Raymond,
I view the frantic credit creation as desperation. It is not the sort of action that one takes unless one needs to. Imho, it is the initial salvo that one would expect to see when the gaping maw of the liquidity trap begins to open wide. Having said that, it is not the sort of thing that a bear wants to step in front of. Let it run its course and then watch to see if real buying shows up. We are at that crossroads now and I think the buying will not materialize.
The alternative here is that we will see a record number of people be right. History tells me that that's not how bear markets work. It would be shocking to me to see so many on Wall Street (they are recommending an all-time record of equity allocation!), and so many on SI for that matter, hit the mark and be correct that we are indeed at the front end of a nice run. Nope, they will be wrong.
I think it a misconception that bear markets make bears rich. While bull markets birth many a genius, I think bear markets thrive on fooling the majority regardless of persuasion -- when this thing is over, years from now, the mood will be nothing like it is today. There will be few so eager to proclaim a new bull, insiders buying will be turning the corner, P/Es will be somewhere south of 10, Wall Street analysts will be touting fixed income, the public will have no interest in the market, commercials will be net long, and SI won't exist. In other words, it will be nothing like it is today.
This is all standard bearish fare. I know that. I expect that the bulls think that they'll get the jump on the perma-bears buy buying these dips. They are wrong. They will be disappointed until they give up. Until they do, there is ample fuel for a bear.
I look forward to just raising my kids and buying the dip. It's years away yet.
Cheers, Allan |
