Trey: "Amen" to your "I live for days like today". I sure know the feeling. My clients have been cuffing me behind the ear so frequently (for a "too early" bearish stance) that I'm getting punchy. I hope you're correct about the broader markets not getting taken out, as I don't want my kids (or me!) to have to suffer through a "30's" scenario, but that is exactly what I think is coming. Just to get a bit of discussion going, herewith a few reasons:
- funds up to their ears in tech stocks.
- can insane buyback programs (the BIG supplier of buy-side dough) continue? A lot of this buying is loading many balance sheets with debt and depleting shareholder equity.
- while the fed and the stock market are maintaining a vigilant watch for any sign of inflation, DEFLATION makes a stealth entrance. (see commodities, gold, pricing power, wage gain stagnation, etc)
- defaults on cards, cars, etc rising, bankruptcies hitting consecutive records every quarter (and this in "good times")
- if markets fall more than 12-15% and margin calls kick in with a vengeance, the money that has to go somewhere may go somewhere....up in smoke or down the toilet
- PC/semi sector is now big economic driver....if it slows.....yuk
- Do we know anybody who hasn't put every last savings or borrowable discretionary dollar into the market?
- Most fund managers, and most investors have yet to be tested by a bear.....of course they are all in it for the long haul....(ie they'll sell at the bottom as is always the case)
- Fund managers now "closet indexers". Selling stocks gets one fired. Holding cash causes poor comparative performance, which also gets one fired . Fund managers are locked in
- Foreign markets already showing deflationary stress
- As is the case for our sector (PC/semi), the world as a whole suffers from too much investment in production capability, which is deflationary (too many loose dollars, yen etc, looking for a productive home).
- N American consumer "feels wealthy" because his stocks are up. Meantime he's humping a historic debt load, and has precious room for any mis-steps. He "can't afford to cash out"....and miss all that continuing stock price appreciation, so like the fund managers, effectively he's locked in and will go down with the ship
- Foreign central banks buy gazillions of U.S.$ and U.S. treasuries, which holds interest rates in check.....what if they decide to se..?
Boy this is bearish stuff.....I'm going to bed (g)
Anyway, what am I missing, and where is Goldylocks? Somebody show me the enlightened path through this new era, as it looks too much like a swamp.
How does one find the Kahuna thread? (g)
Sweet dreams to all, Earlie
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