Jacob, Your posts are certainly well thought-out, and I also enjoy them. Regarding the Fed cuts, history is clearly on the side of the bullish argument for the market at this point when one considers the likely effect of the rate cuts. That is why the "don't fight the Fed" remark came about. I can't argue at all with your assessment of valuations, but can only say that it is hard to predict what kind of valuations the market will assign at any given point in time. I thought the consumer buying has fallen off quite a bit, but only not much in relation to previous downturns where it went much lower. I may have this wrong. I think since our standard of living is so high, there is room for consumers to buy more non-essentials, such as in technology. They can cut back in other areas, like maybe by drinking a few less Cokes or Starbuck's coffee, or maybe by buying SUV's that are one size smaller, or houses that are just large instead of huge. If great products are developed, good gadgets, and so forth, I think the consumer will buy. Regarding inflation, it is way lower than it was in the 70's. I hear lots of debate on this one, some arguing that we will get deflation in fact. Also there is the argument that the CPI is not measured accurately, that inflation is actually lower than it seems due to technological advances. As one example, consider what it costs for well functioning wrist watch at this point in time.
It is hard to call the mood correctly. You may be right in that uncertainty applies better, but clearly techs are viewed as dangerous places to put your money now. That is a big change from a year and half ago.
Regards,
John |
