I hear you JDN, and I can really empathize. Here's my take on this stock market mess.
Since 85% of my investments go into DRIP and mutual funds, I just don't look to often and hang in there for the long term outlook. My trading stocks are a different story, so I don't want to go there! Suffice to say, I didn't go short anywhere near often enough. :(
However, the American economy is still sound overall long term, and with Bush leading the charge to reduce marginal tax rates. It should continue being strong in the future.
What we've witnessed is exactly what many long term investment pundits have been saying for quite some time. PE ratio's just got way out of hand. Especially, for internet technology companies. I took a look at Yahoo the other day in order to see if it was a good entry point. And the PE is still 90. We did have a lot of over-exuberance, just as Greenspan had been warning, and now we're paying the price.
I'm not one of those who believes Greenspan is the culprit of all this, nor do I believe he has the power to fix things with a few quick large interest rate reductions. His main concern should always be inflation. And he continues to tweak on the economy slowly in order to balance all the factors which provide growth with low inflation.
Maybe he's seeing something we aren't seeing on the horizon. I really don't know. GDP did grow 1% in the last quarter of 2000. And unemployment still remains very low by historical standards. We keep hearing about layoff's, but from my vantage point, the job market appears pretty strong.
If we can lower marginal tax rates across the board, which will encourage more entrepreneurial investments and activities, this slowdown may end quicker than many pundits expect.
Two years from now, quality stocks should make a decent rebound. So I'm keeping my eye out for some good Leap options to buy.
Best of luck,
Michael |
