This Viagra Stock Market Packs A Punch!

We find ourselves here yet again. With a stock market that is being propped up by stimulus. Just as miraculously as that baby blue pill works, stocks do the same. If the Federal Reserve continues to thrust cheap money upon the economy through artificially low interest rates, or QE as in the past, it will have the same effect as Viagra, propping stocks up. Retirement investors be forewarned: work with a retirement advisor so the stock Market does not dictate the success of your retirement plan! Hey, it’s pretty simple math. Keep pumping patient full of Viagra, and he’ll continue to smile (if there is enough blood to go around). Cease the medicine, aka., cheap money flowing, and the economy will limp along at best. The concept of economic stimulus is straight forward. Make money cheap so people and businesses spend more to stimulate the economy. Of course it works in the short term, but it’s a crap shoot the longer the experiment continues. There will be a hell to pay in both dollars as well as the health and well being of the patient: These pills are very expensive and there’s only so much room on the credit card (yours or the nations). That depends of course on how long your heart can hold out!

Anyone who is a non-believer that stocks are rising in direct relation to the Fed-speak threats of pumping up rates must simply look the direct action of the market’s. Every time a Fed governor even hints that rates might rise, stocks limp.

In the big picture I still believe that all of this rhetoric is nothing but threats to keep stocks from soaring on the back of continued stimulus. In the end, I doubt the Fed will raise rates in September, or the rest of the year.

Here are the 3 reasons the why Fed will not raise rates in September:

1. Janet Yellen has repeatedly said she will not raise rates until there clear evidence of inflation. With the CPI below 1%, we have more risk of deflation!

2.Rising rates are used to keep economies from overheating. The August non-farm payroll of 151,000 last week and the ISM Manufacturing Index dropping dramatically from 52.6 to 49.9, a 6 ½ year low, a too strong of an economy is the least of our worries.

3.The election. The Fed does not want to appear partisan and will not move before it is over.

Investors Strategy:

Stocks are currently in a scare correction due to threats of a possible interest rate rise by Fed members. This is a buying opportunity. When no rate rise occurs, stocks will be making new highs. Investors should stay focused on top growth sectors such as “cyber-security” through FireEye (NASDAQ:FEYE), Palo Alto Networks (NYSE:PANW) and the PureFunds ISE Cyber Security ETF (NYSEARCA:HACK). In addition, growth investors can buy Apple (NASDAQ:AAPL) at these low levels. The new I-Phone 7 will be huge and push this stock to new highs. Also, Microsoft (NASDAQ:MSFT), which is the staples for every computer made; Intel (NASDAQ:INTC), which is getting hit and a good buy at these prices; Google (NASDAQ:GOOG) (NASDAQ:GOOGL), which has had a nice rebound but still a great time to step in as their growth potential is in the stratosphere; Netflix (NASDAQ:NFLX), which revolutionizes media delivery and will have the earnings to prove it; Facebook (NASDAQ:FB), a social media staple and is winning over the older crowd, which are the people with money; and Amazon (NASDAQ:AMZN) which practically owns the online marketplace. For a broad-based approach, you can simply buy the market ETFs like the PowerShares QQQ Trust ETF (NASDAQ:QQQ) and the SPDR SP500 Trust ETF (NYSEARCA:SPY). The WisdomTree Europe Hedged Equity ETF (NYSEARCA:HEDJ) is the play for a European resurgence as it is long EU stocks and short the currency. If you are cautious and want to play the downside, or want some portfolio insurance, look toward the ProShares Short SP 500 ETF (NYSEARCA:SH) or the iPath SP 500 VIX Short-Term Futures ETN (NYSEARCA:VXX)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

About admin