The S&P 500 was near its Sept. 2011 low this week and there has been an increasing amount of fear by the pundits in the media and on the Internet.
Many pundits have made a living by preaching doom and gloom, which is fodder to those less-sophisticated folks who believe the United States is ready to collapse.
For those of us who actually manage money, this is quite amusing.
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In April 2009, the 10-year Treasury went below 3 percent as many pundits were predicting the S&P would crash to 550. Those of us in The Dividend Machine, who bought in the four months after April 2009, while the S&P rose 23 percent.
Last July in a blog post, I mentioned the 10-year Treasury went below 3 percent for the first time since April 2009. Four months later, the S&P rose about 20 percent.
“Recession,” “Great Depression” and “worldwide calamity” are just a few words that get bandied about on regular basis by folks in academia and the nightly news.
In fact, many of those folks don’t understand jobs or investing.
Warren Buffett, the greatest investor all time who has made more than $200 billion by investing, thinks the odds of a recession are low.
Buffett says Berkshire Hathaway has been buying stocks at “bargain” prices, including shares of his own company.
“I’ve seen sentiment turn sour in the last three months or so, generally in the media,” Buffett said. “I don’t see that in our businesses. I see we’re employing more people than a month ago, two months ago.”
Jack Welch, former General Electric CEO, said the same thing. Of course, that doesn't make the headlines.
According to the Federal Reserve Bank of St. Louis, year-over-year percentage change has improved in these categories:
• initial jobless claims;
• manufacturer's new orders of capital and durable goods;
• money supply growth;
• new housing permits.
Actually, since Aug. 3 when the S&P 500 plunged below 1,249, the S&P has had large daily swings and many media outlets are trying to relive the crisis of 2008.
The reality is that the S&P has actually been in a very defined range of 1,138-1,221. It was only below 1,138 the entire trading day on only one day, Oct. 4.
It has been only been above 1,221 every trading day except Aug. 31 and Sept. 1.
The range has actually been more narrow. It has been above 1,160 every day except seven trading days and been below 1,190 every day except five trading days.
Despite the forecasts of doom and gloom, Buffett has bought more stocks in the last two months than he purchased in the past year and a half.
I’m just reporting the numbers and not the noise.
About the Author: Bill Spetrino
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