The College Investor’s Market Thoughts – November 4, 2011

Welcome to the first College Investor’s Market Thoughts of November.  Another week of wild swings thanks to Europe!  But for all the swings this week, the market is only down 1% through Thursday. Check it out:

So What Drove The Market This Week?

• Europe: Europe was the biggest driver of the market this week.  First, a debt deal was done.  Then, the Greek Prime Minister wanted to hold a public referendum on the deal.  That sent the market into shock mid-week.  Finally, after pressure from world leaders, the Greek Prime Minister canceled the vote.  That gave the market a sense of relief towards the end of the week.
• Manufacturing: The ISM Manufacturing Index reported on Tuesday, and it gave hints that manufacturing may be picking up.  This is similar to reports last week from the government.  New orders had a reading over 50, the first time in over three months that it showed expansion.  Also, there was a sharp contraction in prices paid by manufacturers, which gives manufacturers more leeway to invest in the business and employment.
• FMOC Meeting: The Fed released their meeting notes on Wednesday, and announced, as expected, that it will keep the Fed Funds target unchanged through 2013.  It also said it would continue with Operation Twist.  It highlighted that it was moderately positive about economic growth, but reiterated concerns about the labor market.
• Retail Sales: Retail sales were announced as mixed across chains.  Many stores reported stronger than expected sales, while others were worse.  The declining chains blamed their issues on weather and higher gas prices.  However, most chains expected positive same-store sales growth through the fourth quarter.

The College Investor’s Thoughts:

• REITs: With interest rates poised to stay low, and continued uncertainty in Europe, real estate and real estate debt securities continue to be good plays.  These investments utilize the low interest rates to invest in higher paying securities.  Since these securities are insured by the US Government, they are relatively safe bets.  They also pay great yields.
• Retailers: Retailers are poised to have a good 4th quarter.  Many middle class retailers are taking back market share from the dollar stores that were doing well over the past several years.  As a result, these stores should see continued growth through the rest of the year.  These could be a good 6 month play at a minimum.
• Tech:  Groupon is the big upcoming tech IPO today.  I would stay away from this with a ten foot pole.  However, there are some interesting tech companies that could be a good play – especially Amazon.  With its’ disappointing earnings last week, its’ stock is down, but it should have a good 4th quarter as well.

Readers, what are your thoughts about the market this week?

This post was written by...

Robert – who has written 317 posts on The College Investor.

Robert is the founder and editor of The College Investor, a personal finance site dedicated to young adult and college student finances. You can learn more about him here and connect with him on Twitter or Facebook.

Contact the author