Some misguided reporter from the Seattle Times got lost yesterday and ended up interviewing Fleck:
seattletimes.nwsource.com
Market Movers: Recovery smacks of
1930's false rally
by Greg Heberlein
Seattle Times business reporter
For four weeks, stocks have climbed, so much so that this week
the Nasdaq composite index - the one so horribly wrecked in
March - moved into a plus position for the year.
Time to jump back in and buy stocks?
Heck, no, says Bill Fleckenstein, a world leader in the fight against
conventional wisdom. Fleckenstein operates Fleckenstein Capital
in Seattle and has been one of the clearest voices against
overvalued markets.
"You might say it's time to get back in and be an investor," said
Fleckenstein, who also writes an entertaining column for a
Go2Net online site, Silicon Investor. "What stops me is I see this
huge body of speculation and I can't believe that it won't be
washed out."
Some see flattening interest rates and an economy essentially
under control fueling future market gains. Fleckenstein sees
something else.
"Basically we've had a big rally off a nasty smash," Fleckenstein
said. "But it hasn't been powered by much news. The inflation
front has been getting worse every day. There's a chance we'll get
disappointment on the earnings front. We've got a chance to have
disappointment on the personal-computer front ... in the wireless
sector. The micro environment is not going to be better."
Even buying conservative, lower-valued stocks doesn't make
sense, Fleckenstein said, because a stock with a price-earnings
ratio of 12 still could go to 6, or lower. (Price-earnings ratios are
determined by dividing the stock price by the past 12 months'
per-share profit.)
The more Fleckenstein ruminated, the more it occurred to him that
1930 was similar. In the crash of 1929, stocks fell 48 percent by
November. But in 1930, they rallied 49 percent off the bottom
and appeared headed for the old highs. Instead, they turned tail
and by July 1932 had lost 89 percent off the 1929 top.
"1930 - that's what this might be all about," Fleckenstein said.
Yesterday, stocks struggled, with the larger stocks slumping for a
second straight day and the rest of the market fighting to stay
even. |
