Making money in the stock market hasn’t been this tough since the fall of 2008. Bear in mind that in the short-term the bears may very well be in control. Stock markets are succumbing to the deflationary, and very negative conditions in many European nations that have been driven by very real necessity to cut budget deficits and reduce debt. This fiscal discipline is not priming the pump of slowing economies.
In the U.S. the sharp decline in consumer confidence and housing starts along with poor jobs numbers plagues expectations for domestic equities and is driving down–rather dramatically, too–the yield on 10-year Treasury notes. Plunging yields attest to the lack of vigor in the economy.
“Count me among those who believe that the ‘austerians’ (austerity is coming) are about to send the economy off a cliff, or as I see it, into a demolition derby,” warns my newest favorite blogger John T. Burke Jr. on Centerlane.com. Indeed, the dividend yield on the Dow is a tad more than the 10-year Treasury. Never mind this odd juxtaposition. Investors continue to take their money out of money market funds and equity funds to put the money in bond funds as the search for yield continues in frustrated fashion.
To craft a survival strategy for this environment, StreetTalk has made use of several shrewd, pithy market gurus he especially respects. Christopher Woods, emerging markets expert for CLSA Securities, Stephen Leeb of Leeb’s Market Forecast, Robert Smith of Smith Affiliated Capital, and Frank Holmes, CEO, U.S. Global Resources, a mutual fund group.