(Written on 9-1-2014)
Did you hear that? No, neither did I.
I have been watching, observing and studying the stock markets for over 26 years, and I must say this has been one of the quietest and calmest summers I have ever seen. Not much action, except corporate America has been buying and merging with each other. History have proven that when investors are happy, and there are as many corporations mergers and acquisitions as we as have seen in 2014, it is a sure sign that the stock markets will correct soon.
A new trend or twist that I have noticed in the mergers and acquisitions are where companies have been Renouncing their American citizenship “inversion” all in the name of paying less taxes.
I am all in favor of paying less taxes, but I am not sure I like this inversion” method of jumping ship.
There must be a better legal strategy to avoid paying taxes. Hire more people or pay your current people more, would be one way; yes you will have less profit in the short-term and you will pay less taxes but you will have more happy and loyal employees, which always leads to more competitive edge and more long-term profits.
While I do love how the media is completely ignoring the current stock markets; I think this is the calm before the storm.
Please remember the main reason we have such a booming stock market is not solely due to corporate profit, it was mainly due to the FED punishing people who pull their money out of the stock markets by forcing interest rates down to almost zero. So people who jumped out of stocks to go to safer type investing, such as checking, savings and money market type investing, ended up earning very little on their money. And yes the FED strategy work brilliantly because it very obvious that these same types of people got sick of earning very little on their money and are now are now coming back into the stock market and further pushing up stock prices to ALL TIME NEW HIGHS!
I do have the very strong feeling that, much sooner than later, the Fed will be forced to make a move and start a trend in raising interest rates. Keep in mind that the Fed also has been printing money and flooding the money supplies as if there was no tomorrow and they will also have to start finding away to pull this extra money out of the system. The Pendulum has swung way too far to one side!
Yes, once the FED makes this move, it will indeed knock some of the wind out of this steady bull type stock market, which in my opinion, will be welcome news if you are an intelligent investor who loves dividends paying stock as much as yours truly.
I was very impressed with their announced products release yesterday. If you did not get a chance to see or watch their event it was a good one. They will release the iPhone 6 (which is getting bigger and bigger with each release) and the iWatch…Yes, the “Dick Tracy” technology is finally here, if you are too young to know what this is then Google it: LOL