The Poor Millionaires

Cost of tomatoes have not gone up and neither that of a TV or a cell phone but most of us already have those. Inflation never goes after the stuff we already have, what would be the point in raising prices on items people don't really want. No, it is always the stuff everyone wants that goes up. The old supply and demand thing.

What is going up? How about government services, i.e. healthcare, police and education? And how about repair and maintenance of your house, body and your car or your DVD or your PC. Unfortunately these are the things we need more of. And guess who avails themselves of these services? The rich, of course. Combine that with the fact that all a million dollar will earn in a bank today is about 20,000 a year and what you have is a land of poor millionaires. No wonder the stock market keeps trying to go up; every one is hoping to get a little extra income, even the millionaires.

Are we in for a multi-year bear market?

It takes a special kind of investor not to be affected by the gyrations in the stock market. When the stock goes up, people rejoice and buy more. When it goes down, all the worries of the past come back and people sell. We are definitely in the latter kind of market at this time. And yes, it could get worse before it gets better. But the question is how long? Or is it already over?

As we know, any one that gives you a precise date when the turn around is going to happen, is either not telling the truth or is ignorant or both. What is however possible is to decide whether this will last a long time or short, compared to previous bear markets and market sell off's.
The longest bear market of modern times was in the '70's. But even then, you had years or periods when you could get a 20% return, only to be followed by a similar decline. This was the case because something or the other kept going wrong for a bull market to take hold.

Frankly, we have just entered a bear market which some define as 20% decline from the high. I really look at whether more than a few groups of stocks can steadily rise, week after week. And that is not happening yet. So, don't be in a hurry to break your piggy bank yet. Hold on for better signals.