State of the Economy and the Stock Market Outlook
As if the markets going down by 50% over the past year (2008) is not depressing enough, the forward looking view needs the markets to go up by 100% to get back to parity of a year ago. The leading question is, when will that happen? It’s safe to say the markets won’t double in the next year. Can it take 10 years for the markets to recover the past year’s losses? An even more provocative thought is, will it ever get back to those levels?
If one were to remain in the stock markets for wealth creation, as opposed to other forms of investment, there are plenty of investment strategies including things such as money management where dollar-cost averaging would be utilized to buy accumulating shares of a stock over time. With the notion that people put money away for long-term savings purposes, it makes sense to accumulate stock holdings as the capital becomes available. Even if they have a big capital base to begin with, it makes sense to use dollar-cost averaging to build the stock holdings. For example, buy more to accumulate a stock when the price dips.
For people choosing to stay in the stock markets but not wanting to wait on long-term investment or wanting to gain back more quickly, trading the trend cycles would seem the most appropriate strategy. It goes without saying that the right stocks in the right sectors need to be found. And if the trader is willing to accept more risk, going long and short on stock trading will maximize the returns.
It is certainly interesting times ahead to see the progression of the economy which of course is the basis for stock price appreciation or further stock price erosion. There is plenty of research to do in order to determine the best stocks to indulge. And when the stock trader is ready to execute, technical analysis is equally important for ultimate success.
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