Taipan Investor Financial

Taipan Covers the Investment World in Stocks, Options, Forex, Commodities

Today is Thursday, November 20th, 2008

About the Author

Taipan is a retired commodity broker, forex trader and portfolio manager who enjoys following the forex, stock, and commodities markets and drawing upon his 40 years or so of trading experience to post articles to a series of blogs. While Taipan is not always right with his forecasts he usually offers some interesting insights into markets. Actually if he weren't so modest he would tell you that in the big strategic picture he is almost always right. Taipan is very distrustful of statements made by stock brokers, stock analysis, so called forex experts, and in general talking heads. The investor who thinks that the playing field is level and that he can depend upon MSNBC and CNN for inside trading information has got to be at least a little nuts. If you want to trade well you had better develop your own style and your own sources of reliable information. This blog will attempt to provide market trading information that will be helpful. However, always keep in mind that any decisions made to trade using this information are your sole responsibility. Taipan has been around long enough to know that the markets can make a fool out of anyone so never blindly follow what someone else suggests. To trade well you have to think well and the thoughts need to be your own.

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Sell Stocks in May and Go Away

May 1st, 2008 • Related • Filed Under

The old Wall Street saying “sell stocks in May and go away” may have more than the usual ring of truth to it this year.

The unleashing of massive liquidity into the world’s financial system, lead by the United States Federal Reserve Bank, has brought about a heady sense of euphoria among investors. The quarter of a basis point cut in the federal funds rate to 2% announced at 14:15 hours on Wednesday afternoon was enough to cause yet another celebration on Wall Street with the Dow advancing some 189.87 points to close at 13,010.00 on Thursday. This sizable rally occurred even though the Fed indicated that the aggressive round of interest rate easing was near an end.

The price action Thursday seemed to be especially euphoric as it occurred just before Fridays jobs jamboree proceedings. The market is usually fairly quite before the NFP report. Economists are looking for another 70,000 loss in non farm payroll job yet that guesstimate didn’t seem to suppress Thursday pre NFP report price action even one little bit.

While my guess is probably just as much as a guessiment as anyone else’s I guess that the market is set up for some real disappointment starting as soon as perhaps tomorrow. The stock market euphoria on the part of investors seems to be way premature to me.

The housing disaster shows no signs of bottoming out. The writedowns of billions and billions of dollars of questionable mortgage related securities and derivatives continues at most of the world’s premier financial institutions. The war in Iraq still rages, costing the US about $12 billion dollars a month. A second American aircraft carrier battle group has deployed into the Persian Gulf.

No, I think that there are still plenty of thick oh so dark woods surrounding us and that a few nasty surprises are likely going to pop out from behind a few more trees as we head into the Summer months.

Sell in May and go away? Looks like a good idea to me. At current levels the stock market seems overly ripe for major disappointment on the part of euphoric investors. In the current environment joy can quickly turn into dispair. So it’s best to be alert and aware that all is not right in the investment world.

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