<< the fundamental will catch up to the stock market but the stock market is on its way >>
I agree, but I think the market is "on its way" DOWN, not up. Aside from the fact that the market has come too far too fast, the fundamentals are considerably worse than the market thinks. For example, the imagined rise in consumer spending is total nonsense, and largely the result of some very creative accounting.
Also, history is NOT in favor of a summertime rally, in part because we are in a secular bear market. During bear markets, summers have, on average, produced considerable losses, and this is particularly true during the current bear market.
Unemployment will get worse for another year at least. Credit markets are still not functioning, although they are no longer paralyzed. There is a relief rally underway in real estate, but that will be stomped on within a few months. Things will go from bad to really bad in China very soon for a number of reasons, and civil disorder or even civil war is not at all unthinkable there within the next several years.
You heard it here first: this summer, the shorts will do considerably better than the longs. And, we are near or at the top.
WS |
