March will be a volitle month. As it stands, I am looking for the following numbers to be reached on the major market indexes;
DJIA: 11,750-11,650
SPX: 1375-1325
NASDAQ: 2375-2350
I certainly hope the market hype didn't get you over extended in your portfolio asset allocations.
At 11,700 (8% correction) on the Dow, we will be raising our allocations as follows;
70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative
I like to increase my exposure to the markets gradually. The reason is because no one really knows where the bottom or top of the market really is. At the beginning of every correction, you will see many experts begin to call the bottom at 10%. This is nothing more than a textbook analysis of what would be “normal”.
This morning we heard that Treasury Secretary Henry Paulson is back visiting the Asian region again. His last visit was in December, and the global markets began selling off about two months after his visit. My best guess is this visit may be more productive, and we could see the global markets begin to rally again sometime in April.
The latest victim among the subprime lenders is New Century Financial. The stock is set to open sharply lower this morning after a report came out and said its accounting and stock trading are under investigation.
The housing market is continuing to unravel. Adjustable-Rate Mortgages (ARM's) are killing consumers, and approximately $1 trillion are due to reset their rates by the end of the year. According to Realty Trac, 130,511 foreclosures were filed in January, up 19% from December, and 25% higher from January 2006.
While all this news is discouraging, we continue to believe raising our asset allocation levels as suggested in the newsletter will pay off.
