What about valuations? Dow PE, PB, PS are all nuts. What about sentiment? Wall Street is still crazy about equities. This bear needs years of "The Death of Equities" type mentality. What about the groups doing the buying? Insiders are always buyers well before the bottom - they've only just begun, and appear to be reversing course on this rally. Corporate cash takeovers pick up around bottoms. Where are they?
I agree that cycles are favorable here, that's why I'm treading so lightly. However, of the things that really matter in ending secular bears, it appears the valuation metrics are key, and they are the ones still in nosebleed territory. We've had a few bad days for Dow stocks like MMM, PG, JNJ, and nothing more. They need to have a few really bad years before this is over and done.
We've got a few necessary conditions for a bottom, but not any that are sufficient. Maybe enough for a short cyclical bull, maybe, but I have serious doubts about even that limited notion. This bottom just wasn't durable enough to last very long. I said that about 9/11/01, and we hit fresh lows nine months later. That rally had the benefit of extraordinary liquidity to kick it - I don't see the similar liquidity forces at work now.
BC |
