January, as a predictor of market volatility - Tucson Local Media: Business

January, as a predictor of market volatility

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Posted: Tuesday, May 25, 2010 11:00 pm | Updated: 8:08 am, Thu Mar 24, 2011.

In October 1987, the Dow dropped 22 percent in one day. In 2000 the NASDAQ started a drop from 5,000 to 1,300. The Dow went from 14,000 in 2007 to 6,600 in 2009. OMG!

Markets go through the floor faster than they go through the roof. Trying to predict what the Dow, S&P 500 or NASDAQ will do at any point in the near or distant future is a difficult task. However, there are indicators that give positive re-enforcement to predicting markets.

Since 1950, the month of January has established market activity for the following 11 months. A radical January meant a volatile year. This year, the Dow moved down 6 percent in January. Since then, the Dow has moved 12 percent into positive territory and back down 9 percent. So far, January has told the story that 2010 will be volatile.

Now, to the crystal ball. The Dow Jones Industrial Average Index Forecast predicts the Dow at 10,740 in May and a drop to 9,040 by December. The S&P 500 Stock Index Forecast predicts a drop from 1,161 in May to 970 in December. There are several causes: overpriced stocks, inflation and the debt of Portugal, Ireland, Italy, Greece and Spain. It appears the Euro may sink and the U. S. will get involved in the bailouts.

It means fighting the Bull or taking on the Bear before 2010 is over.

Consider this as an investment strategy. Look into investing in a basket of 10 to 15 stocks that have an FDIC guarantee of $250,000. These long-term investments will require a lock-in of five to 10 years. They are called structured investment stock certificates of deposit. The stocks are prominent NASDAQ, NYSE, and Dow corporations. The CDs guarantee a percentage per year as a minimum and there is no cap on the upside. Even if the stocks go down, the CD pays a percentage per year based on the amount of your original investment. Contracted for a specific time, the only way you can lose money is if you pull out early, thus voiding the contract. Got your attention so far?

Structured investment stock CDs are a great way to preserve wealth, gain against a down market and get some sleep at night. Interested? Pull up structured investments and investigate, or go online to a discount brokerage firm, get the number, and call the structured investment CD department. The offerings are made in the first week of the month and close in the fourth week. Each month brings new offerings. There are also structured investment CDs of commodities and indexes. You pay no commissions. Check 'em out. 'Til next time.

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