Tuesday, August 5, 2008

FOMC

So the feds held the key rate at 2% (I believe). The decision was a piece of cake because as many of you know the price of commodities easied quite a bit. For example oil was at 145 not too long ago, and today we dipped below 120. That's about 15% drop. Not to mention, gold, euro and grains, they all fell nicely. The feds had to dilemas: inflation and liquidity (jobs, money from gov to banks, etc). Since the inflation has been easied and the credit crisis is slowly recovering, there's no reason for the feds to raise.

People were heavily investing money on inflationary instruments and they've been pulling out quite a bit. Where is that money? As I said in the previous post, stocks suddenly became very attractive.

Either the worst is behind or not, markets are liking what the feds are doing. Once dollar starts breaking high out of the consolidation, we'll see more drop in commodities. This doesn't mean, of course, oil drops to $50 and stays there, but we'll not see a parabolic type up-move near soon.

I have moved all of my 403b plan back to stocks and global equities and purchased some stocks in Roth IRA a few days ago. I maybe wrong, but I think we have a good shot here.

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