundamental backing. I don't need much just more than a little bit. I am sure there are some companies out there making money in the last two years. Are they going to earn enough to lift the world economy? I guess we will see in 2010.

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