BTW, as we contemplate a pullback in oil, coal, and other commodities, perhaps in conjunction with a dollar rally starting sometime this summer, it is worth remembering that this will have a significant negative effect on indices. We all know that energy and commodity-related have been on a great run, so now they are a huge portion of many indices. As an example, you look at the top 100 companies in the mid-caps -- the biggest percentage are energy and oil-related.
As a related aside, think back over the last few months at the craziness espoused by the talking heads -- "Put your money in what is working." was the basic message as we legged lower. For a while emerging markets was a lock, then tech looked good, then oil looked good again, then mid-caps looked good, then ag looked good, and so on... That is an exceptionally poor defense. It's an offensive defense -- a risky defense. How do these people get paid for this thinking?
Five years of buying the dip has made us bubbly in the head again. I would not have believed that if you had said it was possible back in 2002. |
