Business News

Rally is not bull

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by Peter Switzer

Another bad day for the poor old bears on Wall Street and other stock markets with another round of “a Greek bailout package is close” placating investors. Once ‘Eurotrash’ debt problems stop spooking, investor go back to US earnings, which have been great.

Let me give you a warning, no, let’s call it a lesson — never underestimate the commitment of negative people to work hard to look for the negative at the expense of the positives. And, further, don’t ignore the media’s desire to go along for the ride.

In truth, they often accessories after the fact!

Wall St rally

Back to the Big Apple and shares had one of the best days in ages with the Dow up 122 points or 1.1 per cent. Greek-created market fears have now subsided and the fear index has again dropped below 20, which is always a good sign.

On the all-important US economic recovery front and jobless claims dropped by 11,000 and oil topped $US85 a barrel reflecting great belief in the global economic recovery.

Earnings continue to impress the market which was proved by advancing stocks beating declining stocks by better than three to one.

Market makers and breakers

What’s ahead that could excite or ‘re-spook’ the market? Tomorrow morning we will find out how GDP is doing in the US, as well as consumer sentiment. These could be market-makers or -breakers.

But there is one other news item I look forward to and that’s the report on the annual meeting of Warren Buffett’s Berkshire Hathaway. The Oracle of Omaha often comes out with an investor pearl of wisdom from these get-togethers.

Buffettism

Regular readers know that my favourite Buffettism is: “Be fearful when others are greedy. Be greedy when others are fearful.”

This kept my faith when the markets were diving in late 2008 and sustained me until the markets turned in March 2009. My nerves were also settled by the fact that Buffett injected $10 billion into Goldman Sachs in September 2008, which was a classic case of Buffett following the advice of Buffett!

I’m hoping Buffett talks to the US economic recovery and the rally but it was not long ago that he bought into a US railway. Coincidentally, as I reported this week, the Dow Transports index has really been doing well of late, which is a good economic omen.

I guess Buffett’s investment in the transport company was the great investor letting his money doing his talking! And when money talks you should at least listen.

For advice you can trust, contact Switzer Financial Services.

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Published on: Friday, April 30, 2010