Heinz, Jim and others have done an excellent job of making the "bear case."
Now, just for fun, I'll make the "bull case":
In roughly chronological order:
-- The fed raises ¼ this month. By then, the market is down another 200 points or so. After the hike, no market swoon occurs, and the consensus, again, becomes that the hike "had already been priced in the market." -- and the market barrels back upward.
-- The fed adopts a neutral bias after the hike, further easing market concerns…the market slowly trends up.
-- This fall, y2k is a reverse surprise for the market. Most Americans believe that our country "has it fixed" and - not wanting to pay capital gains tax - keep their money in the market. And money flows in from countries likely to have troubles. This new gush of foreign money sends the market higher in October, surprising "rear window investors" and crushing the shorts…who eventually contribute to the rally.
-- Also in the fall, the fed, reluctantly, addresses growing liquidity problems and lowers rates. The market cheers and continues up.
-- This "most remarkable of all markets" closes the year at a high (the exact number is left as an exercise for the reader :-)
-- 2000 begins remarkably y2k trouble-free, with the exception of a few glitches in countries that nobody cares about anyway. The market again powers to new highs.
There!
Now...do I believe this??
Not. At. All. :)
doug |
