Balancing bears and bulls to fit your needs and objectives, will determine your financial future.
Buy This! Sell That!
Last week, several news items represented good examples of how investors could look at the same data and draw different conclusions.
1. Gross domestic product rose at a 2.8 percent pace in the October through December period.
Bullish investors say that’s up from 1.8 percent the previous quarter and the fastest pace in a year and a half.
Bearish investors say it’s less than the 3.0 percent growth expected by economists and most of the growth was due to inventory accumulation.
2. The International Monetary Fund (IMF) cut its forecast for global economic growth in 2012 and 2013.
Bullish investors say fears are overblown as private-sector economic activity in the 17-nation euro zone showed small, but unexpected, growth in January and durable-goods orders were up a strong 3.0 percent in December in the U.S. – the third straight increase.
Bearish investors say just heed the IMF’s warning, “Global growth prospects dimmed and risks sharply escalated during the fourth quarter of 2011, as the euro-area crisis entered a perilous new phase.”
3. Spanish and Italian bond yields dropped dramatically lately.
Bullish investors say the drop in yields and the strong demand in January’s bond auctions suggest the euro zone crisis is easing.
Bearish investors say the Portuguese bond market is now imploding, the Greek restructuring could fall apart, and the European Central Bank’s December offer of unlimited three-year loans to banks has simply delayed the inevitable day of reckoning.
Source: The Wall Street Journal
It’s differences of opinion like this that make markets. Thanks to the free market, there always seems to be a buyer for every seller – at the right price.
Like Joni Mitchell who sang, “I’ve looked at life from both sides now”, it pays to look at the markets from both the bullish and bearish sides and, ultimately, make decisions which you think will best position you to meet your long-term goals and objectives, yet still allow you to sleep well at night.