Thursday, November 4, 2010

Why I Think You Should Be Investing In The Stock Market Today


I guess that I want to go on record here and say why I think you should be investing in the stock market today. Yesterday, the Federal Reserve decided to pump $600 billion dollars into US Treasuries. I thought the timing of the decision was especially interesting coming a day after the elections. Anyway, it's my feeling that this will decrease the value of the dollar. A weaker dollar in my opinion will lead to the stock market to go higher. Because of this I am bullish on investing in the stock market right now.

The markets are a global market place and because of that I also think that the value of the stock market represents it's global value at any given time regardless of currency. Here's how I look at it. If the Fed yesterday came out and said they changed the value of the dollar to 50 cents, wouldn't it stand to reason that if yesterday you charged $10 dollars for your product, you'd double it to $20 dollars immediately. You would after all, want to still have a value of $10 for your product.

While in the United States, the value of the dollar is all what we in the United States perceive it to be, those in the rest of the world see it as a bargain and this will affect prices in two ways. One it will increase global demand. Two, the people selling their stocks will know that it's worth is actually being misrepresented. These two factors mean that the stock market will probably go up in my view.

The only problem with my theory is that the market could have already priced in the news of the Fed's decision. While I think that this is possibly the case, I actually think they will end up buying more Treasuries than they announced.

So, let's see how things play out. Keep in mind that when you reviewing your stock market investing plans, to always keep an eye on the current outlook and only invest when the market is in a confirmed uptrend. Because my opinion doesn't matter. What does matter is what the market says on a daily basis - not me.

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Thank you for your insightful articles. I liked your article expanding on stockbee's IBD list. I recently got an IBD online subscription and it certainly helps to follow others who have used it wisely. Thanks - Jay.

Good to hear from you Jay. Good luck with your investing and thanks for the comment.