Wednesday Nov. 19’ US Stocks tumbled further as the markets closed with brutal downfall’ at the levels not seen since 2003, after the US Federal Reserve downgraded its growth forecasts through 2009 and the Fed's recent policy meeting showed officials believed more interest rate cuts may be needed as the economy falters’ the caution I already shared with readers here (falling interest rates analysis)..
The financial crisis came that out of the blue, has witnessed a complete reversal of the financial markets. This year’ CY08, has been started on the positive note, while carried forward the bull ride of Dec.’07, as the time passed and with last quarter to go, bears outshined bulls. The crisis now officially blowing away every effort of the regulators to keep it in control, contrary to their purpose’ more and more efforts proved futile against stubborn crisis and even make it more immune to them.
Higher volatility with low liquidity always resulted into steep falls or gains in the quick sessions. Uncertainty and panic conditions resulted into huge price gaps in buying and selling while trading and that is the reason for the present fall. We already experienced this few days back and also expect more to come in near future.
From most of the investment options available to individual investors, except the U.S. Treasury bonds and the U.S. Dollar, everything losing money including equities, preferred stocks, dividend paying stocks, oil & gas trusts, real estate, treasury inflation-protected securities (TIPS) and even the gold.
Experienced investors consider that the markets discount the future development in its pricing, that’s why in the rising markets investors keep on buying strong growth stocks at prices well exceed the present valuations’ calculated with methods like ‘price to earning multiple or P/E’, during bullish trends stock valuations usually calculated on the expected earnings growth of a businesses for next year or two.
The basic fundamental value in buying a stock or a business is the cash flows it can generate over time. Investing in Stocks is like investing in any other business. Even in the present crisis situation, there are different companies those will still be producing free cash flow for many years to come. This fact must be considered by investors and probably, the long-term investors. The looming crisis situation seems to take more time to handle than general expectations.
For traders, this is vital to remember while trading’ always try to earn with the flow of the market movements, any trading approach excluding market movements and merely on predictions can be very dangerous, specially in huge volatile situation like these.
Going forward, if you are a trader and need help in trading strategies or a trader struggling to survive and even if you are typical long-term investor or an average individual worried to take your moves. We at IMM’ in association with INO, inviting our readers for an exclusive offer below to help you sustain in the present tough times. . . . .
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