Happy Monday and I hope my weekly blog brought to you by Legacy Investing & Wealth Management is as insightful as it is entertaining. I focus on educating and empowering the newer investor on wealthy principles as well as giving you the most recent stock market analysis. There is still time to catch up on my past blogs and be ready for the next contest giveaway, which will be just in time for Christmas. Just go to www.LegacyInvesting.net, look under “The Legacy” tab for Market Mondays. There you will find all of the blogs posted so far.
I’ve been focusing on home ownership for the past several weeks but I took a break last week to talk about our first Open House, where I talked about our services and how to build generational wealth. If you missed this one, please don’t miss the next one (sometime in the first quarter of 2016).
If you own your home that’s a really good thing, especially over time as you build equity and pay down your mortgage. So when is a good time to buy or sell? The quick and easy answer is sell at housing market tops and buy during recessions. We just had a market top in early 2007 and if you’re a homeowner, especially in Prince George’s County, MD (and countless other counties in the US), chances are your home is nowhere near those levels. Homes in Prince George’s County got cut in half and just over the last few years we are starting to move higher again. It will probably take a decade or so to get back where we were in 2007. So if you ever sense hysteria around home prices rising so quickly, that is probably the time to be selling. For homebuyers, a great time to buy was during the last recession but housing took a while to recover. Anywhere between 2009-2010 was a great time to buy but we still have historically low interest rates so there is still time. For those extra savvy investors, selling at market tops, moving somewhere temporarily until the next recession, then buying again is the best way to accelerate home equity building. I know doing that is unrealistic for most people but just thought it was an interesting look at what happened a few short years ago and how some people profited. The best and most realistic way to build wealth is investing in the stock market; I can definitely help you do that. Next week we will start talking about investing in real estate then we will start shifting to wealth building in the stock market.
In Market News
The S&P 500 finally took a breather from the 6-week rally and dropped over 70 points. I was anticipating this pull-back and we quickly hit the first level of support which was the 200-day moving average (2060ish). The next level to watch was the breakout from the top of the correction channel we were in (2030ish) and we broke through that to end the week at 2023. Now I’m looking at the 2000ish level which has also been a level of support. It’s normal to have some type of pull back in November, then have what is called the “Santa Claus rally” in December which can last into the first part of January. That’s when I believe we will get to the all-time highs or surpass them at some point soon. The really strong October jobs report is weighing on the market and significantly increases the odds that the Federal Reserve will raise interest rates in their December meeting. So watch what happens on December 16th when the Fed concludes their meetings and makes an announcement to either raise rates or hold them near 0%. If and when they raise them, what happens is the dollar starts moving a lot higher, making it harder for foreigners to buy our products, thus weighing on US companies and lowering their profits. When their profits are lowered their stock price drops and that’s how rate hikes affect the overall market. When the rate hike finally happens, certain sectors of the market (the US dollar and financials in particular) could outperform, while other areas like gold, the gold miners and emerging markets could underperform or sell off. Terrorist attacks usually have a knee-jerk reaction on stocks sending them lower, but if the particular situation is contained then stocks will rebound as they did this morning.
Visit our website at www.LegacyInvesting.net and contact us today for a FREE consultation. It’s a no pressure meeting where I’ll give you more information about our services and find out what your financial goals are. If I can help you, we can move forward; if not, it’s ok and we give each other a great big God bless you lol. Let’s move forward and build generational wealth together. Have a productive and prosperous week, and as always, I wish you many happy returns!