HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Going into today, the S&P 500 was up 18 of the last 21 days.
1) Nothing goes up forever. That’s a long stretch.
2) Yesterday on CNBC, Bob Pisani quoted Paul Desmond of Lowrys Research (a technical forecasting service in business since the 1930s). Desmond noted that their long-term indicators remain bullish but their short-term indicators are very over-bought. He said a correction in January is a real possibility.
3) In a previous letter, I wondered that if the Bush tax cuts were allowed to expire, it would put some pressure on the market before the year end, as people sold in 2010 to avoid the higher taxes of 2011. On a personal basis, I was waiting to see what would happen until making an extra withdrawal from my IRA. I will now delay that withdrawal until the first week of 2011, and thus delay the final tax bill.
Is it possible that investors will delay taking profits until the New Year, putting some downward pressure on the market.
I apologize to my subscribers in the real estate industry, but it appears residential real estate is dead.
1) There was an article by Peter Schiff in today’s Wall Street Journal, which shows housing prices would have to decline another 20% just to get back to the historical trend line (i.e., regression to the mean). Considering that markets often over-shoot, the decline could be greater.
2) Case of the Case-Shiller Housing Index was interviewed this morning on CNBC. He noted that prices are already off 30% from 2005, housing starts are at 50-year lows, there is an unbelievable backlog of foreclosures and 7-10M homes are underwater (value less than the mortgage).
I cannot think of a one reason to buy a home right now. If you are selling a home and someone makes a reasonable offer; take it.
RMD
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