Three Questions

A reader left a comment asking three questions that I thought I would answer here, where anyone who cares can see my answers.

1) Do you think the market will still end at around 1300 if Greenspan hikes interest rates?

I don't think I ever thought 1300. I made a reference to 1270 as an upside target for this year on July 31. I think the external shock of Katrina makes trying to figure when the high point will occur, whatever the level, very difficult. If Katrina does hurt the entire economy we could see a lot of earnings warnings in December that could take the market lower that month. Warnings in September could do the same thing but I would not be surprised if companies don't have a real sense of the Katrina effect so soon. This ties into why I think the market could trade higher a little higher for a while.

As for Greenspan, I have a hard time thinking (recurring theme) that with so little time left in his term that he will let the Fed action be too disruptive to capital markets. I think they will figure a way to communicate their intention in such a way that the market prices it in correctly. Maybe I am being naive.

2) What do you think about technical analysis (MACD, Moving Averages etc..)? Do you consider that to be a userful tool?

Since the most important aspect of my exit strategy revolves around a moving average, I would say it is very useful. I also look at charts for individual stocks when I want to put on a new position. This part of the process though comes after I know what stock I want to add. I don't use charts as a screen to find investment ideas.

3) What is your favorite color?

Actually this is a Monty Python reference.

3) What books would you recommend for someone who is still educating themselves on investing?

This is not an easy question. I suppose anything by Peter Lynch and Jeremy Siegel. The last book I bought was ;
I am saving the book for our plane ride to New Zealand next month.