Stephen: where's the rest of that great article? My comments:
1) The market, especially NASDAQ, is the canary in a coal mine. Interest rate increases get a faster response here than elsewhere in our economy. For him to say "no recession" is easy now.... the real impact to an interest rate change doesn't hit the miners for 6 months. So if the Fed does 50 in May, 50 in June, the economy takes a hit in November- December, just as a new President is elected.
It's a general rule of thumb that the best time to deal with hard economic moves is early in a President's term, rather than late, but that typically means sometime between 6 mos and 18 mos after inauguration, after the Prez has time to get the feet wet. Forcing a difficult economy on a Prez in late Fall, when the economy and market historically should be firing on all cylinders, is madness. Can the Fed be that mad?
Perhaps. If old money is mad enough at Clinton to be pulling out all stops to quash Gore, they could be demonstrating a willingness to see the economy impale itself on the knife to make it happen. And consider that old GHW Bush still blames Uncle Algae (wrongly) for his loss to Clinton in 92.... Bush and Big Oil have been buddies for a long time.... and oil prices sure have been a tad high lately, right?
Do I sound paranoid? Does this sound like the ravings of a conspiracy theorist? All I can say is that politics is about money, and national politics is more controlled by corporate interests than vice versa. (hough he can hardly be called "Old Money", do you think Bill Gates and his legions of Stepford Beanyheads want to see Gore follow Clinton into power?)
It's terribly easy to find simplistic villains and get them crucified politically. After all, the corporate control of our national media is pretty obvious by now. And if you can dismiss me as a paranoid, how bout that Morgan Stanley suit, who made the case about the way McCain & Bradley got undermined? I spoze he's just a wacko theorist too, right? The conservative analysts writing about Little Laury Summers undermining Uncle Algae too... just more schizo paranoids, right?
I won't discount a 50 for June because of this. But I think it's overkill. A 25 is more practical, with 25 in August, October and December. I would not underestimate the vitriol directed at Clinton though, especially by Big Oil.... even though Clinton has been the most corporate-friendly Dem in my lifetime.
2) Yeah, a return to a Republican White House and Demo Congress can happen. Even the corporations don't like to see one party dominate across the board. Better to have a government stalemated into inaction than one that gets too activist in one direction or another. But I'm not convinced this will happen. There certainly seems to be a greater gleaming eye rabidity in CorpWorld these days; they may want a Republican in every garage. I'm always leery of the hari-kari suits who drool at this prospect.
3) With all the focus on China, Clinton is overlooking the most obvious counter offensive, which Carter realized and Reagan gained from (Carter never got the credit he deserved for the AWACs decision).... Saudi Arabia. SA is the key to oil price moderation and a few plums thrown that way could subvert the coronation of Dubya by the bluebloods. But Clinton could care less about Gore. He's always been for hisself and all others can kiss grits.
4) Returning to how that impacts us as traders, I totally disagree with that 15% cash nonsense... 15% stocks makes more sense till the bottom is established. Not every day, but some days. And some days, 100% stocks makes more sense. But he's talking about investors, not traders. I'm a trader.
5) The big names he touts make sense if you want to limit losses, but they hardly represent the best gains. Of the tech stocks mentioned, YHOO, BRCM, ARBA are the best. But he failed to mention upstarts like AMD and SCMR and VNTR, which will outperform his plays.
Digressing briefly into conspiracy theories and market psychology, here's how I define the bottom: when MSFT is 50% off its top. At 65-1/16, that's less than 6 points away... meaning it's less than 9% from the bottom. It's likely you'll see AOL do the same again, so look for it (now 53-3/8) to hit 48 again. A correlating 9-10%% drop in NASDAQ still leaves it above 3000. So yeah, he's right in calling it a severe correction. Or, as I call it, a bear cub.
Using percentages to gauge what fell where, with one standard applied to those that unlocked shares in 2000, and another standard for older tech stocks, the smart trader should be able to discern where to place bets in the future. Take that to the bank
The one exception to that is Linux stocks, which have also taken added abuse from the Stepford Beanyheads. Some of the Linux companies, in fact, have a brighter future, with LNUX, RHAT, INPR among the most viable. Just not yet.
6) Your article ended midway in the discussion of Europe's euro. This requires our strong attention. We may have weathered the asia financial panic a few years back, but a European panic will produce tougher times for us than that one did. I encourage folks to keep their Third Eye peeled in that direction in the next 18 months, because that's a canary, too. And it's singing off-key at the moment. |
