Rocky and Jay,
My feeling is that both of you are right, just depends on your time frame. Yeah, this has been a tough period, and it will, IMO, get tougher before it gets better. So Rocky, you'll make some money, I think over the next few weeks. But after the election, the market will head back up, maybe not immediately, it will depend on exactly what happens--if the Democrats or Republicans get control of both the executive and the legislative branchs, there will be another sell-off, some gridlock in the Federal government is a good thing, it means people have to work harder to make their case to get things done. But a Fed governor just today started preparing people for a weak GDP report coming up on Friday. The US economy is slowing faster now. Europe is very slow. The Far east can't keep exporting if the US and Europe are slow, so they will slow down as well. And while oil prices remain high, they too will come down with a weaker economy. The mid-east is still a question mark, and a potential source of disruption, for sure. But the Fed won't sit on its hands for long if we get a couple of weak GDP reports, and the final excesses are wrung out of the market (which is in the process of happening right now).
The worst case, I think, would be if the Republicans get control of congress and Bush wins. His mammouth tax plan will surely scare the dickens out of the Fed, which won't lower aggressively until it sees what they will do. But I still vividly recall Oct 98. This isn't as bad as it was then, yet. Perhaps it will become that, we'll have to see. But with the carnage that has already occurred, I don't think Mr. Greenspan needs to prove too much more. So I think we'll have a whale of a rally beginning sometime between Nov 8 and Nov 20, and continuing through the end of the year (assuming, again, that power in Washington remains split between the two parties).
IMHO.
Sam |
