Hold on to your stocks

I trust you have made money by following my blog.

I meant to post this a week ago for two reasons. First, I have told this to everyone I met since the last post in the last September, including a few conferences in which I was a speaker. These include the funny period of people dumping stocks after Obama is elected, and the overly concern about fiscal cliff. Many do not understand the Obama’s election means this recovery will not be derailed. Fiscal cliff will be a little bump in the road anyway.

Second, I see risks popping up, but markets still should have runs, which means the returns from this point will be bumpy. Then after some more time, we will see some dive again (the sure thing, which is not a risk, is China’s economic dive). What are the current risks? Although European crisis has abated, including some positive steps to further forgive debt in Ireland, the austerity stance has not eased and will lead to further economic contractions. China will start to put some brakes on housing price increases, and likely will start to slow down further by the end of the year (I had some friends calling me that the Chinese housing markets will be wonderful again but I told them that the central government will not allow that, which will set up the fall after all the speculators start to depart). A few Fed sillies who argue for early ending of QE will only set up for more QE later, after economy fail again, but I do not think they can change the course of the QE this year. The market seems to focus on this last event in the last couple of days, which is a good time to buy.