what WOULD make you bullish on the sector, or the markets in general?
Well, that could be a long answer.......basically, the Fed in attempting to head off a prolonged recession/depression a la Japan, as been too accommodative and while the economy has bounced back rather mildly from the recession, other "bubbles" have been created like in Real Estate.
What we have experienced in the past 18 months, was a cyclical bull rally in the mist of a longer term secular bear, which started in 2000. I think the secular bear will re-emerge (Already has) and that another "adjustment" process must ensue to get things back in balance. American's shouldn't be this much in debt, the Gov't shouldn't be in this much debt. Inflation is here, yet Fed interest rates are below the current annual rate of inflation. Rates either go higher and kill the economy or stay the same or go lower, which surely does not lend itself to strong economic conditions. There isn't much consumer spending outside of the U.S., so which country will stand up when the American consumer is tapped out?
I will become more bullish on the markets in general after we have another "washout" period. The first, 2000-2002, helped clean up corporate balance sheets, aided by low interest rates, the next one will clean the consumer. Market fell 40%-50% on the first one and something similar will happen this time. NASDAQ 1400?
So, I'm waiting for the other shoe to drop, see where we are at that time and then might get bullish. We could drop and stagnate, depending on how the "authorities" deal with the situation. There will be a time to be bullish again, but first the "medicine".
A-M-S |
