It makes sense that the energy stocks got hit since all sectors have been over the past 2 weeks. the Natural
Gas stocks have been moving sideways for a number of months now, and stocks like EOG are coming
back to there 200 dma, I'm interested in buying it at the 200 dma. It looks to me like Natural Gas will
be staying far above it's previous historical range this year. 4 and 5 dollar Natural Gas prices enable the
big producers to generate tremendous cash flows.
Templeton's pretty sharp, but we have to remember that the Nikkei has had rallies that have doubled it from it's
1992 and 1995 lows, and the DJIA had a massive bull market in percentage basis from it's July 8th 1932 low
into 1937. Obviously the NASD will have a massive countertrend rally at some point, and so the next few
years will be much more trading oriented for equities.
from Templeton's interview, and one point to be made is that book values and even earnings capabilities,
have been transforming to some degree over the past 150 years. It's hard to make direct comparisons to
the 1920's although his PE ratio point is well taken.
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Templeton said he is warning investors that the recent
"technology bubble ... was far bigger than any previous
bubble of any nation ever. Ö Now is not the time to buy
common stocks."
In fact, Templeton says, he is encouraging those who will
listen to stay out of the stock market almost completely and
invest in long-term uncallable bonds.
"I really remember 1929. It was fascinating. ... I like to keep
it straight to arithmetic. How high were the prices [in 1929] in
relation to earnings? The maximum was 29 times earnings.
Now, in the recent bubble, the Nasdaq went up to 300 times
earnings and is still over 100 times earnings, even now."
Though he believes the market will eventually recover " and
the Dow may hit more than 1,000,000 by the end of this
century " it may take years.
Using an old rule of thumb employed by professional
investors, Templeton said bear markets often last half as long
as the preceding bull market.
He counts the bull market as having begun in 1982 and
having ended last year " an 18-year run " and wonders out
loud if we may be witnessing "maybe a nine-year bear
market."
Templeton is quick to say with a smile that he has "never
been that smart" to predict the duration of a bear market.
He believes the Bush tax cut could provide significant help to
the economy and the market.
"Cutting taxes is always magic to stimulate an economy," he
said, adding that Bush's reduction is too small. "It should be
more," he said.
Templeton also likes Bush's idea to invest some Social
Security funds in the stock market. Had the system begun
with that idea, he suggests, the money in Social Security trust
funds would be "enormous."
He believes such a change would dramatically change the
"human mentality about business."
"If human beings thought their future had been dependent
upon businesses, they would then vote in favor of business." |
