Mike, don't take me wrong, i have a few long tech positions as well...but once again the short shrift you're giving the '29 and Japanese mania endings is not doing them justice. you completely leave out the fact that shortly before these manias topped out, everybody was convinced that there were NO macro issues cropping up as negatives...on the contrary, in both cases the future never seemed to look brighter. as i have recounted before, a team of economists recently fed all the known economic data of the 1920's up until September of '29 into their computer and asked what the probability was that a recession or even depression would occur in the following year. answer: 0% probability.
what i'm trying to convey is that no bell will be ringing at the top. of course, i do know that election years tend to be o.k. for stocks and the cycles still point up into July of next year. however, in election years where there is no incumbent, the normally seasonally strong first few months of the year tend to be weaker than normal. the market then tends to strengthen later in the year.
another factor to consider is that the interest rate cycle is clearly a negative now. the Fed will be forced to tighten next year, as the overheating economy just doesn't let up, barring a Y2K induced recession. neither scenario is a positive backdrop for stocks.
one could argue that's a wall of worry for stocks to climb on...but have you seen or heard that anyone is worried lately? on the contrary, bullish sentiment is at multi year extremes (AAII polls, put/call ratios) as everybody sees nothing but blue skies ahead.
sure, as long as the market's primary trend seems intact, it makes no sense for an LT investor to bail. i believe however that the unwinding of the bubble when it begins will be very swift and violent. for people sitting on enormous gains in the mania stocks it probably makes sense to redeploy some of their gains into more defensive areas...after all, there ARE lots of values to be had.
regards,
hb |
