Hi Jim,
As you can tell, I was basing my views of Mr. Smith's statements based only on what I saw in your most recent post. I am not totally sanguine about the view that we will be looking at good comparables in earnings seasons 2 or 3 quarters ahead. Actual results in aggregate are more likely than not to be showing lowering rates of growth of corporate profits. As to whether the market at that point in time will be looking again ahead by 3 quarters and seeing improvement is still an open question in my mind. I'm seeing too many dominoes here, first dot.bombs, then B2B, then telecom carrier's, now FO wunderkind. This is a ripple that resonates a long way. Especially when we hear today, for instance, that GM is basing its future productivity on empowering its employees through the Web. I thought this was how employees wasted company time by watching their stock portfolios gyrate....
I remain convinced that Greenspan will act to counter any attempt by a President Bush to relent on debt-repayment and to flood the country with cash from a tax cut.
As for the cost of gas and oil, I may be more sensitive than some folks in Sunbelt retirement. Some of my family are in northern climes and their bills are going to be much higher this winter. If that ain't inflation, I'm not sure if we have a language or an economic problem. And in a classic double whammy, not only do some of them expect their natural gas bill to be up 50% this winter, but they also have friends in the independent trucking business who've seen their incomes cut in half this past year as fuel costs destroy the economics of their business. These folks see things entirely differently, I assure you.
I'd have to say that I see Smith as being too optimistic about the steady progress he's expecting in equity levels. I'll grant that we most likely will see prices drift up for a while, but only until we get to pre-warning season again, which is going to be a bit quirky next period due to the new Fair Disclosure rules. But, barring a move by the Fed, which I don't expect before spring at the earliest, I'd say we're in a trading range with the balance of risk being weighted toward not being out of the market in a decline, rather than toward missing the start of the next bull run.
If I saw another really hot trend like the dot.com mania, I'd think differently. But I don't see the next stock craze in my crystal ball just yet.
So, I guess we can agree to disagree? Thanks for your views. They seem well-considered and thoughtful. But I guess I just see the road ahead being a little rockier than you. And that, as they say, is what makes a market. <bg>
Best, Ray |
