Aug 20 2008
Gear up the worst might yet be there to hit the market
With the stocks again on their upward movement the investors might be getting ready to put their feet up and relax. But going by the market sentiments this might turn up to be a pre mature act. The stock market rally came to a grinding halt recently awakening the fear amongst investors that the worst might still be there to come. The feeling going on in the trade circle is that the present environment is not conducive for trading and it feels like it could further dip to lower levels.
The ill effects of the present global scenario ranging from the worldwide economic meltdown to the prevalent credit crisis seems to be casting its black shadow on the market. Adding fuel to the already irked sentiments is the rumor indicating that the mortgage giants of Freedie and Fannie might need recapitalization and not sparing the banking industry is the word going around that major banks might witness huge failures. Caught in the corner is the Federal Reserve which neither can lower the rates further and nor can it raise interest rates as it might risk increasing the recession environment already enveloping the economy.
Analysts speculate the worse and comment that this down market scenario might just be here to stay for a time period stretching much longer than we are assuming now as the banks and other financial institutions are going to take a long time period to assess and then correct their fundamentals. In such a scenario giving your investment portfolio a global exposure is the best thing to do.
Spreading your investment in various sectors preferably technology, health and consumer durables and buying shares from companies having a good name is the safest way to play in the market. The metal and agriculture sector along with the financial sector are the sectors to completely steer clear off at this time. A defensive portfolio is what the present time orders for you. Sticking to a predictable earning with reasonably stable earnings is the pill to this crisis.