Beginning of a bull market, really!!

We are seeing some selling in the stocks today though any selling is not going to be pronounced. According to Jim Cramer, stocks have nowhere else but to go up. Not that I rely on his analysis or his thesis even for a second, but I have to agree with him. The reason is that there are too many players in the market and it's very easy to control a herd because of "herd mentality". I call it that because with so many investors out there, who really has the education, intelligence or even inclination to waste time in going through the financial statements of all the companies whose stock they want to buy. It's so easy just to follow the herd. We even have a dignified term for this on the Wall Street and it's called "momentum play". In simple terms it means that you don't have to do any homework just follow what others are doing assuming they have already done the homework for you. May be Jim Cramer does some of that for you!! There were so many Jim Cramers in 2005-2007 in the real estate market disguised in the form of real estate brokers/agents. They told every one that house prices only tend to go up if you chose the location and house properly (this was the homework part btw that they brought to the table). Combine that with low interest rates and glut of money pouring into the mortgages from US as well as foreign investors searching for extra yield and you had the recipe of straight-line increase in house prices.
The difference is just that this time around it is in the stock market. All other ingredients are same. Interest rates are near zero, Federal Reserve is fully committed to print money (i.e. provide liquidity), Jim Cramer is there and pretty much every one on the Wall Street is a bull now. We can ignore the low earnings estimates otherwise we can't justify the stock prices. In fact, it's very good for retail investors that earnings estimates are low because it provides each company an opportunity to beat them by 1 or 2 cents and thus provide a same day upside of at least 5-10% in the respective stock.
Under this scenario I am very comfortable in recommending any stock on earth as a good or great buy. So investors should not waste time in trying to look through the financials. There is no meaningful information there. Just invest based on "momentum". And I have full faith in Ben Bernanke that he will not let us down. As long as he is providing liquidity ("printing money" in layman's term), we should buy stocks. Keep in mind that Federal Reserve and Congress keep a close eye on the market and do not like it very much if market goes down 100-200 points in a day. So we are fully assured that they will not do any thing to roil this rally and in fact will provide more liquidity if the market conditions warrant (i.e. market drops 100 points in a day). Also money will now be moving into the stocks after saturating the commodities and bond markets. You can also follow Jim Cramer to get an extra 2-3% upside because he controls quite a few herds out there.
In this post I am deliberately not mentioning any particular stocks because as I said before "Any" stock is good. Investors should worry about picking and choosing at a later date.
Remember that many people made a lot of money during the housing boom as long as you know when to get out. So it is the time to make similar kind of money from the stock market now. Dive-in ;-)

Market currents for New Year

On the first days of trading in 2011 market is up significantly with Dow Jones avergae at 11704 and S&P 500 at 1274. Both of these avergaes are up sharply since August 2010 with no downward pressure at all since Ben Bernanke confirmed that he has all the intentions of creating next asset bubble even though it means destroying the currency and consequently the power center position of the whole country. In Ben Bernanke, we have one person who will successfully diminish and destroy the country, pretty much single handedly, even though he is not a political figure elected by the democratic system in place in USA. Stock markets are up becuase fundamentally stocks do not have any value in today's market. It's driven by those investors who are hungry for yield to benefit at the expense of devaluing the whole country. Any prominent financial institution with access to Fed's lending can access short-term loans at 0-0.25% and can generate a better return by investing elsewhere. So people started with investing in junk bonds (less risky than other investments). As they pretty much exhausted bond market, investors slowly moved into commodities (riskier than bonds but still less risky than stocks). Now copper is hitting all-time highs, gold is up significantly and silver is also making all time highs. Now as commodities look slightly more expensive, investors are turning to stocks with full faith in the stupidity and incapability of Federal Reserve in USA and especially its chairman Ben Bernanke. As long as he is leading the Federal Reserve, I am very bullish on stocks.
The good thing about stocks is that they don't have any fundamental value unlike some of the other asset classes mentioned before. So people might or might not pat what they want for the stock. This is clearly reflected in many high-profile stocks which are trading at all-time P/E multiple of 60-100 (which is enormous by any historical standards) but who cares. As long as I can generate a yield of more than 0-0.25% from my investments, my investors and I are all very happy. I am also advising to move all the profits made in USA to overseas markets becuase its better for the health of investors to stay away from US dollar.
This is pretty much the fundamental investment thesis at every big financial institution in USA. I, on my own part think that sooner or later people in the country will realize the folly of this chairman and put pressure on the government to oust him. I just hope this happens sooner before it's too late. Until then I'll be in the bull market camp and make profits on every day rally of the market. Buying the hot stocks is more rewarding if you have a target of 2-3 day investments. Some stocks in this bucket are: AAPL, NFLX, PCLN and CMG.