When everyone is buying real estate, and every channel on your tv is another rookie flipper making big money on their first flip, be scared. When everyone is investing in bear ETF’s be scared. In looking over the performance of all of the ETF’s available by class one thing stands out like a neon sign. The only clear winning categories are those who are market bears. With grade school reasoning, one could assume they could just place their money in one of these funds and boom you are making money. I try to learn lessons from my past. How about the penny stock craze of the late 1990’s that coincided with the internet boom. Everyone was an expert, there were no mistakes to be made. Following that, just a few years back,real estate dominated the national news, HGTV TLC, I could go on and on. The media LOVED the fact that real estate was a money mill. The news started gently and built into a boiling frenzy. It was making me sick that every time I turned on the tv there was some absolute knucklehead flipping a property for a handsome profit. People that clearly had no idea what they were getting into, but hey everyone was doing it. They could not lose. Well, that market came crashing down, and it came crashing down fast. It seemed as though someone just flipped a switch. Trust me, I was involved having been luered into the Florida real estate market at the end of 2006 despite my gut telling me it was too good to be true. After that switch was flipped the ensuing news was about a possible recession. Possible recession? The recession was a fact and as the data came in the news built and built. The depth of which the free flowing money that fueled the real estate market would effect the economy as a whole was gravelyunderestimated. We have experienced massive layoffs and a financial meltdown. Now a few years later the water is boiling once again with all media outlets concentrating souly on this fouled economy. This doom and gloom of the economy, and a frozen credit market are all we read about daily. I am a student of history and trends, and see the writing on the wall. There are many differing opinions about where the market is going and many people will disagree with me, however consider the following. With the amount of bad news we have had to swallow: (the automotive industry, AIG, Lehman Brothers, staggering unemployment etc.) what news is it that will send us spiraling down yet further. I think we have taken our medicine as and the party is over. The bulk majority of our losses have been taken, and there are in fact people out there that are still working and making money. There are still people who have disposable income. Even with unemployment in the range of 10-15%, there are still upwards of 85% of people still earning. This money is on the sidelines, and is poised to enter back into the market to swallow up the stock deals of a lifetime. My past lessons tell me that we have indeed bottomed out and now are on the path to recovery. I feel we will be finding the easy money in bear etf’s will end. Look to see IWF, IVW as some of the early movers on our path to recovery. I see other issues such as inflation that will affect other markets, but that will be in an upcoming post. Look long term, see the writing on the wall and adjust your portfolios accordingly.
By: Greg Cullen
ETF Daily News