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Top Stock Market News Trends of 2009

1. Markets Crash! Dow Jones Falls 500 Points
At this point in time, it seems like the Dow Jones Industrial Average (the main stock index) is falling off in record losses every day. It’s almost a weekly habit that we see the “biggest decline in history” in the markets, only to have this loss dwarfed by next week’s action. Let’s face it, we are in bear market territory. As we continue to feel the brunt of a global market slowdown… don’t expect things to improve any time soon. We may see this news trend for quite some time.

2. Commodities are the Next Bull Market
The first two quarters of the 2008 fiscal year proved to be stellar for anything and everything tied to commodities, the third quarter was anything but. Although we were seeing some record levels in the price of crude oil, natural gas and gold in 2008, it would seem that now all those profits have been erased… and then some! As things continue to fall, we get analysts calling for the “next bull market” in oil or another commodity like wheat or ethanol. It’s one of the most popular themes, and one of the biggest pitfalls you need to avoid as an investor.

3. Blue Chips Produce Superior Earnings Numbers
If you are an investor, you have probably heard time and time again that you NEED to be in a massive company in order to reduce your portfolio risk. This is actually not true at all. Granted, in most cases a large company will move less and is less likely to go bankrupt. However, the true risk of a company is on it’s balance sheet and it’s volatility in trading hours. We’ve seen massive companies that were “too big to fail” go bankrupt, namely banks like Lehman Brothers and Wachovia. Don’t always believe that these “blue chip” big boys are going to save you from loss.

4. Ben Bernanke and Federal Reserve in Talks to Cut Rates
As our overall economy spirals, a lot of focus has been put on Ben Bernanke and Henry Paulson. The Federal Reserve and the U.S. Treasury are in the international spotlight… as American financial systems are now a gauge for the global economy. Almost every time the market takes a hit, there is a new discussion of the Fed “cutting rates” or making borrowing cheaper in layman’s terms. Maybe talks between the Fed and the U.S. Treasury to put together bailout plans and rate cuts are over-emphasized… so keep a skeptical eye out!

5. United States Meltdown has Become Global
Globalization is real, and we’ve seen this firsthand as the United States recession has now spread into international markets. The Asian and European indices now track what the U.S. exchanges are doing, and act accordingly. When we had a +1000 point day, Asian markets took off. This may not happen the other way around all the time, but we can clearly see that the American markets have adversely effected the overall investing conditions. It’s a scary time out there, so be sure that you know where your money is… and make sure to diversify your risk to enhance your returns.

6. Financials Underwrite Massive Amounts of Debt
Everyone is scrambling for liquid assets, bottom line. Anything that is close to cash is in high demand nowadays… and the financial companies of the world have begun to look for potential lenders o that they can get some debt off their books. When banks take out loans, they are in effect gambling that they will get reimbursed in the future. With things like sub-prime home mortgage loans, this doesn’t always happen. When markets began turning on banks, debt became unpayable… and financial institutions had to start underwriting the bad bookings to clear their balance sheets. This has continued for about a year to this point, and the trend is not going to reverse any time soon as European and Asian economies start to struggle.

7. Foreign Exchange Markets Heat Up
So what is the deal with Forex? Forex, or the Foreign Exchange, is the global exchange market for currency. You can trade spreads between economies by using the country’s currency (e.g. U.S. Dollar, Euro, Japanese Yen, Chinese Juan) and trading them based on strength. Foreign exchange markets have really heated up as of late, as they are a place of relative safety when put in comparison to the stock market. The difference between the two is that in Forex, there is a winner and a loser. In the stock market, everyone can win and everyone can lose… right now the latter is more true. Because of this obvious win-lose payoff, Forex can be used to make money betting effectively between currencies even in a bad market!

8. Worldwide Consolidation Has M&A Activity Reeling
As global markets continue to struggle in dealing with credit problems and consumer spending cuts, it is important to keep an eye on the consolidating markets. This may be more obvious in the financial companies, as many banks are being bought out and acquired by stronger firms. As competition dwindles and the weak companies are pushed out of the marketplace, we have an area where mergers and acquisitions (M&A) are alive and well. When things are cheap, more things are bought… so maybe the financial turmoil isn’t always a negative thing if you are a large multinational corporation.

9. Emerging Markets Boost Growth Overseas
While 2007 may have been the year of growth in China, many of these popular growth havens have been picked apart by an international market slowdown sparked by the United States economy. How far can these markets fall? If you are in the camp that would believe these economies are performing up to expectation, place some speculative bets into emerging economy tied companies like those invested heavily in Brazil and India. You may be in for some monster gains once things turn around.

10. Crude Oil and Natural Gas Stage Big Movements
Going with the commodity theme, it seems that high/low crude oil is mentioned every day. Ever since crude prices per barrel jumped to $145 people have been freaking out about what is going to happen next. Even as crude has now fallen to $80, nearly half of where it once was, people are still very concerned with the moves in crude oil and natural gas. The argument is still alive and well with which is the better commodity, but both energy plays can be an excellent hedge to a flailing market. Keep an eye on the trends in stock market news that talk about moves in the energy commodities, and you may find yourself ahead!

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-Jim Regan

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Written by Jim Regan · Filed Under Uncategorized 

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