Hot Market Again - Good or Bad

Written by The Dividend Guy on April 21, 2007

Things seem to be going crazy again in the markets. Oil is up, the Dow is making record highs, and money is flowing into the market like there is an endless supply of gains to be had out there. Kind of scary if you ask me.

Investors have short memories. Only a couple of months ago did the Dow have the largest drop in a very long time. In my own portfolio, I was sitting on an loss for the year of -2%. Today, I am now sitting on a gain of 4.5% (which is above the Dow’s 4% gain). This in large part is due to the Talisman stock I hold as well as Wal-Mart and IGM Financial. The Talisman stock is a play on the oil and gas sector and things seem to be pretty good there right now.

However, I DO NOT think this is a time to get cocky. This has been one heck of a volatile year and I think that is going to continue as we move into the summer. I am expecting some big swings here and there. At the end of the day, I really couldn’t care less as I am in this for the long haul and drops in the market are good time to put some money into more stocks. That is what I am looking for.


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8 Comments so far

  1. Latest Finance News » History » Hot Market Again - Good or Bad April 21, 2007 7:25 pm

    […] Original post by The Dividend Guy […]

  2. Chris April 23, 2007 8:42 pm

    I say bad. This market is too frothy. I expect another correction at some point, perhaps 10% or more.

    Here’s what I don’t get (and I post about this on my blog): a few months back the market was freaked out by the subprime lending mess. This mess has not been cleaned up - it’s still an awful mess! And yet the market was in a panic about it for awhile, and now it has forgotten.

    The market freaked out when Iran took those British sailors. Then they freed them, and the market rebounded. Iran was just as dangerous the day before they took the sailors as the day they freed them. Nothing fundamentally changed about Iran.

    So I’m just worried that this market is shrugging off everything, and it doesn’t seem healthy to me at this point.

    Besides, I need some buying opportunities!

  3. Rich Slick April 24, 2007 6:45 pm

    I suspect gas prices will hit $4 this summer and the Fed will be forced to raise rates again to fight inflation. When these two things happen, the market will take a hit of at least 10% or so.

    My portfolio is energy heavy and will only get heavier once May options expire.

  4. FinancialJungleGuy April 25, 2007 1:42 am

    Not all sectors mirror the market. US HomeBuilders and Financial stocks look cheap. Both are trading near their historical lows.

    JNJ was at a rock bottom price ($60) just several weeks back.

    I just ignore the market and pay attention to individual stocks. The best time to buy O&G stocks was back when NASDAQ was at its all time high… i.e. when investors were dumping O&G stocks in favour for high tech concept stocks.

  5. ThickenMyWallet April 26, 2007 2:52 pm

    I am not sure if its investors who have short memories. The institutions continue to have a lot of cheap money at its dispoal chasing very few fundamental good stock. The money has to be used somewhere.

    If you are a market-timer, its going to be a bumpy ride but if your horizon is 5 years plus isn’t this just another peak in a series of peaks and valleys?

  6. MyOwnMillions April 27, 2007 12:40 pm

    If 5 years is your time horizon, I do not think you need to worry about a peak since there is still much money and interest for our stock market and long term is still good. Even though the economy is slowing, it doesn’t mean it is stopping or even going negative anytime soon.

    The advantage of a long term strategy is to go with historical statistics (10% per year avg) so you can ride out the bear and bull markets, so keep investing if 5+ years is your target.

  7. Q April 27, 2007 2:46 pm

    Quite the bummer that $4 gasoline will cause the Fed to raise my borrowing costs. I think it’s a double whammy on the country

  8. Jeff July 18, 2007 12:30 am

    Fools learn nothing from wise men, but wise men learn much from fools.

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