It was reported that 36,000 jobs were created last month, which is way less than what was expected. However, miraculously the government also reported that the jobless rate dropped from 9.8% to 9.0% in January. Of course, while no one with a right mind can reconcile these two numbers together, we have seen again and again all kinds of miracles from this government in handling the economy. Everything looks rosy and all the problems are in the process of being resolved. No wonder why the bond king, Bill Gross, one of the best economists and investors, said today that the job report is schizophrenic. I cannot agree more and would also extend this by saying that the market and the recent Euro appreciation are totally schizophrenic!
For those who is not familiar with this medical term, schizophrenia is a mental disorder characterized by a disintegration of thought processes and of emotional responsiveness. Simply put, this is the mindset which is totally discordant from the reality. Take the Euro as an example, have the Euro zone countries done anything in the past weeks to fundamentally solve any problems they are facing? None! They still have the huge deficit problems and most of them are still at the edge of default. However, the Euro has appreciated significantly in the past few weeks. To me this is just like a schizophrenic patient who is in the phase of extreme euphoria. I simply keep shorting Euro. Actually the whole stock market is behavioring just like that.
Of course, I'm just too small to fight against the market. While I have been expecting a major correction for quite some time and I think it is very dangerous to buy stocks at the moment, there is no telling when this schizophrenic stage will end. Who knows that this market may keep propping up and up for weeks and months regardless how irrational you think it is. For those of you who really want to join this bullish market, I suggest you put money into big and well-run companies, which may better weather storms in the stock market. Even better if you can diversify your money into good companies around the world. Interestingly, I have found one such ETF fund, which just does that. It is called Ishares S&P Global 100 index fund (symbol: IOO), which tracks the performance of 100 large-capitalization global companies. More interestingly, this fund also pays dividends at about 1.5%, which is likely much better than the interest you may get from your bank's saving account. If you do want to put your money into work right now, I highly recommend that you use a tight stop loss to preserve your capital in case the market turns around against you.
For those who is not familiar with this medical term, schizophrenia is a mental disorder characterized by a disintegration of thought processes and of emotional responsiveness. Simply put, this is the mindset which is totally discordant from the reality. Take the Euro as an example, have the Euro zone countries done anything in the past weeks to fundamentally solve any problems they are facing? None! They still have the huge deficit problems and most of them are still at the edge of default. However, the Euro has appreciated significantly in the past few weeks. To me this is just like a schizophrenic patient who is in the phase of extreme euphoria. I simply keep shorting Euro. Actually the whole stock market is behavioring just like that.
Of course, I'm just too small to fight against the market. While I have been expecting a major correction for quite some time and I think it is very dangerous to buy stocks at the moment, there is no telling when this schizophrenic stage will end. Who knows that this market may keep propping up and up for weeks and months regardless how irrational you think it is. For those of you who really want to join this bullish market, I suggest you put money into big and well-run companies, which may better weather storms in the stock market. Even better if you can diversify your money into good companies around the world. Interestingly, I have found one such ETF fund, which just does that. It is called Ishares S&P Global 100 index fund (symbol: IOO), which tracks the performance of 100 large-capitalization global companies. More interestingly, this fund also pays dividends at about 1.5%, which is likely much better than the interest you may get from your bank's saving account. If you do want to put your money into work right now, I highly recommend that you use a tight stop loss to preserve your capital in case the market turns around against you.
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