I think AG is fuly in control and knows exactly what hee is doing. I really dont think it mattered a bit if we had gotten a 50 basis point or 75 basis point cut or for that matter 3% cut - the market would have sold off anyway. This is the stage that is just the opposite of what we had last year and was called buy-on-the-dips-no-matter-what, except this time it is called -sell-into-the-rally-no-matter-what!
Right now we are in the emotional stage of the bear market. Under normal circumstances day-t0-day Markets are driven by 30% fundamentals and 70 emotion. At this time we are going through a phase where markets are driven 98% by emotion and 2% by fundamentals. It is the same as how it was last year at Nasdaq 5000+, except now it is to the other direction. With Nasdaq at 5000+ last year we had bulls calling for Nasdaq reaching 10,000 in no time. And now we have people calling for Nasdaq reaching 1400 or 1000 or I even heard on CNBC some wall street pimp (aka analyst) caling for Nasdaq 500! Everyone is calling the bull is dead and the sky is falling!
But the fact is the economy is OK and on track. Here are the things I look for:
a) Housing is still going strong (i.e. people have cash and are willing to spend it on buying homes and going under mortgage and debt because they are confident of their financial prosperity and the future). Consumer spending is down but not because people dont have the money or not willing to spend, they just are looking for bargains and are sitting on the side and have a wait-and-see attitude. Of course some are also like me who simply have no cash left (I am 100% invested in the market and in the high techs!), and therefore can not afford spending on consumer goods anymore!
b) and unemployment remains at 4.2 (historically still very low), and will continue to be low. For example as quickly as these high techs are laying off people in Silicon Valley they are hired by other techs (mostly mid to small caps)!
c) There is no inflation (thanks mainly to the huge trade deficite we have)!
d) and the energy prices despite OPEC's attempt to cut production is surprisingly falling (and that I have not figured out why)!
So despite business leaders such as Cisco's John Chamber's scary tactics by singing the gloom-and-doom song to push the fed for a more aggressive rate cut, the economy will do just fine by the end of summer (i.e. second half of the year). Yes there is a slow down as noted by layoffs at Cisco, Oracle, Motorola, etc. etc. etc., but it is temporary, and in my view it all has to do with the technology inventory build up which will be reduced shortly (either through consumption or one time write-off).
When a long term bull such as myself - and believe me you can not possibly find anyone more bullish and optimistic as I in the entire universe - gets a bit scared and thinks of selling everything with huge losses and just take the cash and sit on the sideline - you are almost guaranteed that the bear market must be over! This was the feeling I had for a very brief moment this afternoon before looking at the bigger picture.
So for now we just have to hear and read a lot of self-claimed market gurus talk down the market and the economy, but in the final analysis they are just pure noise like listening to heavy metal music concert (i.e. Obnoxious and irritating, but nevertheless amusing!)
Regards,
P.S - And Of course just so you know, I am not going to sell one single share of anything! I am in this to lose it all to $0 or gain 500% to the upside! |
