Karun:
I wish I would not be a blind bull or a blind bear. I would prefer to be wrong with my fundamentals intact. At the moment, I'm 60% invested; I will gradually increase it but if the market goes against me, I will happily concede that market correction is not over.
But what I'm really surprised is that if the premises based on which bears are predicting a fall are right, then the fall should have come at 7200 or 6300. For me, these points on DOW charts are irrelevant. Look at total corporate profitability of S&P 500 and capitalize it at 4% yield, the net result valuation comes to in excess of $7.4 trillion. The cap factor of 4% is very aggressive but that's how prime assets are sold. With so much of orphan liquidity around trying to find a foster home, US corporate equities, in my opinion, are the only place where runaway equities can find some decent roof. Japan, Latin America and Asian countries, or even Europe with its structural economic problems, does not have the kind of depth to feed this orphan equity searching for a home. It has to be either US bonds (with approaching balanced budget scenario) or proprietary owners as instruments of new world economy, i.e., US corporations.
Maybe time will prove if I am far out of tune,but I always believe that fundamentally market works on premises as mentioned above, otherwise, DOW would not be here in the first place. DOW can only be justifiable based on above simple calculations.
Iqbal Latif
(Kuwait) |
