Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Rex Martin who wrote (10426)	4/4/2002 12:11:44 PM
From: SliderOnTheBlack	Read Replies (2) of 36161

Rex - re: being too pessimistic... Perhaps so...but imho; there is no question that risk catalysts are ramping while the investor class is still basically fully invested and stocks are at valuation multiples that defy not just history, but common sense as well - especially given this geopolitical & economic environment. We're seeing a seminal cyclical shift... and a historic one imho. The recent shift to home oriented activities that has kept the home electronics sector & retailers in general relatively strong; as well as the home builders & Real Estate Market is just the beginning of a cyclical shift out of the stock market and into safety. The "Home" is the first flight to safety arrival point; but it won't be the last. Unfortunately we are in a real estate bubble... partially because we just exited a near decade long "Mortgage & Credit Bubble"... the credit & lending bubble of the last decade created an environment that can't be sustained....unless we revisit 4-5% Mortgage Money (which we may, but not untill we see DOW 5-6000 imho and I honestly think we will over a continued 3-4-5 year Bear Market for Stocks. It amazes me that nearly everyone now acknowledges the irrational, speculative bubble in Internet Stocks and in Technology & the NAZ 5000-mania. But; yet that same reality seems to ignore that this was just the beginning of a traditional longterm cyclical correction of a paper asset bubble. Stocks will indeed follow for a multitude of reasons. It is incredibly naive to think that we can exit a historic speculative paper asset bubble and work our way thru a traditional Bear Market Correction and never even return to "normalized" valuation multiple levels; let alone true "Bear Market" multiples. Dow 6-7000 is "reality" and DOW 5,000 is Bear Market territory and where we are now @ Dow 10,000... is nothing more than the last remmnants of a speculative mania that is stubbornly hanging on...(but, not for long imo). We DO have a near marketwide "earnings quality" crisis that is not being discounted one iota by the market... and the earnings quality crisis (read accounting quality crisis)has and will continue to be met head on imho; with a much slower and more drawn out global recovery than anyone anticipates. Throw in the shift of capital to the "War on Terrorism Machine" and a couple more "Rogue Wave" crisis events and the stage is set for a very intersting chapter in Market History to unfold imho... and if that is not a reason to be a market "pessimist" and position one's investments in a near purely defensive position... I don't know what would be. I think we're going to see yet another wave of missed earnings and lowered guidance that will begin to paint 2003 as the "potential" recovery target and investors who have allready begun to shift assets to Real Estate and the "Home" will begin to capitulate after seeing yet another year of negative 401K & Investment returns. The Street will have a hard time selling Mr. & Mrs. Main Street that stocks are cheap and that Happy Days are right around the corner... once that mindset shifts out of paper assets and momenteum builds... it won't stop and turn on a dime. "Stocks" will be hated before this is over... history is amazing... it gives so much and asks so little (vbg); but yet so few heed its lessons... We've seen a degree of market intervention by the Fed and the powers that be; that is unprecedented. This manipulation and the rapid & reckless expansion of money supply & credit is going to lead to a global currency crisis and gold will return as the historic currency of last resort as it allways has been & allways will be. Fiat was an experiment that will end badly and imho; we're merely seeing the beginning of the end. ...only time will tell; but we will see a day where the masses beg for the return to the gold standard... and we will. I think we've got 3-5 more years of painfull history lessons yet to come and yet another generation will humbled.

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