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Emotional Investors
Posted On Thursday, July 23, 2009 at at 11:56 AM by Finance Fanatic
It's been nothing but green thus far for the markets as more earnings reports and "perceived" positive housing data was released this morning. AT&T and 3M both announced severe losses compared to last year's numbers, but results were once again "better than expectations", which as a result has caused for a lot of buying for the two companies. However, once again we find ourselves in minimal volume trading days, which again shows that indeed the big market movers are on the sidelines, and that much of this market is being moved by day traders and short term emotional investors.
A slight increase in home re-sells caused for a big push in the home builders sector. I'm sure the number has nothing to do with the fact that we are in the most active home buying season of the year. Of course, the year over year number remains horrible, but we usually don't look at the true comparable data these days. Also, conveniently, California has put a moratorium on home foreclosures until September, which just happens to be the entire span of the hot home buying season. So during the hot buying season, what has been the largest selling inventory the past year (bank owned homes), will essentially be non-existent the entire summer.
The absolute blind regard for fundamental data worries me greatly. Not only are we continuing to see markets bolstered up by, what I believe to be, media and government manipulated reports, seasonally effected numbers, and market reactions from trillions of dollars of government spending, but the real technical data (median home prices, deflationary data, and unemployment) remains quite dismal. No such recovery can be expected with such bad data. Indeed, the rally can be refreshing for investors, but I am being very cautious, as even after a 50% retracement we saw during the early Great Depression, markets lured investors back in only to crush them severely worse than the initial crash did. I am trying to take emotions out of investing.
