Xmas Rally Kicked Off
Posted by Frugal on November 28th, 2007
The stocks are running up now. This is in conjunction with $US rising (which means gold is falling). I don’t know how long this rally will last, but I think this rally should be sold. The exact timing is hard to pinpoint, but I’m guessing probably mid-January to late February.
I moved some 10% of my idle cash in my 401K account into stocks right near the bottom. I was going to add more, but I got hit by a 50% loss on my NG position, and has been pondering my next step on that instead.
Anyway. Things appear to be temporarily bright for stocks, due to the upcoming Fed rate cuts. I fully expect that Fed will be cutting interest rates sooner and faster than in 2000/2001. Cash will be earning next to nothing again, while inflation is going to eat away the savers’ nest eggs. To combat that, one must buy into stocks I believe after a serious fall yet to come.
When everyone expects that housing is going to wreck the stock markets, instead, I believe, a semi hyper-inflationary scenario will be in store for stock markets. However, my assessment must be qualified by a higher than usual probability of a big deflationary fall (coupled with this higher than usual probability of the hyper-inflationary rise). Anyone knows how to bet on volatility without buying options, but rather selling options on products such as inverse ETF?
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