Markets Fooling Themselves?

by The Investment U Research Team

Defensive plays have been up. Oil is climbing, gold just pulled above $900, and yet the markets have been clawing higher this week, what gives?

Either things are a whole lot better than anyone expected, or the market’s are fooling themselves.

Losses have been smaller than expected from most of the companies that have reported earnings recently. Now most of them lost money, but they didn’t loose as much as Wall Street thought they would. A few even turned a profit.

On one side you could argue that it’s the result of an improving economy, company cutbacks and belt tightening measures. On the other, you could argue that these firms have been sandbagging the real extent of their damages, or have used tax and accounting rules to make the books look better.

Unfortunately, we believe it’s the latter instead of the former.

While the economy may have bottomed out, corporate earnings are still on the ropes. Regardless, a recovery isn’t going to happen overnight.

What does it mean for investors? It means that we’re going to see churning and volatility continue. As the bankruptcies of GM and Chrysler get closer to reality, we should see their negative impacts affect the markets.

• Alphabet Soup Rebound Vs, Ls, Ws, and more?
• The Frontline of the Global Recovery
• Markets Need to Be Good

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One Response to “Markets Fooling Themselves?”

1. cihat Says:
   April 25th, 2009 at 8:36 am

   This is what I like about free speech.

   You can tell the truth as you expect, whether the governments and officials like it or not.

   You are not allowed to give your sincere ideas against officials in many countries as you will be scared off as a person harming your countries benefits by spreading negative news.

   So there is a lot of hidden sins under the carpets of other governments, I would multiply the worse case scenarios we can think of by at least three ..

   I can’t see too many articles about this crisis in may US newspapers either..looks like, they don’t want to cut the branch they sit on as well… another inconvenient truth…

   Reply

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