Dave...
I'll share my thinking.
I expect almost everything to go lower. My thoughts go back to mid 2000 when the accepted consensus was that tech was immune. I accepted that and held, much to my dismay.
Today, I am really rattled by the Consolidated Freightways BK and the downturn in new factory orders. It's an excess capacity situation. On a similar line, I have been expecting a consolidation in tech, but it hasn't arrived just yet. I'm not talking about the dotcoms, but about software, semis, instruments...run-of-the-mill tech. We clearly don't need all these companies while demand is so very low. Many companies are buying back their own shares because they are viewed (internally) as well priced. These same companies however are not buying outside firms...and I surmise from that that they see no external bargains.
There's also the notion that housing is immune, or at least is not in a bursting bubble. Frankly, I don't believe that. I think we are going to see a consolidation, or closures, or both. That will mean more layoffs, and in turn, people selling houses. I'm watching not new permits, but days of supply in resales. When (or, if) that starts to increase, we'll be in more trouble very fast. People who begin to defer purchases anticipating lower prices will be rewarded.
Some will say the refi market is our salvation...puts money in consumer's pockets. However, refi is a smaller market than resales. It's a market that can slow down or dry up even when rates are low. Imagine what would happen to refi's if appraisals were to start sliding. They could, if days of resale supply increases noticably.
Long term, I'm a bull. Short term...6-12-maybe even 24 months...I'm very bearish. Cash. Only cash.
Chaz
Chaz |
