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  • Market And Meaning – Week Ending 4/11/14 0 comments
    Apr 12, 2014 5:53 AM | about stocks: DIA, QQQ, SPY, IWM, GLUU, ASYS, GLD, SLV, NFLX, TSLA

    Market and Meaning is our weekly update on market movements and their meaning for you as an investor. If you have questions or comments beyond what we discuss here, please leave them below or contact us directly. Also, don't forget to take advantage of our Education Center - a great resource for growing as an investor and getting your questions answered. To follow us more closely at Investor in the Family, be sure to subscribe by entering your info in the field to the right side of our website and follow us on Twitter, Facebook, Scutify, and even Pinterest.

    Markets took some tough hits this past week! We have been calling for a market correction for months and this is the second time in that period we have seen weekly drops of over 2%. Last time, there was a quick and full rebound. The jury is still out for this round. We continue to hold the view that the stock market is at all time highs and the economy is full of reasons for fear and concern. This mismatch will ultimately need to be balanced, either stocks fall or the economy strengthens. We truly hope the economy will bolster to fill the gap, but we struggle to see evidence or strong reason for hope at present. With the U.S. Federal Reserve continuing its Quantitative Easing, stocks should continue strong for some time. Any drops that we continue to see will be viewed as corrections and not as a bellwether for a crash.

    As we wrote yesterday, some of our favorite stocks have dropped close to 30% as small caps have taken the biggest beating of late. Volatility in small caps is not unusual and should not be overly alarming. There is a good chance small caps (tracked by the Russell 2000) will fall even lower if this market setback indeed turns into a full-on correction. All the same, we did add to our holdings of Glu Mobile (NASDAQ:GLUU) and Amtech Systems (NASDAQ:ASYS) this week. If prices fall further, we will likely buy even more. Our price target for ASYS remains $20, which would be a 100% gain from current prices and our target for GLUU is a minimum of $9 (likely much higher, $12-15) giving us a minimum 100+% gain from today's prices.

    In the grand scheme of things, this market pullback is a good thing. If the bull market is to continue, some healthy re-balancing needs to take place. In California, people get scared if there hasn't been an earthquake for a long-time, that means pressure is building. The longer there are no minor tremors, the greater likelihood a big one is coming. In the stock market, minor setbacks can be seen as holding off major crashes.

    What does all of this mean for the investor? Stay calm and don't let the current setbacks scare you. Many of the stocks that are being hit hardest are those that are soaring high on mostly hope; Netflix (NASDAQ:NFLX) and Tesla (NASDAQ:TSLA) are good examples. Most of our holdings at Investor in the Family are in small caps, so we have felt the pain of this pullback. The difference between our loses and those of momentum stocks like NFLX and TSLA is that our stocks choices are based on solid performance and potential as opposed to almost pure popularity. The current pullbacks are also the reason we have kept a large portion of our portfolio in cash (as much as 20-40% at times). This method allows us to reduce losses and have money available to buy more stocks on sale when the correction settles.

    We have an exciting announcement for readers, through a special partnership with PTT Research, our readers can enjoy $500 off a lifetime membership to their service. Check out our review of PTT Research and through the links provided, use discount code "faminvestor" at checkout. The code will only work through the links found in our article.

    In site related news, we are excited about some new articles this week for new investors. What would we do if we were getting started with $1000, $5000, or $10,000 today? We wrote articles detailing our moves in each situation. Also, don't let any more time pass before you read our resource recommendation for Scutify.

    The Dow (NYSEARCA:DIA) lost 2.3% or 386 points for the week, closing at 16,026.75.

    The S&P 500 (NYSEARCA:SPY) lost 2.7% or 50 points for the week, closing at 1815.69.

    The Nasdaq (NASDAQ:QQQ) lost 3.1% or 128 points for the week, closing at 3999.73.

    The Russell 2000 (NYSEARCA:IWM) lost 3.6%, closing at 1111.45.

    Gold (NYSEARCA:GLD) closed at $1318.40/oz and Silver (NYSEARCA:SLV) at $19.91/oz. with gold up slightly and silver mostly holding steady. As we have said for weeks, we are still looking for one more big drop, perhaps even gold declining to $1000 and silver as far as $16 before a longer term rally begins. We are waiting for these price drops before we buy anymore gold or silver. Our general time frame is May/June, but that is being held rather loosely. If you own no physical gold or silver, we consider the current prices to be a very good entry point for long-term investment. We want to reiterate that we are talking about owning physical gold and silver coins and bars, not stocks or ETFs. For information on how to buy gold and silver, please see "How To Buy Gold And Silver."

    Bitcoin is sitting at around $428.64, now hovering in the $400s for the first time in months. We took advantage and spent some more "lottery money" on Bitcoin this past week, buying some fractional amounts. If you have been considering buying Bitcoin, these are some of the lowest prices we have seen since the dramatic price jumps in December of last year. Caution and small amounts of money are prudent because however things unfold from here, we continue with our view that owning Bitcoin should be equated with buying a lottery ticket. If it becomes "established," it could skyrocket from here, but it could also fail to catch on and crash to $0. For information on how to buy Bitcoin as well as our views on investing in it, please see our article, "How To Buy Bitcoin."

    Disclosure: I am long GLUU, ASYS.

    Additional disclosure: We own gold and silver coins and bars as well as some Bitcoin.

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