'There Aren't Many Places to Hide' for Investors

The Street ^ | 10/05/2011 | Frank Byrt

[SeekAndFind]

There's nowhere for investors to hide. No safe haven.

The fourth-quarter kickoff yesterday saw the S&P 500 Index slip below 1,100 to a one-year low, while oil and commodities extended their declines in a sign global economies may be headed toward a recession. And in the third quarter, which ended Friday, 45 of 46 countries' stock indices posted declines, and U.S. stocks had their worst quarter in three years. More importantly, many of the issues that prompted those miserable performances remain unresolved, which bodes poorly for the stock market for the rest of the year.

What analysts and investment advisers are eagerly awaiting, as companies begin reporting third-quarter results in the coming weeks, is fourth-quarter earnings guidance and a peek into 2012. Third-quarter revenue and profits are expected to come in strong, as they have been, but with slower growth. S&P 500 member companies reported record profits in the second quarter.

The concerns are that the tumultuous events of the third quarter will bleed into fourth-quarter earnings and beyond, limiting business and equipment expenditures and hiring into next year. If that's the case, expect stocks to sink further.

The two main worries now are that the Eurozone will slip into an economic abyss because of sovereign-debt crises in weaker member nations and their impact on banking, while on the home front, a rudderless government is raising fears of a double-dip recession.

Greece warned Sunday that it won't meet deficit-reduction targets, throttling world stock markets for the umpteenth time. That raises the odds the country will fail to get new loans to avoid default. "Greece is almost certain to default, probably sooner rather than later, which, depending on how it's handled, could precipitate contagion to other countries of the periphery (Portugal, Ireland, Italy and Spain) and put European banks under severe stress," said Jerry Webman, a senior investment officer and chief economist at Oppenheimer Funds, in a market commentary.

September's meltdown sent investors heading for the exits, as global markets fell 10.1%, their worst monthly performance since plunging 20.6% in October 2008, S&P Indices reported. The 7.2% loss of the S&P 500 was the worst month for the index since May 2010, as only 54 stocks had gains, while a staggering 218 lost at least a fifth of their value.

That capped a calamitous quarter for investors. No diversified U.S. mutual funds posted a gain in the period, and only a handful of sector funds made money. The average loss for the quarter, out of 9,402 mutual funds tracked by Morningstar, was 17.8%. Funds also fell for the full year as well as the past 12 months. Howard Silverblatt, a senior index analyst at S&P Indices, told TheStreet that the outlook over the next two weeks is for extreme volatility in the markets worldwide as the situation in Greece reaches a conclusion of either a refinancing of its debt and likely some market recovery or a default, with resulting negative repercussions.

But market gyrations are likely to continue even after that because there are so many uncertainties facing investors, Silverblatt said. "The uncertainty is the killer. In 2008 liquidity was the issue. What have now is a whole host of items, including the political situation," he said.

[MichaelCorleone]

This is proof positive that gov’t should stay out of the financial markets and get out of the way of the real economy.

But the inside the beltway crowd is too blind, deaf, and dumb to recognize that.

So into the abyss we go...

[Utah Binger]

American Fine Art...Better Than Money in the Bank!

[lurk]

Psalms 18
11 He made darkness His hiding place, His canopy around Him, Darkness of waters, thick clouds of the skies.

Psalms 32
7 You are my hiding place; You preserve me from trouble; You surround me with songs of deliverance. Selah.

Psalms 81
7 “You called in trouble and I rescued you; I answered you in the hiding place of thunder; I proved you at the waters of Meribah. Selah.

Psalms 119
114 You are my hiding place and my shield; I wait for Your word.

Isaiah 8
17 And I will wait for the LORD who is hiding His face from the house of Jacob; I will even look eagerly for Him.

[q_an_a]

they are hiding in GASOLINE futures - the price of oil is at a level that was once equal to 1.99 gas, but now it is a dollar higher thanks to speculation in gas. The inventory is high the refineries are working at 85% way below their norm of 90+ demand is down as peopel are out of work - trades are playing in GASOLINE - we suffer. Shame on the Republicans for letting it get started - Can you say Chris Cox? Shame on Democrats for letting it continue...Tim Geitner.

[MeneMeneTekelUpharsin]

Excellent post. If only more people would realize that, we would be better off.

Whatever you do, don't put your money in Cemex (CX). It just keeps going down. It's a huge cement company that is financially solid, but somebody big has plans to buy up shares on the cheap right now and they sure are doing it.

[CodeToad]

I decided to keep most of my wealth in cash. Some of it is out there trying to gain some hidden rewards but with the risk and taxes I won’t put the rest of my cash into play. No way. I know loads of people doing the same thing. Imagine having a government that didn’t do the crazy things ours is doing, there would be investments, jobs, and productivity all over the place.