Stock market reminds me of the Tech stock bubble of 2000
The stock market is getting weaker and looks like it is topping out. It reminds me of the Tech stock bubble of 2000 when a handful of glamorous tech companies rose dramatically in price causing the indexes to go up. When the few stars were stripped out of the data the result was a weak, sickly and overpriced market. Half of the SP’s 4th quarter profit was due to Apple according to Factset. In the first quarter profits for the SP were expected to decline slightly without Apple, but with Apple the SP profits will breakeven. And 15% of the stock market’s gains this year were due to Apple.
I think the best investments are investment grade bonds, despite low yields, because the (anticipation of the 2013 tax increase that will cause) recession and stock crash. I think it will start in late in 2012 and early 2013 and will make bonds go up in value.
The economy has a GDP growth of 2.0% which is at “stall speed”. Next year new taxes will create 3.5% reduction in GDP which will mean a recession with -1.5% growth. The reports of growth were caused by unseasonably warm weather. BCA said that there is little evidence of improving economic growth in recent quarters.
I have written an article “Will T-Bond bubble burst?”
Investors should seek independent financial advice.