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5%-10% Stock Market Correction

5-10% Stock Market Correction

March 24, 2017 – Folks, the long awaited stock market correction is here at last.  We can expect a 5 to 10% decline from the Dow’s most recent high of 21,000.  As we’ve mentioned before, any bad new can trigger the correction.  It appears that the most recent not so good news that are making investors and the smart money edgy is the realization that not all Trump’s investor friendly proposals will sail smoothly through congress. TrumpCare which is supposed to be the replacement for ObamaCare was thrown out due to lack of support.  This the first indication Trump’s that investor-friendly promises such as reduction of corporate and personal taxes may not see the light of day.  The good news though, is that this consumer driven economy is still going strong.  Transportation sector is stronger than ever which is an indication that a recession is not looming in the horizon yet.  The bad news is that stock prices are really over priced that is why a correction is expected.  For the average investor like you and me, we will be better off leaving your money alone until the next recession which will surely come.  When will that happen, download my eBook, DOW to drop 80% Soon?

https://www.amazon.com/Dow-drop-80-soon-investment-ebook/dp/B01KPQB0OS/ref=sr_1_5/167-3876012-9264725?s=digital-text&ie=UTF8&qid=1490390009&sr=1-5&keywords=didosphere

 

 

Stock Market Correction coming soon?

Folks, even though the Dow breached the resistance level of 20,000 a couple of weeks ago, I smell a 5% to 15% stock market correction knocking on our doors.  In fact it is overdue.  The last correction happened over a year ago. It was triggered by relatively benign news, i.e. there was an oil glut and the price per barrel dropped to below $30 in January 2016. The regular Jos Schmo would ask, “Why was that bad?”

Economists and political pundits think that the reason for the record surge in stocks is due to Pres. Trump’s pro business posture, i.e. lower taxes and less regulations.  Doing away with burdensome regulations should be relatively easy to do.  The administration does not even have to issue executive orders.  The government can just stop enforcement.  Lowering taxes is harder to accomplish.  We are looking for the correction to happen around April or May.

Trump goes to war with the mainstream media but the stock market keeps going up.  Genius or mad man?  A presidency in disarray or a fine tuned machine?  The smart money is betting that Trump is a genius and the administration is a fined tuned machine.  Smart money keeps pouring into the stock market.  Should you be a contrarian and bail out now that all the major indices have reached all time high?  The answer is are you in for the long term or do you want to gamble a little bit.  If you do, get out of the market now and put all your money in a money market fund (stable fund) because I think a correction is overdue. Wait until there is a major correction of 10 to 20%, then jump back in.  Remember that if you are out of the market, you will die each day you hear the major indices reach record highs.  If you adopt this strategy, sit back have a beer and watch TV until you hear the DOW is back down to 18,500.  Then jump back in.  Good luck.  I’m not a gambler. I will stay put and ride the tide if my portfolio loses 10 to 20%.

 

01/10/2017 – When will the Trump bubble burst?

Dear Readers,

The Dow is really trying to surge through the resistance level of 20,000.  It may do it this week or there may be a 5-20% correction before breaking through that resistance level.  Many stock market experts have turned bearish pointing to the longevity of this bull market, overvalued stocks, Trump’s tweeting habits and what many political pundits consider as dangerous casual comments about serious global problems such as US, Russian relations and North Korea’s threat to continue to develop nuclear weapons capable of reaching parts of the USA.  Trump’s reply in a tweet, “it won’t happen”, is considered by many as proof of Trump’s lack of experience in dealing with global matters. Many investors are poised to bail out of stocks before inauguration day. Many stock market experts and some respected economists are even predicting a recession this year. Most investors will stay and weather the bumpy ride through the first 100 days of Trump’s presidency. There will be wild fluctuations but I predict there WILL NOT be a recession in 2017.  Be reminded that in general, stocks will lose 30% to 60% of their value during the bear market that follows a recession. When will it happen?  When should you get out of the stock market?  Read my exit strategy in, “DidoSphere LIVING RICH AND LOVING IT”.

Correction before Dow 20,000?

Correction before Dow 20,000?

Dear Readers,

Just like I said in my previous post, we may experience a 5-10% correction before breaking through the resistance level of Dow 20,000.  It has been 2 weeks now that the Dow has been hovering around the resistance level of Dow 20,000 but has not closed above that. We may be in dangerous waters although in the long run I still feel bullish about stocks. Read my book “Living Rich and Loving It”, to find out when you should really get out of stocks and put your money into a money market fund.  Merry Christmas, happy holidays and a prosperous New Year!!!

Dow 19,500 resistance level breached. Entering the danger zone

Hi Readers,

After Dow 19,500 resistance level was breach on Wednesday, Dec 7, we are looking for a new resistance level of 20,000.  A serious correction of 5-10% may happen before reaching Dow 20,000.   There will be profit taking and the gnomes of Wall Street are just waiting for a slight whiff of any bad news to dump some stocks and get back in after the correction.  For now, those who stayed with me and did not panic and did not get out of the market before election day, let’s open some bottles of champagne  this weekend, congratulate ourselves and enjoy this Trump rally. Just remember our long term outlook. If Trump’s proposal for lower taxes sails through the Republican Congress and Senate, we will have a lot of foreign earnings coming back into our economy. A lot of it will find its way into the stock market.  Let us check back if/when the Dow breaks past our new resistance level of 20,000.  Have a great weekend!

Don’t mix investing with politics

November 22, 2016

As of today’s closing, all the U.S. stock market major indices reached record highs.  The Dow closed above the resistance level of 19,000.  In the short run, the stock market will not have a “stairway to heaven” type of climb. I guarantee there will be dips at the slightest whiff of any bad news. Remember the first quarter of this year when the price of crude dipped below $35 per barrel? Moreover, there will be profit taking by the Gnomes of Wall Street.

The new resistance level we are looking for on the Dow is 19,500.  There may be a 10% correction before reaching this resistance level.  The climate has suddenly changed with the election of Trump.  The Gnomes of Wall Street, or perhaps we should call them the shepherds leading the flock suddenly decided that a Trump presidency is good for the economy.  Does anyone even remember that the Dow futures were 800 points down on election night as Trump started winning the battleground states one by one?  What was that all about?  Even though the market opened higher on the day after Election Day, my friend Jake got out of the market as soon as it opened at 9:30, Wednesday morning and put his entire portfolio into a money market fund. He voted for Hillary and was afraid that Trump’s victory would precipitate a global equity sell-off because he believed that Trump is an unpredictable, unstable and unqualified leader who’s the laughing stock of the whole world.  Even after the Dow gained 1,000 points, my friend Jake is still out of the stock market.  He told me last night he “cannot believe why the market keeps going up”. Don’t mix investing with politics, folks. Happy thanksgiving!!

Most Economic Indicators Pointing Upwards

It has only been over a week since the voters elected Trump and housing starts are up, unemployment claims have been the lowest since the great recession, retail sales look strong, corporate profits are up, the Dow gained more than 5% since the election. Happy days are here again?  We’ll see.  The uncertainty of the US elections kept the stock market stagnant for almost a year.  So this is a post-election bump that still has legs.  Trump’s pro-business policies of curtailing government regulations, lowering corporate, capital gains and foreign earnings taxes are meeting with great enthusiasm from the gnomes of Wall Street.  Look for a correction around Dow 19,500.  The correction could be 5-10%. Follow this blog so we may discuss the possibilities.

 

 

After the dust settled…

Wednesday morning after Election 2016, the 1,000 point drop in the Dow that many so-called experts predicted as they were watching Trump beat Clinton one battle ground state after another did not happen after all.  In fact stocks are not only in the positive territory at noontime eastern standard time but had healthy gains of 1-1.5%.  Still Myles Udland, a financial writer for Yahoo Finance says, “…don’t mistake Wednesday’s rally for an “all clear” sign from markets. The unknowns around any new presidency are considerable, and perhaps no recent administration presents more question marks for investors than  a Trump White House”.  Adam Parker, a strategist at Morgan Stanley, wrote in a note to clients on Wednesday that, “We are more bearish today than we were yesterday because of increased uncertainty.”

Frankly, I am tired of listening to these geniuses and shame to investors who blindly listen to them.  These are the same type of geniuses who led investors on the wrong path in 2008.  After investors lost 50% of their savings during the bear market that followed the great recession, these geniuses told them to get out of stocks.

Go ahead, listen to Udland and Parker.  Get out of the stock market now and you’ll be sorry.  I say this because Trump’s fiscal policy is pro-growth.  Low taxes, less government regulations, repatriation of foreign profits, possible repeal of Obamacare, infrastructure investments, etc.  Of course I am concerned about a few uncertainties such as Trump’s promise to replace Janet Yellen whom I think is doing a great job and protectionism but I don’t think Trump would act recklessly with regard to these two concerns.  He has VP Pence and other technocrats to hold his hands. So when will the stock market crash? We will exchange thoughts and ideas. Follow this blog and learn.

Election Night 2016

Wow the Dow recovered 400 points in 2 days.  The gloom sayers are wrong again.  Who got out of the market 2 days ago when the Dow went below 18,000?  Remember, the market goes up and the market goes down but in the long run the market will keep going up in a free market economy like ours.  Many know-it-all commentators tonight are predicting an up market if Hillary wins and a down market if Trump wins. What do they know?  Here is what I’ve heard finance gurus on TV say:  Trump may fire Yellen and may start a trade war that is why the market may drop quickly at the hint of a Trump victory.  Price of gold may also rise quickly according to them.  On the other hand, according to them, a Hillary victory will stabilize the market and cause less volatility because Hillary’s administration is a continuation of the Obama administration’s policies which has brought sluggish growth, stable dollar and stocks will keep going higher.  These finance gurus know as much as you and me.

Stay Healthy and Fit as you Age

STAY HEALTHY AND FIT AS YOU AGE

Do not act on any information in this blog without talking to your doctor.

If a doctor goes by my family health history it would be easy for him to conclude that I only have a short life to live. My paternal grandfather and ALL my paternal granduncles died of either heart disease, heart attacks or strokes. Many of them died in their forties and fifties.  My paternal grandmother and most of my paternal grand aunts died of diabetes also at a relatively young age, in their fifties and early sixties.  My father’s side of the family was always plagued with elevated triglyceride, high cholesterol levels and hypertension. My mother’s side of the family was plagued with asthma, emphysema and chronic pulmonary diseases.  None of my grandparents, grand uncles and grand aunts died of old age.

Because of my family history and also due to my ignorance, in my first 30 years of life my diet consisted of low fat, low protein and high carbohydrates. For breakfast I ate bread, pancakes, donuts, muffins, cereals, waffles, bagels and cakes.  I avoided eggs (because they have high cholesterol content), bacon, sausages, butter, cheese, ham and steaks.  For lunch I loaded up on pasta, bread, rice, French fries and all types of starches you can imagine.  My dinner consisted mostly of different types of starches and vegetables with very little meat (because they are high on cholesterol).  My annual check-up just a few days shy of my 30th birthday revealed that I had hypoglycemia and my doctor recommended that I change my diet. I must have misunderstood him because the way I changed my diet was to add on more meat to my diet without easing off on my sugar and starch intake.  The result was disastrous.  I gradually gained weight and the result of my blood test a year later confirmed that whatever I was doing was not working. I had elevated cholesterol and triglyceride levels, my glucose was high and my blood pressure was consistently 170/90. It was only then that it became clear to me that my doctor’s advice was for me to reduce carbohydrate intake—not necessarily to increase protein.  It was extremely difficult to heed my doctor’s advice. I am the type of person who can consume a 1.5 quart container of Breyers vanilla ice cream in one sitting.  Oftentimes I even added vodka or brandy to it.  But just the same, chances are if I opened a 1.5 quart container, it did not make it back to the freezer.

My day of reckoning came when I went to San Francisco, California for a 2 day conference. My flight was scheduled to depart at 3pm from Newark airport. I worked for a tour operator so I often travelled first class for free.  I planned to forgo lunch to take full advantage of the perks, the in-flight first class meal and free adult beverages.  I had a big corn muffin at my desk about 8 that morning and around 10am, someone brought out a big cake on the occasion of an office mate’s birthday so I took a big piece of the cake.  I was hungry when I got to the airport at 2pm but I said to myself I could bear it for another half hour until boarding time.  I don’t know how it is now since I have not been in first class for quite some time but back then, the airline crew pampered first class passengers and served them alcoholic drinks as soon as they were seated. We had priority boarding and by the time the last passenger boarded, I had already consumed 2 glasses of champagne. Before the plane moved I finished three more drinks, 3 shots of Chivas and gobbled up an assortment of appetizers. When the plane started moving, the flight attendants cleaned up and folded back our tray tables.  As the plane was taking off, I felt a little nauseous and could not wait until the “fasten your seat belt sign” was turned off.  I had a window seat and the seat next to mine was empty so I was able to quickly get up and run towards the lavatory.  The next thing I remember I am lying down the aisle and I am hearing a woman’s voice on the PA announcing “if there is a doctor on the plane please come over…”  I soon realized I passed out on my way to the lavatory.  A stewardess has loosened my belt, unbuttoned my pants and held me down when I tried to get up, saying “stay on your back sir, the doctor is coming”.  Soon the doctor was examining me while I was lying on the floor and asking me questions.  “Do you have any medical conditions?  Why do you think you passed out?” I calmly replied, “I have hypoglycemia and I think I had too much to drink with too little to eat”.  “You should take a return flight as soon as this plane lands.  You need a full examination”, he concluded.  The stewardess helped me up and got me back to me seat. “Do you have pain in your chest?” she asked, pointing to her own chest. “No, why? And where are my glasses?” I replied with a puzzled look on my face. “They’re in your shirt pocket, you took a nasty fall”. I took my eye glasses out of my pocket.  They were bent out of shape and I had to twist them back into shape so I could wear them.  I felt better two hours into the flight after eating the first class meal the airline served.  I refrained from any alcoholic drinks and only ordered diet coke, tea and coffee.  I started feeling soreness in my chest area so I went to the lavatory to check it out. When I unbuttoned my shirt I noticed a 2 inch by 2 inch welt in the middle of my chest.  I also noticed a bruise on my forehead just above my right eye.  The locations of the injuries led me to conclude that when I lost consciousness, I must have fallen forward, bumped my forehead on the back of an empty seat then my chest hit the armrest. I learned two important lessons from this eye opening experience.  First, when you become unconscious you will feel no pain.  There must be something in our brain that disconnects the pain receptors. A protective mechanism that protects us from pain.  Second, I was not healthy.

So when I got back home, I immediately called my PCP and related my experience on the plane. He ordered different types of tests for me which were done over the course of 2 months.  These included, blood work, electrocardiogram, nuclear stress test and glucose tolerance test.  He concluded I was pre-diabetic, I had hypertension and elevated cholesterol.  So, at the age of 32, my doctor put me on Lipitor to lower my cholesterol and a beta blocker for hypertension. And he threatened to put me on diabetes medication if I fail to shape up.  To make a long story short, I struggled for 7 years, gradually gaining weight, experiencing palpitations, extreme fatigue, drowsiness at around 3pm, insomnia and sleep apnea.  I am only 5’8” and weighed almost 200 Lbs. If I walked only a few blocks or climbed the stairs I had trouble catching my breath.   My life changed when my son who was then in high school asked me, “Dad, why don’t you walk around the yard instead of spending the entire day in front of the television?”  The rhetorical question hit me like a lightning bolt.  The next day, I walked around the yard for 15 minutes just to show my son that his dad is not a lazy bum.  Then each day, though I struggled, I picked myself up and walked a few more steps until I started jogging, then running a mile then 2 miles a day. I got my old bike repaired and started riding it for long periods on weekends, sometimes for 3 hours. Although I lost 10 pounds quickly due to the physical activity, I was not able to take control of my diet until I accidentally came across a book entitled “Protein Power” by Drs. Michael and Mary Eades.  Two statements (paraphrased) in the book became etched in my mind, “The body does not need carbohydrates…” and, “…fats in the absence of carbohydrates are good…” Since I secretly love fats anyway, I resolved to give the diet a try. I followed the high protein diet by eating 2 eggs and bacon for breakfast, broccoli and fried chicken or a burger with no bun for lunch and chicken, fish, pork chop or steak and leafy green vegetables for dinner. After 15 days on this “protein power diet”, what a surprise!   I lost 15 pounds!  The best part is that my blood work taken 1 month after I started this diet showed my cholesterol, triglycerides and glucose all went down close to normal levels.  My blood pressure was consistently much lower than normal for 3 months so my doctor took me off the hypertension medication.  I continued taking only the Lipitor.

That was 15 years ago. I have an occasional craving for sweets and starches and on those occasions, I make an exception and still consume a 1.5 quart container of Breyers vanilla ice cream in one sitting just to get it out of my system.  But generally, I remained faithful to the diet and only consume less than 35 grams of carbohydrates a day.  I feel much stronger today, physically and mentally than 20 years ago.  My weight is down to 165. I kept up with walking, jogging and running at least half an hour every day.  In fact, I stopped taking Lipitor 2 years ago but did not tell my doctor. Thank God my blood test readings are still all normal even without taking any regular medications. My doctor keeps telling me, “Continue doing whatever you’re doing….”, so I continue eating eggs, bacon and steaks.  I have so much energy that I now go to the gym thrice a week for strengthening and conditioning.

In summary, I eat a low carb diet, exercise at least half an hour each day, I almost always drink 2 glasses of wine with dinner, I drink at least 8 glasses of water every day, I usually get 7 to 8 hours of sleep and I go out of my way to avoid any type of stress.  Stress can cause anxiety and depression and can weaken the immune system.  When I’m feeling stressed out and I feel that my mind is in turmoil, I do the following:

  • While sitting in front of my desk, I put my elbows on my desk, my hands on my face, empty my mind so I am thinking of nothing, which is similar to what others may refer to as meditation, hold my breath, try to tense all the muscles in my body from head to toe, then exhale. I repeat the process 3 or 4 times.
  • Then I push my chair back, grasp the front of my desk and do 15 squats, as shown on the picture below. I do at least 3 sets of this exercise during the day. Squat exercises offer many types of benefits. Click on this link to find out more: http://www.beautyandtips.com/sports-and-fitness/10-benefits-of-squats-and-why-every-girl-should-try-doing-squat-exercises/

If I am home, I do plank exercises or push-ups and sit-ups, doing as many repetitions as I can. Life is good. Why not make it even better in retirement!