Hello Henry,
It is in deed good to find you posting again. I have not gone back an read your thread yet, but will do so shortly. I've been putting together a scenario for the next few years..., can you put any holes in it..? <smile>
IMO, there's a fundamental shift taking place and will be good for a few years. I'm looking for a consolidation and sideways USA markets, with very little upside potential, and the strong possiblity of very weak markets.
Reasons:
The major element of growth in these markets over the last three years has been in computers.., internet, telecommunications and genetic research sectors. The Nasdaq reflected those companies, they were the leaders and the basis of the countries wealth effect and feel good spending. (All parabolic charts correct.)
This growth was combined with Greenspan's brilliant work in saving the international monetary system..., Mexico..., Hedge Funds.., Banks.., and working with Japan to easy its domestic financial problems. (And his not so brilliant Y2,000.) The USA essentially bailed out the world by remaining strong and buying.
In today's environment the news is not so clear as to who is going to lead the broader markets forward. The investment psyche has changed and we are back to stodgy old growth patterns.
Add to this...., the International Psyche has also changed and it's view of USA political policies is undergoing a dramatic alteration. They liked Clinton for his moderate -- centrist positions and now fear the isolationist -- conservative polarizing tendencies of Texas and the Bush Folks. (Go back 12 years and look for a rerun.)
Bush's political bent will cause the international community to -- Sell the Dollar -- Sell our Bonds -- Buy the Euro -- and Buy their own Economies. Oil/Gas prices will remain high -- Gold will gain in value, along with the Swiss Franc and Euro.
Bush's Tax cuts will reduce surpluses, weaken the deficit reduction process, weaken social security and are inherently inflationary requiring the Fed to hold interest rates high to attract buyers of our bonds. (Greenspan maybe replaced by Lindsey, which will cause further longterm problems.)
These down-trending charts have to be substanially broken to alter my view. The next two to four years are going to be a study in political polarization..., in the USA and world wide. No Depression, but certainly recessionary. |
