So it seems like the consensus of Wall Street professionals is that we cannot just buy and hold stocks or mutual funds (for the short term). Apparently stocks are trading more on momentum and less on fundamentals.
So basically we are now being told that this market has very little to do with the fundamentals and everything to do with speculation right now. Now if you have a 5 to 10 or 20 year outlook then this is a cheap market according to Wall Street. Keep in mind if the market goes down another 50% from here, then the market would need to go up 100% just to get back to where you started from.
If fundamentals are really not playing a factor and it is all about speculation then aren’t we really just gambling with our money? At least if I go to a casino the rules are the rules and they can’t change in the middle of the game. Is the real goal of investing in the stock market to roll the dice?
Look at the products that being introduced into this market. I especially have noticed the increased popularity of “ultra” short or long Exchange Traded Funds (ETFs). On any given trading day these products typically show up on the most active securities list. These products promise a multiplier effect on the sector, index or commodity that you are investing (betting?) in. If you are Long Financials with an ETF “ultra” fund 3x, then if the Financials go up 2% the ETF is suppose to go up 6% (vice versa on a down day). Does this product sound like an investment?
Investors make stocks grow for the long term because they typically”buy and hold “stocks. Does this market seem like it is mostly made up of investors or speculators?
