How Money Talks When Bargains Are Shunned ~ The Risk Averse Alert

Wednesday, January 12, 2011

How Money Talks When Bargains Are Shunned

Not a day goes by without some number of analysts appearing on CNBC boldly claiming that, "stocks are cheap." Indeed, there rather seems a consensus around this view within the financial community.

Yet if this were actually true, then with so many abundant values just lying on the ground — a virtual 21st century California gold rush in the making — why are so few of these many bargains in fact being snapped up? Why is the stock market's leadership thinning rather than broadening?


If I could list all the reasons why fewer NYSE-listed issues are hitting new 52-week highs as the NYSE Composite extends its gains off late-June 2010 bottom, none would bolster any such outlook as contends "event risk" among banks and financials is on the verge of abating. Rather, under the covers we see such weakness as squarely places U.S. equities on the same thin ice as European credit markets.

Indeed, the market's increasingly meager leadership only the more positively warns that, distress is prevailing even while so called bargains abound. Thus, what is "cheap" all too likely will become even cheaper...

Fast Money
* * * * *

© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.

There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!