Today, Obama came out and declared that for long term investors, the market is probably a good thing to buy right now. The market reacted by selling off from its highs.
Not sure what the purpose of Obama coming out and saying this is. In fact, I think it is pretty counterproductive. The problem right now for the markets is the lack of confidence in the system. There is so much uncertainty right now, that nobody wants to play the game. The more that the government does, the more the market goes down. Do not discount the market's reaction to Obama's plans. They do not like it. As much as I hate to say it, this is not all Bush's fault. A lot of what the market is doing right now is in direct reaction to what they see as the government increasing regulations and controls on the economy. This is something that market players obviously does not like.
To further my point, I think the market does not like being told by people like the President what is "good" or "bad". It just feels like I'm being "sold" to. It feels a little bit like he is trying to build confidence up by saying we should all be confident. I have learned in my career that when people try to tell you everything is OK, chances are everything is not OK.
Is the market a good buy right now if you are a "long term" investor? Is Obama right? That is REALLY hard to say. Do not buy the company line. The company line just two or three years ago was that housing was ALWAYS a good buy. Housing NEVER goes down. Now people are trying to tell you if you have a buy and hold strategy you should do just that. Tell that to the people who did that a dozen years ago. We are right back where we started. Not working out so great for those people.
Two years ago, I noticed many residents in my apartment complex were moving out. Everyone was buying a house. When I asked why they decided to buy? Was it a great deal? They simply told me that they wanted to buy while they still can. If they waited any longer they might be priced out. That's insane! I thought to myself. Now, two years later, I'm sure a handful of those neighbors are regretting their rash purchase.
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