Six Flags Magic Mountain,
Lots of Roller Coasters
Flags Magic Mountain in Valencia, CA has quite a few roller
coasters. Some are bigger than others, some are quiet, some
are loud. The drops are all different sizes.
The nice thing is you know what
is going to happen if you have ridden them once before.
Sometimes you may forget a turn or two, but overall you know
where the drops are.
The problem in the market right
now is people can only remember the big last roller coaster we
rode in 2008 and 2009. Well, we have all ridden this before
also numerous times. 10% drops are normal for the market.
are also normal for the month of August as we've seen today
with the 500+ point drop in the DOW and now official 10%
correction marks hit also for the S&P and NASDAQ.
This roller coaster has
unfortunately been ridden 90 times prior. People are just
worried it the same one we rode last time. The catalyst
driving this forward is the fact that Washington made a mess
of the debate of the so called debt ceiling.
This may sound like a broken
record, but corporate earnings continue to escalate and beat
their estimates as well as the quarter over quarter earnings.
This is great for the market.
However, the CEO's are not ready
to hire which is the main problem due to the uncertainty in
Washington. It is hard to enter a double dip recession when
corporate earnings are doing well.
Just because consumer spending
is flat does not mean corporate earnings will fall. These
profits as they continue will force the market higher as
savings are picking up (supply/demand).
Our year-end estimates are still
intact for the S&P to be above 1400. Based upon research
it appears the third quarter will be tough and we would start coming out of it
towards the end of the quarter.
To read more articles on our web
site click here or go to
www.RebellaCPA.com and click on the Newsletter section.
always you can call me at 714-619-0667 if you have any
questions about investing, retirement or any other tax &
accounting related issues.
Regards, Monica Rebella, CPA
President, Rebella Accountancy