>> Really? Who are those folks?
(This is a partial list... there are others i've read, but can't find the right articles...)
At the year progresses, the overriding issue upon investor and trader minds alike continues to be the potential for a conflict with Iraq. Many have stated that upon the resolution of this matter -- a quick and successful prosecution of the war with no incipient damage to oil production capabilities over and above their current state -- the U.S. and world equity markets will move significantly higher.
While this is quite likely, I don’t believe it will be to the large degree many expect. The equity market outcome and the economic outcome will likely be two wholly different scenarios initially, but they will eventually come back into some type of balance.
I believe that the markets will experience a relief rally spurred mainly by short-covering, and also by dwindling amounts of mutual fund cash being put to work in “high beta” stocks such as technology. If recent history has shown anything, it is that portfolio managers are willing to take on additional risk in order to outperform their relative benchmark indices.
moneycentral.msn.com
The logic of war
I’m getting a lot of questions about how the market will react once war breaks out. It appears clear from the market’s recent gyrations that anything that brings the war closer is viewed favorably, while any action that further delays war with Iraq sends investors out of stocks. The twisted logic here is that the market hates uncertainty, and investors want to see a speedy resolution in Iraq to reduce uncertainty. (Of course, there is the uncertainty regarding North Korea among other things, but the market seems to be more Iraq-focused right now.)
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In the long term, I’m still not convinced that this will be more than a bear market rally of roughly 6 weeks or so. However, the last two times we saw readings over 55% Bears in the AAII poll were in mid-July and mid-October 2002, right ahead of sharp rallies. While a number of other sentiment indicators are not as clear here as they were at those bottoms, this pessimism has me wanting to lighten up our short positions and get ready to look for new bullish positions.
moneycentral.msn.com
Roll with the punches
As we approach what appears to be a certain war, the superiority of American technology will become apparent very early in the game. This should lead to a swift, sharp rally.
moneycentral.msn.com |
