My sister has been telling me for months that the stock market is in for a correction. Why should I listen to her? She works for a company that handles a large portion of U.S. company 401K portfolios and is in the financial trenches daily. She’s also called 3 of the last 3 corrections in the market. Sure, no one has a crystal ball, but I’ve started to really pay attention to what she says. I’m paraphrasing what she recently posted on my facebook page in response to my comment about moving my money:
There’s talk of a correction (which is typically a 10% drop from the high) – even that misfit Jim Cramer thinks so. All the signs are there. The market grew by 65 – 75% in 2009. How in the heck could that happen? t’s another false economy that’s being driven by false pretenses.
Unemployment
Approximately 1/3 of the country isn’t working:
- 10% unemployment plus
- 15% or so under-employment (the number is unclear but high) plus
- who just gave up looking
Consumer Spending
Despite the uptick in consumer confidence in January, a large chunk of the population just isn’t spending. Unemployment and uncertainty about the housing market and whether or not the recession is over is keeping wallets shut.The financial state of PIIGS is terrifying.
What is PIIGS? Wall Street Journal reported that some bearish international investors have coined a new term for the countries that they believe are the weak links of the euro zone: PIIGS — which stands for Portugal, Italy, Ireland, Greece and Spain. Last Friday, the financial industry widely covered the possible default of Portugal.Commercial Real Estate
Keep an eye on the commercial real estate bubble. The standard contract is 3 – 5 years for ALL commercial real estate. After that time, the lender re-evaluates the business to see if they’re still a viable client. If so, they’ll extend the contract. If not…no dice. You haven’t heard much about it until now b/c the contracts that were signed when real estate was flying high are coming due starting this year. A good source who works in the business indicated that half of the commercial real estate is underwater. Those are bad numbers. Stay tuned.
I have the courage of my convictions (and my sister’s). I moved all of my investment portfolio into money markets and bonds on Friday Feb 5, 2010; my sister moved all of her money before Christmas. My portfolios have recovered significantly from last year’s 40% drop and I thought it was a good time. I’d rather have all of my money for the near future and take a chance on missing any stock market rally which might happen.
How about you? What’s your prediction for the stock market? Have you moved your funds recently? Tell us about it by leaving a comment!
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I read your article and it was very interesting. I already had 50% of my 401K in Bonds, and the other 50%, 50% of that was also already in bonds (it’s a combo kind of fund).
I went ahead and changed it to all bonds for now. Hopefully you will keep us up to date when we can ‘move back’ to the investing in companies again.
Remember, I’m not the expert – you might want to talk to someone who is.
Uh, why would you leave anything in that when the govt has floated ideas that they will “steal” that money as soon as they can do it politically. Before you say oh no that will never happen, they have floated proposals thru the years alluding to this very thing, just phrased differently. During the Clinton era, they talked of taking 15% of the total for target investments, meaning money losers for the politically connected. O”moron has floated making you purchase worthless govt bonds since the chinese and russians wont fund this much longer. The big question is why anyone believes they will ever see a dime of that money as it goes? This country is just putting off the day of reckoning, you see this with your own eyes and in your own articles on how people are shunning credit and learning to live with much less. This system is not coming back, it was fraudulent to begin with, take your heads out of your arses and see it for what it is.