The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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Drumroll, please . . .

Yesterday, the stock market reached the highest point in over two years.

Does that mean the party is over? No, of course not!

Does that mean we will get back to our 2007 market high? Yes, but not in 2011.

Does that mean we face smooth sailing? Absolutely not! December and January are usually the two best months of the year for the market. We’ve been in a rally mode since July. It is time for the market to take a break and consolidate soon. February would be a logical time.

What about the market experiencing a double-dip? That is always possible. Market corrections normally occur because of cyclical factors, which I don’t expect anytime soon. Sometimes, they are a result of an event, such as a financial collapss, which are sudden, like heart attacks. That scares me a lot and is the reason I hold so few bank stocks.

We’re definitely in a recovery mode but remain subject to financial heart attacks.