I am not anticipating a fiasco, rather, a second dip. The
economy came out of recession, but remains weak. I would
think the party will continue as long as the Fed keeps printing
and the stimulus keeps running, but we'll have another
recession in 2011.
It's not about the Fed, rather, about credit. If one has
poor credit and the banks are not lending, then they have
no ability to refinance.
I expect a new bull market to be born after that second credit
mountain is worked out. That would be a thought of an optimist,
although there are more hurdles, including the
bankruptcy of our government, potential funding crisis.
The latter always comes last in a cascade of crises. Huh,
that's a relief? Not really. It's very, very ugly, but secular
bull markets are born out of that ugliness
The most pessimistic outcome is hyperinflation and 100K DOW.
Unfortunately, that can run for decades. It depends on how
the crisis is handled.
I believe US stock market is in a secular bear market that
already ran for 9 and some years. While we can certainly
anticipate the bottom of that, it is rather hard to predict
it's exact timing. My guess of 2011 is as good as anybody
else's guess, and I am not talking about SP500 going
to a new low, just a new low in inflation adjusted terms.
Yes, one can anticipate a bottom of that some time relatively
soon since traditionally secular bear markets are shorter
in time than secular bulls. The secular bull was 1982-2000.
The secular bear, so far, 2000-2009, about half the time.
In terms of secular moves, "relatively soon" is measured in
years. -g- |
