(6 Feb) The tsunami is coming!

The markets continued to creep higher on Tuesday. Some of it was attributed to the incoming administration's tax stimulus plan. I'm personally not sure how an average of $500 per taxpayer is going to help the economy - but that's just me, I guess.

Non-manufacturing index info

The ISM non-manufacturing index rose in December. The result was way ahead of the decline expected by the consensus. The rise in this index showed that, even though the economy continued to contract at the end of 2008, it was doing so at a slower pace.

These figures on the service sector, together with what appears to be the low point in car sales reported Monday, helps to reinforce my perception that we will be seeing an economic recovery this spring – with or without any more economic stimulus packages from the Feds. Matter of fact, most of the money that's been allocated for stimulus hasn't even hit the economy yet. This leads to the tsunami headline today.

Surf's up!

As discussed here before, there is over $8.5 trillion sitting in, effectively, no return "safe" instruments like CDs, money markets and US Treasuries. Add to that the (insert your number here) billion for those various stimulus packages coming down the road and you get the makings of a massive monetary tsunami on the way. All this won't all go into the markets, to be sure, but even a relatively small percentage will have a major positive impact.

The first ripples are already lapping on our shores. Here's proof.

The US media - with its seemingly total focus on negative issues and old news - has completely missed a rather significant point in their "reporting." Let's look at the S&P 500 Index - the one they're more than happy to remind us of how badly it has done last year. In a seemingly stealth move, if we look at what it has done since 20 Nov when it hit its low, it has gained - not a misprint - 24%. Have you heard that mentioned on the 6 o'clock news? Sure, it's still down a lot from its 2007 high but it's been a bear market, fer cryin' out loud - that's what happens. I don't know when the media will declare it "okay" to invest in the markets again but you can be sure that we shall have seen another large gain before that occurs.

Like a water-borne tsunami, you don't really see it until it hits the shoreline. In this case, we'll consider the media's awareness as the shoreline. This market will build up speed and momentum and then, seemingly as if it were a total surprise, it will come crashing into the collective awareness and many will still be in disbelief - just like with the one from the sea.

The markets are anticipatory so this movement should make people feel better. Trending up, in the ways of the markets, is always seen as a good thing.

Don't be caught on the shoreline with a dazed look in your eye as the market starts cresting high enough for the even the media to see. It will be hard to, once again, not just be caught up in all the swirling and be reaching for anything that will help you keep up. Take your time now to create or fine-tune your investment plan, evaluate your current holdings and look at the wonderful shopping opportunities disguised as investments that can added to your portfolio.

This way, instead of watching for the wave come in, you can be riding it...