In this time of market misery Ranger Mike comes back to the Q thread, his place of origin at SI, to ruminate about the misery, where it might lead, and to hear the wisdom of this most democratic and wise of threads.
I don't know who deep and bad this downturn might be, but it seems to me that the market periodically fixates intently on one or more thing or another, as it was the only thing that mattered. Right now the big fixation is the emerging markets
The emerging markets that had looked so strong as buyers of American products look a lot less strong right now. If investment money flees those countries then it takes with it the ability to build the infastructure of those countries or to improve their economies.
My personal hunch on this one is that there may be some validity in this, but that it might pass. I say "might" because the real danger is if the emerging equity markets take substantial hits, then the inflow of investment dollars will quickly turn into an outflow. Obviously this is bad for tech or other infastructure companies that depend on sales to these regions.
I don't think the concern is just over SE Asian countries. the worry is that a domino of collapsing markets will start in Asia and end up in Latin America, Eastern Europe, Western Europe. Today's 13% drop in the Brazil.
But as I said, the market is focusing on this as if it was the only trend going on right now, and it probably won't play out in it's most dreadful form.
There is also a lot of concern about earnings going forward, particularly in the tech stocks. Some of the oldtimers will have to tell me if I am right, but it has seemed to me, since I began investing in techs just a few years ago, that the market decides about once or twice each year that there is no more money to be made in technology and that growth is going to slow. Stocks tumble at this time. Then the sun comes up again and everyone yells "Buy like your life depends on it! This is an opportunity of a lifetime!"
OK I am back to rangering. |
