RE: Barron's
Alan Abelson has always seemed pretty even-handed to me (if not always right--nobody is) and his column sounded pretty skeptical about the longevity of the bull. Then there were all the statistics on the differences between 1982 and now, and the other analysis. The news that John Templeton is pulling a few million out of a stock fund, and that his successor is steadily reducing U. S. equity presence in the funds he manages.
Sometimes news coverage, like the crash story in Time Magazine a couple of weeks ago, is NOT a contrary indicator. In 1929 the NY Times had steadily and accurately called the market badly overvalued and predicted disaster.
Of course there was a leavening of bullish opinion in Barron's, too.
Another thought: I had not noticed how high the dollar had risen. A declining dollar means declining stock prices on Wall Street for those outside the U.S., and an automatic rise in oil prices. Although I think that sooner or later stocks will decouple from bonds, a temporary dip in bonds caused by foreign sales could push the stock market over the edge.
About ten years ago I tried to write a program in a threaded computer language--LISP--that would predict market changes by feeding in every sort of variable. At that time I was working on gold prices. After I put it all together I tried running it with different values. I could not get any sort of consistent results. I thought there was something wrong with the program at the time, and only later realized that it was telling me the truth. The situation, the system, is too complex to make short term predictions, and unforeseen political events can always emerge. All one can do is look at a particular thing and try to determine if it's selling for more or less than it is really worth.
Right now the only truly undervalued thing seems to me to be oil (at least I know Americans would pay triple what they do if they had to), but oil exploration worldwide is so intense that demand is being filled at much lower levels than what it's really worth, especially in the US. Any slight contraction in available supply would raise prices a lot. So in addition to being short on the stock market I am long on oil and gas royalty trusts and speculative oils. The former provide a generous and largely untaxed stream of money; the latter provide wild adventures. And possibly big payoffs. Since gasoline is cheaper right now on an inflation-adjusted basis than it was in the depression, it's hard to see it falling further.
And a rise in oil would surely hit the economy and stock market.
Well, that's some Sunday afternoon thoughts. Easy to guess about things when the markets aren't open to prove you wrong! |
